In this short note Chris Goodall looks at consumer payment technologies. He says that the banks and credit card companies are under no immediate threat from new technologies. Do not be confused by the wizard new technologies coming out of Nokia; technical advances are not going to change payment systems much in the next five years. Rather, he suggests, observers should focus on three interesting companies which use low technology solutions to solve particular payments problems. These companies support, rather than undermine, existing players in the consumer payments industry.

This note provides an update on UK Internet trends covering the post-Christmas period. It covers usage, shopping and other online activities of the 17.7 million connected adults. The note highlights the feminisation of the UK online population and its impact on shopping behaviour.

Broadband cable suffers from several technical performance problems, including installation, actual performance and the costs of providing content, in particular to gamers.

In Germany, less than 5% of cable homes have been upgraded to digital, suggesting that Deutsche Telekom’s DSL push has irresistible momentum.

In our recent report on the prospects for BT, we looked at the pressures on the company resulting from declining prices, static call volumes and increased competition from mobile.

In France, mass marketing by France Télécom and Wanadoo, lack of availability of unmetered, and ubiquitous self-installation have allowed DSL to increase its market share from circa 40% in mid-2001 to an estimated 70% by end 2001 (300,000 DSL connections plus). We expect cable operators’ market share of the broadband market to continue to decline to circa 15% by 2005. We assume that the current European Commission investigation into Wanadoo’s DSL pricing will lead to maintenance of current prices (circa €45/month) through 2003. In our opinion, lack of sustained price declines to €30/month or less will limit the French broadband market to 2.5 million connections by 2005 (25% penetration of Internet households).

This report looks at how consumers in the UK spend their money on TMT goods and services. It tracks changes in the portion of household expenditure going to TMT. It shows that expenditure patterns are very different in the lowest 40% of all households, with very little expenditure going on newer technologies. The greatest increase in TMT expenditures has been concentrated in the upper middle of the income range. The richest consumers have actually decreased the portion of their expenditure devoted to TMT in the last five years.

On the other hand, the published commentary failed to note that the new BARB panel will allow analysts to get more accurate figures for the actual watching of TV advertisements. This data, to be released in a couple of weeks, will provide important new information. We doubt whether the figures will make pleasant reading.

Since the research for our report on Vodafone was carried out, the UK mobile operators have made a number of changes in tariffs. We think the net impact of these changes has been to increase average call charges. This may be the first time that the UK has seen any upward trend in prices. If these price changes stick, the impact on voice ARPU is clearly positive.

Looking ahead, the costs of buying a PC and funding a connection will act as barriers to Internet expansion. Such expenditures weigh more heavily on households in less prosperous households, where the Internet have-nots are concentrated. Although the Internet-enabled mobile phone and digital TV subscription would eliminate PC ownership as a barrier to Internet access, we do not think these will be (for the foreseeable future) access platforms of more than marginal significance.

Nokia's quarterly results statement included an estimate for worldwide global handset shipments of about 390 million. Global shipments so far this year have been:

This report provides our forecasts for online advertising revenues in 2001 and 2002 in the UK, Germany and France. Our central forecasts are for a decline of 3% in online advertising in 2001 over 2000 (€610 million versus €615 million), and for a maximum increase of 8% in calendar year 2002 (€660 million). For Europe as a whole, online advertising will be flat: increases in Italy and Spain are offset by decline in more mature markets.

This report looks at the prospects for mobile operators. It focuses on the UK, and Vodafone in particular, because of the high quality of data available to analysts. We think the main conclusions apply widely across European operators.

It is well placed to weather any downturn, though its dependence on recruitment advertising continues to concern outside observers.

Europolitan, Vodafone's Swedish affiliate, has just announced that its expected costs to build a 3G network will be 10bn Swedish Kroner, or about 1bn Euros.

How will this happen? XP contains hooks that link it closely to Microsoft Passport and Microsoft Messenger. These two applications are the gateway into .NET. Passport provides the central storage for user details (no more tedious entry of personal data into web forms), Messenger offers a broad set of 'unified messaging' functions. One example struck as particularly powerful; XP users can automatically see which of their list of 'buddies' is online and can contact them via instant messaging. If this isn't a direct threat to AOL, we don't know what is. (These functions have been separately available for some time, but making them an integral part of the operating system will hugely expand their use).

In this report we look at one of the subsectors of UK media - regional newspapers - to see whether these companies would be relatively resilient in a downturn - this is the product of our review. The main points are as follows:

Our rationale is simple. This year has been profoundly affected by the impact of high levels of inventory in the early months of the year. This stock has now been disposed of, and handset shipments from manufacturers will revert to a level more aligned with retail demand. This will push up shipments next year from this year's artificially depressed level.