Ofcom has this morning published its UK Communications Market Review 2008 report.
The report shows that whilst availability of DSL and cable broadband as a whole has remained fairly static from 2006 to 2007, 3G mobile broadband has increased in coverage from 70% to 90% (based on the proportion of the population living in postal districts where at least one of the mobile phone companies reports at least 75% 3G coverage). It also shows that availability of LLU has increased from 67% to 80% of households connected to an LLU-enabled exchange. Almost half of the LLU enabled exchanges had more than three providers offering services indicating that LLU rollout is primarily in the more populated exchanges and showing the need for the core services to be offered by BT in the more rural ones at the wholesale level.
According to Ofcom the average blended headline speed increased from 3.6 Mbps at the end of 2006 to 5.9Mbps at the end of March 2008. It is however somewhat questionable how much of this is reflected in true speeds received by end users. Previous information we have published gave an average throughput speed for the UK of 3238Kbps from over 6000 locations around the UK in June 2008. Once the overheads inherent in ADSL communication are accounted for this translates to a headline speed of around 3.7Mbps. Also, the proportion of homes taking broadband services increased from 52 to 58% by Q1/08. This is a slow-down in growth with previous years' growth being around 10%. LLU services however are still in stronger growth phases.
The report in general reports a slow-down in new fixed broadband users as the market is reaching closer to saturation, explaining the decision by many broadband service providers to switch marketing tactics from attracting new broadband users to targeting 'switchers' currently receiving service from competing providers. This means competition will be as fierce as ever. Also, the emergence of mobile broadband in 2008 is presenting a significant risk to the fixed broadband providers with 75% of those with access to mobile broadband using it at home. This option is particularly useful to those with very limited broadband requirements, especially if they travel a lot or use their broadband service from more than one location. We are confident however that over time, fixed broadband services will not as a whole be disadvantaged as the bandwidth requirements rise with increasing adoption of bandwidth-hungry services such as BBC's iPlayer, etc.
Bundling of services has remained at the 40% level since 2006 although Ofcom suggests more complex bundles are becoming increasingly popular with triple-play (telephone, broadband and television services) taking over from smaller 'double-play' bundles of telephone/broadband services.
These figures will be of concern to the small and medium sized providers as the trend towards bundling of communications and entertainment services is driving consumers toward more complex series of packages from larger operators able to deliver triple and quad play services, pushing smaller operators further into the niche markets.