Ofcom anticipates opposing the use of core DTT spectrum for mobile broadband at WRC-15 in November in recognition of the importance of broadcasting

Assuming the aligned UK and wider European position prevails at WRC-15, DTT spectrum will be exclusive to broadcast until 2030, providing certainty for broadcasters and programme makers to enable ongoing investment in the platform

However, there will be continued pushback from the mobile network operators to expand the spectrum made available to mobile broadband earlier, and broadcast will need to remain as vibrant and competitive as it is today

Speculation has arisen about a possible acquisition by Sky of Mediaset Premium, the DTT competitor to Sky Italia. The unprofitable platform faces a 50% cost increase this summer due to the start of new football broadcast contracts

Getting rid of competition would allow Sky to raise prices, but also burden it with the new contracts. At best, if it kept the Premium subscribers on DTT to limit churn, Sky would have a small revenue upside

But the regulatory risk looks substantial, including mandated third-party access to the platform and wholesale of content. On balance, we believe that it would be better for Sky to let the situation play out

Customer movement between operators shows susceptibility to dynamism in branding; O2 are picking up the majority of EE churners as customers move to the new “cool brand” while EE pull in Vodafone churners tempted by the new “best network”. O2 have the lowest churn though the lion’s share move to Vodafone and H3G churners are more evenly picked up by the other three

Customer perceptions of own operator network quality are high among the big 3 with no less than 75% of customers reporting theirs is the best network. O2 is the best regarded while H3G is the least best regarded highlighting a stark contrast between the (prospective) merging parties

Consumers report little interest in quad play and indeed operators in the both fixed and mobile markets have publicly confirmed the same from other market research. However the arrival of converged players in the form of a merged BT/EE or Vodafone re-entering the fixed space will see operators seeking to change this

The posited deal merging H3G and O2 would create a new largest UK mobile operator with 40% market share, with massive synergy benefits available from cutting overlapping network and operations costs

Regulatory hurdles would be very significant, and the remedies required may well counteract the benefits of reduced network operator competition, as they will be designed to do

For Vodafone and EE, the impact will be mixed; a potentially aggressive competitor is removed, but their preferred positioning as being the best mobile networks is under threat

In marked contrast to its Q3 2014 results release, Netflix reported a strong Q4 with respect to paid subscriptions that was ahead of company guidance and consensus expectations

The positive news about subscriber numbers, which saw a sharp jump in share price immediately after the results, was heavily reinforced by Netflix’s announcement of its aim to expand its global base from 50 to 200 countries over the next two years and generate a material profit from 2017

As usual Netflix provided no international details other than to say that LatAm had passed the 5 million milestone in Q4. Elsewhere, BARB data suggest that Netflix passed the 4 million milestone in the UK, while it is still too early to assess the longer term potential of its September launches in France and Germany

Ofcom has decided to implement a fibre margin squeeze test on BT, starting in March, which will include the costs of BT Sport as part of the calculation

Ofcom has stated that on its preliminary figures, BT does currently pass the test, but given earlier statements we conclude that it does not have a lot of headroom

This will make it challenging for BT to absorb the extra costs for its Champions League rights hitting from July without breaching the test, and even harder to absorb an increased cost for Premier League rights, reducing its incentive to bid aggressively in the upcoming auction

For the second year running, 2014 has seen a steep year-on-year decline in total daily average viewing time, which fell by almost 5%, and was again, as in 2013, greatest among younger age demos, especially among children aged 4-15 where the decline reached double figures

Connectivity and the rapidly growing population of smartphones and tablets appear the main, though not the only, causes of a decline that appears general across the main PSB, PSB family and non-PSB channel groups. The decline nevertheless varies by channel genre, with the more youth oriented, such as Children and Music, feeling the connectivity squeeze the most

Whilst the great majority of non-PSB channels are only available on the pay-TV platforms, the DTT platform provides a significant audience and advertising contribution (ballpark estimate of £150-200 million per annum) to the relatively small group of leading free-to-air non-PSB channels, which are also less constrained in developing their online initiatives than the mixed advertising/subscription non-PSB channels on the pay-TV platforms

France’s Iliad will rekindle broadband subscriber recruitment with its Freebox V6 (router and TV set-top box), and extension of the triple play to include unmetered fixed-to-mobile calls

Freebox V6 is positioned as an innovative premium quasi-PC device including a 250GB PVR, a Blu-ray player, a game console and a web browser, re-establishing Iliad’s technology leadership

Iliad expects that V6 subscribers will be less profitable in the short term than in the medium term, but cumulative free cash flow guidance for the ADSL business remains unchanged for 2010-12

Since free DTT launched in 2005, Spain’s free-to-air broadcasters Telecinco and Antena3 have broadly managed to preserve audiences at group level. In 2010, they benefited from the rebound in advertising and from the withdrawal of public TV from airtime sales

By the end of 2010, Telecinco will close its acquisition of loss making competitor Cuatro. Telecinco will be able to realise some synergies, but we expect Cuatro's business model may require change to break even

Pay-TV operator Digital+ has lost 300,000 subscribers (15%) in two years, but prospects are mildly encouraging as a result of the end of the digital transition and the recession, a new three year football deal with competitor Gol TV and possible marketing initiatives by new minority shareholders Telefónica and Telecinco

With the completion of digital switchover still on track for mid 2012, stabilisation of the main digital broadcast platforms is expected, with roughly equal numbers of subscription pay-TV and free TV homes, though with marked differences between the platforms in terms of demographic composition and the proportion of pay-TV customers

Further marked differences exist between the satellite, cable and terrestrial platforms with regard to PVR adoption, notably higher in pay-TV households where distribution can benefit from box subsidies and greater product consistency. National PVR penetration of TV homes is expected to grow from slightly below 50% in 2010 to over 70% in 2015

As DSO nears completion, the stage is set for broadband connectivity. Although household penetration of internet-enabled TV devices is expected to exceed 50% by 2015, the emergence of hybrid broadcast and broadband services is expected to proceed much more slowly, limited by a number of factors – not least the ability of service providers to monetise their non-linear on demand offerings