The purpose of this report is to look in more detail at the actual capital expenditures that 3G operators can be expected to make. We show that costs will be very much lower than expected. This is because most operators will be able to offer a good service to large numbers of customers by installing relatively few base stations. This is excellent news for operators, but infrastructure vendors such as Ericsson and Nokia will see much lower volumes of equipment orders than most analysts are projecting. The evidence for our conclusions is derived both from an analysis of actual 3G infrastructure orders and from an analysis of theoretical capacity.

We see European handset shipments down from 140-150 million in 2000 to 100 million in each of the next two years.

European mobile service revenue growth improved for a fourth consecutive quarter jumping 1.7ppts to -2.7%, the slowest rate of decline in over three years. Easing declines in France, Italy and Spain largely drove the improvement but a full recovery in these markets is still some way away given that all of their growth rates remain below -5%. The UK, and now Germany, are experiencing positive mobile service revenue growth although their improvements in the quarter were more modest

Three announced consolidation transactions have yet to be approved by the regulators although none of these deals are likely to offer much market repair, being either of the wrong kind of deal or being in markets that are growing. Consolidation targets remain in France, Italy and Spain which offer clearer routes to market recovery as seen in Germany where the consolidation of O2/E-Plus has already led to positive rhetoric on medium term market growth prospects

Network investment continues with 4G roll-outs at or over 70% population coverage in all markets and targets being accelerated, supporting long term optimism in the sector. Strong data traffic growth coupled with the growing importance of data to service revenue give a clear focus for operators on value-adding network quality investment, although the impact of pricing competition in some markets could weigh on the ability to capitalise on these trends in the medium term

Claire Enders set out the implications of a Yes vote in the Scottish independence referendum for the media available in Scotland. She critically examines the SNP's plans for a Scottish media, and argues that Scotland's small population would make an independent media hard to sustain. When the effect of a nationalist 'nation-building' project is factored in too, the overall results would be serious costs to the quality of democracy Scots enjoy.

In this presentation we show our analysis of trends in UK broadband and telephony for the quarter to March 2010, based on the published results of the major service providers. We include our own estimates where reported data is incomplete.

Highlights in the quarter included a bounce in quarterly broadband market net additions sufficient to pause the historical decline in year-on-year subscriber growth, continuing relatively strong broadband subscriber growth at the major ISPs, stabilisation in both the level of telephony market revenue and the rate of growth in unbundled lines, and the soft launch of highly competitive bundled offers by Tesco.