BT Retail is putting through another round of residential price changes, trading further aggressive cuts in call plans in return for 12 month contracts, increases in line rental and some volume-related call charges

The £1 line rental increase is in line with our expectations and could trigger a round of increases by other players following Ofcom’s forthcoming statement on Openreach’s wholesale price ceilings

The price changes should help BT Retail to both defend its residential customer base and conserve ARPU. However, some further loss of residential market share looks inevitable

The planned merger of Vodafone and H3G in Australia has raised the question of what consolidation could occur in Europe, although a direct analogy is not appropriate because Vodafone is much weaker in Australia (#3 operator) than it is in the larger European countries, and so would face much more regulatory scrutiny in Europe

The only merger opportunities in the top five markets which would have a similar or lower theoretical impact on competition (and hence would theoretically be as easily approved) in the top five European countries would be T-Mobile and H3G in the UK, Wind and H3G in Italy, and any operator with Yoigo in Spain

There are massive cost savings to be had from in-market consolidation, with network, marketing and general administration costs all fully overlapping between operators. The non-merging players would also enjoy a period of less competitive intensity, which may last indefinitely

The iPhone has inspired all the major Smartphone makers to launch touchscreen models, and dramatically improve the usability of their interfaces. The iPhone itself remains the most easily usable touchscreen handset in our view, although at the cost of speed of use and adaptability

Unfortunately, the characteristics that make these handsets easier to surf the internet with – large screens and/or QWERTY keyboards – are just the characteristics that are unlikely to trickle down into mass market handset models, meaning that the impact on mobile data usage is limited

We continue to believe that web browsing is unlikely to be popular on mass market handsets for the foreseeable future, but usage of web services can be popularised by more of a widget approach, which the cheap but smart INQ1 handset demonstrates well

The Premier League has succeeded in obtaining a 4.4% increase in live televised rights payments from £1,706 million to £1,782 million for the next three year contract commencing with the 2010/11 football season

The big surprise was that Sky bid more than last time round (by an estimated factor of circa 7.5% for its current four packages), while Setanta bid roughly 20% less for its two packages, thereby losing one to Sky

The highly contrasting bidding approaches appear to reflect completely different mindsets, with the not yet viable Setanta focused on the economic value of the PL rights, and Sky taken up with demonstrating long-term commitment to the PL

The essential conclusion of Ofcom’s Second Public Service Broadcasting Review is that the present commercial PSB model is unsustainable in the digital age. The Ofcom solution of fixing on Channel 4 as the “alternative, commercial PSB voice”, while freeing up the Channel 3 and 5 licensees from most of their PSB obligations, still leaves a major funding gap

A particularly attractive solution is some kind of synergy-generating merger/JV/partnership, but difficult to achieve in practice. The attached note examines the main issues that we may expect to arise with the existing proposals

Kangaroo – the proposed BBC Worldwide/ITV/Channel 4 video-on-demand (VOD) service – has been terminated by the Competition Commission (CC) due to fears that it could control the wholesale and retail supply of UK TV VOD

In our view the CC decision is a lucky escape for all three shareholders since it will save them from investing potentially tens of millions in an ill-advised venture which could have become a bottomless money pit when they can least afford it

Near term ITV and Channel 4 will refocus their internet strategies around their own portals and online syndication deals, but these are unlikely to deliver significant revenue; Marquee – the BBC’s proposition to open up iPlayer to other PSB broadcasters – could help, with the advantage of being very low cost

Vodafone’s December quarter KPIs showed only slightly worse underlying European revenue growth compared to last quarter, with another plummet in growth in Spain moderated by improving figures in Germany

In the context of GDP growth across its markets being considerably worse, this is a relatively good performance, with its market share loss likely to prove less severe than last quarter

However, its growth is still very substantially worse than earlier in the year, even compared to GDP, and with GDP declines set to worsen through 2009, and termination rate cuts to bite again in the second half of 2009, growth is likely to decline further

This presentation on Next Generation Access in Sweden is the fourth of our reports on NGA in the Continent, after France, The Netherlands and Germany

Announced in March 2008, incumbent TeliaSonera plans to supply between 1.5 and 2 million FTTH or FTTB+VDSL connections to offer very high speed broadband access and HDTV in multiroom via its ISP brand. In our view, Telia’s strategic rationale on NGA, in the context of declining fixed line revenues, is mainly to develop the IPTV proposition to better counter the competitive challenge of cable operator ComHem, the country’s leading TV provider, on broadband and telephony

Telia also hopes to undermine the proliferation of small scale local open access FTTx networks, which allow competitor ISPs to bypass Telia’s wholesale last-mile access products. Such local networks, together with FTTx operator Bredbandsbolaget (B2), have given Sweden the largest number of FTTx connections in Europe, about one in five residential connections

On next generation access, the interim Digital Britain report has little new to say, but leaves the door open to using public money to help implement it. We think the chance of this happening as part of a ‘deal’ with fixed network operators has increased

On mobile spectrum, the report instructs the mobile operators to agree between themselves a solution to the most contentious issue, 2G spectrum redistribution, or face a solution being imposed. We doubt they will agree, leaving the government to decide and enforce a way forward

On universal broadband, the government is aiming for a 2 Mbit/s commitment. It is early days, but we expect a hybrid wireline/wireless solution, paid for by a combination of government funding, and/or a levy on industry players based on share of industry revenue, which we expect will be fiercely resisted

Strong Q2 results announced on Wednesday 28th January 2009 provided no evidence of negative impact so far due to the current recession

Sky+ HD looks set to provide a major growth opportunity, especially with the Sky+ HD box prices now dropping to £49. That and another record quarter for Sky+ take-up strengthens the view that Sky will meet its target of 10 million pay-TV subscribers by the end of 2010 with room to spare

Fixed line results again displayed relatively strong subscriber growth in an increasingly difficult market, but the operating loss excluding Easynet continued to deepen. Original standalone IRR guidance for fixed line looks unlikely to be met without further price increases