Mobile TV is being hailed as the next killer consumer mobile data application, and is already credited with being the most popular 3G service where it is offered.

This report examines recent developments in Local Loop Unbundling (LLU) in the UK and their implications for market structure and BT’s revenue from residential customers.

BT and other industry players have announced plans to upgrade their fixed telecommunications networks to Next Generation Networks (NGNs). In the UK, BT’s ‘21st Century Network’ plans are the most ambitious. BT intends to rationalise all its existing network platforms, bringing all services and applications onto a single IP-based platform, using the same equipment for handling and routing traffic over one transmission network. The new network also has the potential to support new services.

The decline in underlying Group EBITDA is continuing to decelerate

Local loop unbundling volumes are set to explode, but the impact of LLU on BT Group revenue will be lower than expected

Television's old world of analogue scarcity produced a clutch of big names in free-to-air (FTA) commercial broadcasting: ITV1, TF1, Mediaset, RTL and Sat.1/Pro7 being among the most prominent in Europe - companies grown rich and powerful through advertising demand and lack of competition. Today, they face the common challenge of making a successful transition into the new world of digital plenty. Can they prosper? Or must they disappear like dinosaurs in a whirl of audience fragmentation, ad avoidance, on demand, downloading, video-streaming, convergence, piracy and whatever else the future holds?

The new UK management team, led by former Energis CEO John Pluthero, still has the opportunity to improve C&W UK’s longer-term position

Rapid implementation of a Next Generation Network to cut costs and refocusing Bulldog remain critical

After ten years of top line decline, the total recorded music market stabilised in 2004 at $34.4 billion, but our view remains that specific factors rather than fundamental change in the key market and economic drivers explain this stabilisation. These specific factors included a 9% average retail price decline in the US leading to a 1.4% unit sales increase, a creative resurgence, and the adoption of digital sales by iPod enthusiasts. However, the CD format resumed its long-term decline in the second half of 2004 and we expect this decline to continue.

This price increase brings H3G much more into the fold of UK prepay pricing, putting its outgoing call prices on a par with Virgin Mobile, at a premium to easyMobile/Fresh, and at a much reduced discount to the larger operators.

Recruitment ad spend has led the growth of ad revenues of regional newspapers in recent years. Declining recruitment ad volumes in Q2 2005 and weak outlook for H2 2005 will significantly reduce ad revenue growth in 2005 from the 4.9% of 2004. This outlook will adversely impact groups that are more heavily reliant on recruitment ad spend, such as Northcliffe Newspaper Group and Trinity Mirror Group, and both have confirmed the challenging nature of the current trading environment in their results.

This report examines the impact on alternative communications service providers - unbundlers, resellers, altnets and the cable companies - of BT's proposed settlement of the Telecoms Strategic Review (TSR) conducted by Ofcom, completing the coverage of our recently published Telecoms Strategic Review [2004-14].

Ofcom, BT and the industry are getting closer to completing the Telecoms Strategic Review (TSR), currently in its Phase 3, and scheduled to complete in the Autumn. Ofcom's proposals and the supportive measures announced by BT offer some good news for virtually all players in the UK market, although clearly such judgements depend on what was expected prior to these announcements. We have always considered it unlikely that Ofcom would choose the option of investigating BT and possibly making a referral to the Competition Commission, which could have led to the break-up of BT. However the reaction of the financial markets suggests that at least some City analysts considered that BT has secured a major win by avoiding this outcome.

Strong growth in both online and mobile music revenues was not enough to compensate for the erosion of the core CD market

The competitive strength of Freeview is growing. Freeview is already in five million homes and increasing at the rate of about two million homes a year, far exceeding initial expectations at the time of its launch on 30th October 2002. At that time, there was muted demand for channel space on the digital terrestrial TV (DTT) platform carrying Freeview and no one except the BBC seemed to want to know. This was still the case a year later when Five sublet all its extra gifted capacity to the minipay service Top Up TV, which launched in April 2004.

Although Sky’s monopoly over UK Premier League football runs for only two more seasons, the jostling between other broadcasters eager to transmit top tier football matches has already begun. Persistent rumours suggest that broadcasters are trying to build a consortium to bid for Premier League matches. We believe, however, that such a consortium might well run foul of the competition law, and would in any case be fiercely resisted by the Premier League.

Although the service includes the latest features such as user-customisable channels and the ability to skip tracks, adoption will be limited by the widespread availability of cheap or free substitutes and the massive drain that it will place on the handset battery

In order to make the service affordable, data is priced at an effective 95% discount to current high-usage data tariffs, further highlighting operators’ difficulty in offering attractive data services at economic pricing levels

France has become the largest market for broadband in Europe (7.7 million connections at the end of Q1 2005) as a result of the aggressive price competition unleashed by local loop unbundling (LLU) since 2002. In addition, ADSL2+ line speeds have become standard in densely populated areas (where customers are within 2 kilometres of the exchange).

Digital TV growth trends following the record surge of Freeview homes in December 2005;

Financial assessment of Sky’s broadband/telephony strategy following the acquisition of Easynet;

ITV1 audience and advertising revenue prospects for 2006 in the wake of more than a 10% decline in commercial viewing share in 2005.