Market revenue growth was robust in Q3 at 1.4%, but heavily supported by price rises whose effect will wane over the next year.

Broadband net adds remained negative, with pay TV and telephony more negative still, mainly thanks to strained consumer finances.

Declining volumes and waning price rise boosts are likely to lead the market into decline next year, with a recovering economy needed to reverse this.

 

The metaverse is a radical expansion of online experiences— sparking a host of new safety challenges on harmful content, economic activity, and privacy.

Building safety into the metaverse will take a village: platforms and communities will set policies and moderation. Regulators could struggle to future-proof their tools, especially with decentralised platforms.

AI age verification and moderation is in a race against AI hazards: disinformation, deepfakes and dynamic user content all intensify harms in immersive settings.

Market revenue growth surged to 2% in Q2, but entirely-and-more driven by price rises, with underlying trends negative across volumes and ARPU.

Broadband volumes in particular turned sharply negative, largely due to a post-lockdown hangover combining with weak economic conditions.

The outlook is bleak: price rise benefits are set to wane and then reverse, and weak volumes will feed through, with economic recovery needed for a return to sustainable growth.
 

Social tariffs have provided relief for some at a time of household income squeeze and otherwise unavoidable high inflation-driven telco price increases.

Adoption has risen but remains very low, limiting their effectiveness, and more widespread adoption would expose their shortcomings, with the risk of penalizing low cost operators and significantly increasing prices for non-adopters (by up to 20%).

A better approach might be to recognize that affordability issues are narrower but deeper than current social tariffs can address, with fuller, centrally funded subsidies targeted more narrowly at those most in need.

On 18 May 2023, Enders Analysis co-hosted the annual Media and Telecoms 2023 & Beyond Conference with Deloitte, sponsored by Barclays, Financial Times, and Salesforce.

With over 550 attendees and over 40 speakers from the TMT sector, including leading executives, policy leaders, and industry experts, the conference focused on how new technologies, regulation, and infrastructure will impact the future of the industry.

This is the edited transcript of Session Four, covering: news publisher growth, the way forward for UK telecoms, regulation, and closing remarks. Videos of the presentations will be available on the conference website.

At this year’s Mobile World Congress, new hardware was stuck in beta, but glasses-free 3D screens impressed.

The metaverse confronted its identity crisis in a deflated hype cycle: blockchain and NFTs withdrew to the shadows, leaving the focus on enterprise and industrial applications.

AI: while aware of the (numerous) issues, discussions occasionally skated over issues of effectiveness, data inputs, the role of humans, and conditions for adoption.

Microsoft’s planned acquisition of Activision Blizzard is in trouble. US, UK, and European regulators may make the deal impossible for Microsoft—and a disaster for Activision and the wider industry. 

Sony’s late improvement in PlayStation 5 sales is only just enough to reach its target numbers for the year. It needs a more dynamic approach to a rapidly changing industry, and a less dogmatic message to consumers and regulators. 

Netflix Games is more than a trial—it’s on track to become a major games platform. 

BT’s revenue and EBITDA growth fell in the December quarter, with consumer broadband in particular suffering from weakening volumes and ARPU, as last year’s price rise benefit wanes and broader macro pressures hit.

Openreach, however, had an improved quarter, with the broadband market returning to growth, full fibre build and take-up progressing at or ahead of expectations, and the altnet threat fairly subdued.

Inflationary price rises in April will give a temporary fillip, and likely help drive a decent 2023/24 for Group financials, but it will take much longer for full fibre benefits to really be felt.

The amended Online Safety Bill contains sensibly scaled back provisions for “legal but harmful” content for adults, retaining the objectives of removing harms to children and giving users more choice. However, this comes at the expense of enhanced transparency from platforms.

News publishers have won further protections: their content will have a temporary ‘must-carry’ requirement pending review when flagged under the Bill’s content rules. Ofcom must keep track of how regulation affects the distribution of news.

The Bill could be further strengthened: private communications should be protected. Regulators will need to keep up with children’s changing habits, as they are spending more time on live, interactive social gaming.

Openreach has simultaneously announced that it is applying a full 11% inflationary price increase across all its key products, and effectively removing this price increase (and a bit more) for full fibre products through an update to its ‘Equinox’ special offer pricing.

Equinox 2's purpose is described as to encourage migration of existing connections to full fibre, but this is hard to see, and it looks more like a defence against migration to altnets and/or VMO2’s emerging wholesale proposition, albeit one that seems like it will not fall foul of regulatory rules.

Openreach will still benefit from the 11% price increase across most of its revenue base in 2022/23, and the shift to FTTP will remain accretive. Openreach’s customers will suffer from the price rise, but with a stronger outlook as they move to FTTP, while the altnet/VMO2 wholesale economics are as-you-were.