Carphone Warehouse has perhaps under performed in the fourth quarter only adding 109,000 customers rather than the expected 128,000 but the support material for the webcast presenting the fourth quarters trading statement includes a raft of useful information on what is happening in Talk Talk and AOL land.
The reason Talk Talk is able to offer such low pricing is revealed in the average usage figure for its customers, in June 2007 it was just 2.34GB rising to 2.95GB in December 2007. The rise in traffic has somewhat been controlled by the introduction of peak time traffic shaping which has lowered the March usage to 2.42GB (2.96GB average estimated if no shaping was used). Some 50% of the providers customers use under 1GB a month.
The traffic mix across the Carphone Warehouse has streaming occupying 27% of capacity with HTTP traffic forming the largest chunk at around 40%. The use of shaping has reduced the peak load due to P2P traffic from 25% down to 4%. To save some getting their calculator out, this all equates to a rise from 18Kbps in June 2006 to 21.9Kbps in March 2008 in the average peak usage per customer, a rise of 22% over the year.
Increasing usage is no surprise and estimates suggest we may see usage quadruple within four years as video over broadband becomes even more commonplace.
A program called the Network Unification Project is underway to vastly increase the amount of capacity Carphone Warehouse has. The main aim is to consolidate the various fibre connections around the country, and for those exchanges that have two or more 100Mbps backhaul circuits, the plan in 2008 is to upgrade 200 of these to use 1Gbps (1000Mbps) connections. The cost is estimated at £10k to install at each exchange with the same running costs as the existing network, so the growth in usage by customers is offset by cheaper backhaul.
Carphone Warehouse already has some 1619 exchanges offering fully unbundled services via Talk Talk and another 1011 offering shared LLU services via AOL Broadband. They have not finished adding exchanges, AOL Broadband will get another 200 exchanges added to its network, and Talk Talk will add 400 exchanges to its fully unbundled network. This expansion is thought to bring the LLU coverage to almost 90% of the UK population. The cost of this roll-out is estimated at £35 million.
Talk Talk has been unusual in its use of ADSL2+ as the modulation on its up to 8Mbps service, but it looks like ADSL2+ running at up to 24Mbps is on the way, they estimate 25% of the userbase will benefit from vastly increase speeds. It also seems that the shared infrastructure between AOL Broadband and Talk Talk will continue, particularly as there are plans to use fully unbundled services on AOL Broadband.
Of course no provider can talk much without mentioning the BBC iPlayer, and in the period December 2007 to March 2008 the company has seen streaming rise from 17% of peak usage to 27%, and Flash based streaming has increased from zero to 27% as a proportion of the streaming traffic. BBC iPlayer uses Flash for its streaming video; YouTube is measured independently and its share of streaming traffic has dropped from around 65% to 40%.