The UK continues to be the largest and fastest growing national digital TV (DTV) market in Europe. We now expect 75% of UK TV homes to be equipped with digital reception by the end of 2006, rising to over 85% by the commencement of digital switchover in autumn 2008.

We have argued that mobile operators offering free broadband makes little sense from an economic perspective, and it now appears that it has little draw for consumers as well (which is lucky given its very high cost)

A large number of mobile operators are launching ‘convergence’ offers in Europe (including Vodafone across all its major subsidiaries), and this poor result in the UK suggests that this will prove a needless distraction for them

The latest RAJAR radio data (Q2 2006) delivered further bad news to the commercial radio sector, whose audience share has fallen year-on-year in all but four quarters of the last eight years to the benefit of the BBC. Commercial stations’ share of listening has dropped from a peak of 51% in Q2 1998 to below 43% this year, a level last witnessed in 1993. In the intervening thirteen years, commercial radio has launched one national and 124 local analogue stations, as well as 163 digital stations, although this unprecedented growth in supply has apparently failed to stimulate any long-term gains in share.

Market leaders Orange and Free increased their DSL retail market shares, while (newly IPOed) Neuf just managed to hold its retail market share (including AOL FR), while that of smaller ISPs (as a group) declined

Group revenue growth remains positive, but intensifying competition in residential services and the absence of further big wins in corporate contracts mean that it looks more vulnerable than it has for some time 

In the attached report we are publishing the 2006 edition of our regular review of UK mobile user trends, based on a survey of 1,000 adults. We look at handset ownership, replacement trends, handset manufacturer choice, network operator choice, camera phone ownership and usage, 3G handset ownership and usage and, finally, interest in Mobile TV.

We cannot see how Phones4U can fulfil the volume requirements without significant damage to its business and competitiveness, and Vodafone may also suffer from a vengeful CPW encouraging its subscribers to churn away. Vodafone appears to not understand that it is its competitors that are driving up subsidies rather than its business partners, and is instead trying to shoot the messenger

CPW has less to lose from the weakest two operators leaving than one might think, and the continued lack of differentiation from the operators means that its core business model is still very much secure

Vodafone blamed a harsh competitive environment and the timing of Easter for its low revenue growth in core markets reported this week. Its growth did at least not decline again, although we expect that Vodafone will again prove to be underperforming its competitors as they report their figures over the coming weeks 

CPW will also benefit from its partnership with AOL for portal advertising, content and other internet-based applications, relatively small but fast-growing value-added services in which CPW has little experience or market position, which will prove important in terms of both customer retention and margins.

True to pre-launch speculation, BSkyB has entered broadband with a price-cutting bang that will have sent tremors round the rest of the industry.

AOL UK offers buyers of its internet access business the prospect of instant scale in broadband, enabling 1,000 exchanges to be unbundled on a shared LLU basis. However, it has relatively few of the telephony customers which are necessary to exploit full LLU 

Spain’s top football club FC Barcelona (Barça) has threatened to withdraw its broadcast licence from Sogecable unless it matches an offer from Mediapro that is almost double the current annual fee for the two football seasons commencing 2006/2007 

The present TV advertising slump appears due to a uniquely British combination of very rapid digital TV growth and singular advertising airtime regulations that include the Contract Rights Renewal (CRR) remedy 

The UK market for fixed line telecoms services is undergoing huge change. Local loop unbundling is increasing price erosion in both broadband and telephony. BSkyB, BT and Orange are all planning to launch video services provided over DSL. Fixed line players unable to offer more than one service over the same network infrastructure are up for sale.

The cuts are not as bad as many had feared, and the impact on service revenue for the GSM operators will be de minimus: less than 1% at worst and a probable positive impact for O2, depending on the future level of RPI inflation. The impact will be far worse for H3G and reduce growth by about 3-4% each year until 2010/2011 

BT’s launch of ‘Total Broadband’ represents a timely improvement in the value proposition for BT’s residential broadband customers but its impact will depend crucially on the success of BT Vision and other related services yet to be launched