Over the past 18 months, UK telecoms regulator Ofcom has seized on LLU as a catalyst for change, forcing BT to cut its LLU prices by up to 70%, separate its access services division from the rest of the business and commit legally to improve provisioning processes. Now the race is on to exploit LLU before growth in demand for broadband tails off, the merged NTL/Telewest emerges from restructuring and BT launches new services based on its ADSL2+ local loop upgrade and later, its £10 billion ‘Twenty-First Century’ network initiative. Two of the three surviving LLU pioneers have been sold to major players and AOL, Wanadoo, CarphoneWarehouse and BSkyB have all announced plans to implement LLU.

Global Services is now established as the main engine of growth at BT

The company will take a significant cash hit in the early years of the project but CPW’s new-found scale in fixed telephony means the strategy is likely to succeed 

C&W UK has warned of a sharp drop in organic EBITDA for C&W UK in 2006/07

The main underlying culprit was churn; as we predicted, this has risen as the subscriber base matures, choking off subscriber growth and increasing costs 

H3G’s new UK prepay tariff ‘WePay’, launched this week, offers the appealing gimmick of paying customers to receive phone calls. Less appealing is the 32% outbound calling price rise accompanying this change, and the estimated net impact of a 10-20% price rise.

However, we do not share NTL management’s optimism concerning the power of the ‘quadruple play’ – to date triple play has proved attractive to less than one third of cable households

The UK’s first two trials of broadcast mobile TV, run by Arqiva/O2 and BT Movio/ Virgin Mobile, reported results in the last week. 3G-based mobile TV is already available in the UK, but its one-to-one nature severely limits the number of simultaneous users; for a mass market service, a broadcast network is required.

The arrival of 21CN, possibly in 2008, will see the launch of rate adaptive ADSL2+ services (up to 18Mbit/s) which should allow around 50% of customers to receive downstream data rates of 8Mbit/s

Vodafone announced last week a new extension to its range of music services that will offer European subscribers interactive mobile radio through a collaboration with Sony NetServices

More prominent profile of media in Free's mix of broadband, telephony and IPTV to improve customer retention and attract content owners to Free's broadband distribution channel, while VoIP remains the principal driver for non-access revenues

Egypt-based mobile operator Orascom’s investment in Hutchison Telecom creates an intriguing if convoluted link between the 3rd and 4th players in the Italian market, Wind and H3G

3G datacards slot into laptops to provide Internet connectivity when on the move. They make good use of the current patchy 3G networks: demand is likely to be concentrated in areas that are currently covered, while GPRS is a good back-up outside these areas and the ‘bursty’ nature of their usage does not put an unsustainable load on the 3G networks. However, they are far more expensive and much slower than fixed line broadband, and they are likely to remain so for the foreseeable future, leaving their appeal as a ‘last resort’ rather than a genuine alternative.

The resulting outlook for C&W UK’s performance in the short term is uncomfortable

Longer term, the strategy looks feasible, but better implemented under private ownership

Bulldog’s strategy is unchanged and remains dubious

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.