Broadband Benchmark Update
Q3: July - September 2005
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Executive Summary
This report is the third in a series of
broadband benchmark reports produced for the Welsh Assembly
Government's Broadband Wales Unit. This edition covers the
broadband market in Wales, the UK and the rest of the world; with
data based - where available - on the state-of-play up to the end
of September 2005.
Figures published by Point Topic place the UK
in 9th position in Europe in terms of broadband
penetration per head of population; with a take-up of 13.7% (i.e.
there are nearly 14 broadband connections per 100
inhabitants). The UK's relative ranking in terms of broadband
take-up has not changed since Q1 2005. However, for the first time,
UK take-up as a percentage of the population has overtaken
the USA. The top 16 countries in the world in terms of
broadband take-up each have ten or more broadband connections per
hundred inhabitants with the top five having take-up figures of
over 20%.
Recent forecasts from Forrester Research
predict that take-up of residential broadband will reach 42% of all
UK households by 2010. A rough estimate from current take-up
figures indicates 32% of UK households have a broadband
connection. Having grown by 7% since December 2004, it would
appear that take-up in the UK could achieve the required 2% annual
growth required to achieve this forecast. By comparison, the
Netherlands leads the Europe in terms of take-up with 50.4%
households having a broadband connection in June 2005 whilst South
Korean growth is slowing as the market approaches saturation levels
at 81%. Of course, the UK has a long way to go to match the
penetration levels and access speeds of South Korea and has yet to
achieve the social inclusion and economic benefits that such levels
are expected to deliver.
The dominant broadband technology continues to
be DSL, which has grown by 18.2% since Q4 2004 compared to
cable-modems growing by 12% over the same period. Point Topic
Q2 figures show DSL accounts for 65% of the world broadband lines
compared to 35% held by cable modem and other
technologies.
In September, as a result of the Ofcom
regulatory settlement, BT unveiled Openreach – the organisation
established to take responsibility for the nationwide local BT
network from January 2006 (excluding Northern Ireland). This
new organisational structure is intended to ensure that all service
providers have transparent and equal access to the "first mile" of
the local BT network. The network covers 30 million customer
lines from approximately 6,000 local exchanges. This change
has yet to make an impact on the UK market; although developments
will be monitored and referenced in future updates.
Competition to provide higher connection
speeds in the UK has increased; with BT announcing plans to extend
its 8Mbps "Max" service offering in preparation for commercial
roll-out across the UK next spring. Following successful
trials in London and Strathclyde, 53 exchanges will be upgraded
including four in South Glamorgan (Llandaff, Llanishen, Radyr, and
Rhoose). This is likely to increase the speed of services
offered by BT and BT resellers, which should widen availability of
these higher bandwidth services. BT is expected to announce
plans for further trials of ADSL2+ and VDSL in 2006.
Prior to their merger with NTL, Telewest
increased download speeds to 10Mbps and upload speeds to 384kbps to
40,000 customers as part of its planned service upgrade with all
customers in Scotland expected to be upgraded by the end of
October. The rest of the UK Telewest network is scheduled to
be upgraded by early 2006, and the company has also announced its
intention to boost speeds to up to 100Mbps in the London area by
2007. NTL had previously announced (in August 2005) plans to
make 10Mbps broadband services available to all their 1.5 million
broadband customers by the end of 2006, starting with those
customers using the 3Mbps service. The Broadband Wales
Observatory (BBWO), therefore estimates that 25% of UK households
and businesses will be able to receive 10Mbps broadband by the end
of 2006. Telewest does not offer services in Wales and it is
unclear at this stage how the business strategies of the two
companies will be affected.
Swedish ISP Be has launched its ADSL2+ service
in London offering 24Mbps download speeds and UKOnline has
announced plans to launch an ADSL2+ 24Mbps service in October
2005. In addition, following the successful completion of an
8Mbps trial, Pipex have also announced their intention to
participate in LLU in early 2006, also offering speeds of up to
24Mbps.
However, with only Bulldog currently
participating in LLU in Wales, coverage of higher bandwidth ADSL
services (up to 8Mbps) is estimated to be 12% of all households and
businesses. This compares to an estimated 34% of all households and
businesses across the UK as a whole being able to access higher
bandwidth ADSL services from one of the multiple LLU service
providers active in the marketplace.
By the end of Q3 2005, no plans had been
announced by potential broadband providers to 'unbundle' any
additional exchanges in Wales.
The convergence of IPTV and broadband has
moved a step closer with BTs announcement in September that they
will roll out IPTV in 'late summer 2006'. They have developed
a new set-top box with Phillips. Growth in availability will
be monitored in future reports.
Details of the South of Scotland Broadband
Pathfinder Project to provide schools, libraries and council
offices with 8Mbps broadband services have been published in the
Official Journal of the European Union. The £27million project to
subsidise set-up costs is public sector funded and backed by
Dumfries
and Galloway Council and Scottish Borders
Council with contracts expected to be awarded by mid 2006 and
network running in targeted locations in two years
time.
BBWO estimates availability of first
generation broadband services (512kbps to 2Mbps) in Wales to be on
a par with that for the UK as a whole. However, in terms of higher
bandwidth services (over 2Mbps) Wales is lagging
behind.
Further analysis on the distribution of higher
bandwidth services within Wales indicates that higher bandwidth
services (up to 3Mbps) are only available to 25% of the sites
within the South Wales cable franchise area and even high bandwidth
services (up to 8Mbps) are only available in the exchange areas
within Cardiff and Wrexham (representing 12% of all sites in Wales)
that the Local Loop Unbundler (LLU), Bulldog, has chosen to
'unbundle'.
Figure 1: Availability Of Broadband
By Supplier In Each LA Within Wales, September 2005,
BBWO
Figure 1 shows BBWO estimates of
broadband coverage by supplier and technology type in each Local
Authority area in Wales. Comparisons made in the Q1 2005
benchmarking report between take-up and availability showed that
where end-users had a choice of cable modem and xDSL broadband
services, broadband take-up overall was higher.
Once new data becomes available, it will be
interesting to see how much impact the addition of higher bandwidth
services and enablement of SDSL exchanges have made on take-up in
Wales compared with the UK as a whole.
DSL Broadband Coverage
ADSL Broadband (Asymmetric)
Analysis carried out by BBWO indicates
that approximately 99% of sites in Wales are able to access DSL
broadband. This places Wales DSL broadband coverage for first
generation services on a par with the UK average (also 99%).
ADSL (512kbps) Broadband in each LA area of Wales
BBWO analysis of broadband availability by
household in Wales at the Local Authority level highlights that the
35 exchanges deemed commercially unviable by BT, Powys, Gwynedd and
Pembrokeshire continue to have the highest percentage of households
unable to access DSL broadband services.
Exchanges Deemed Commercially Unviable by BT
The Broadband Brokerage Scheme has been
developed in partnership with the Broadband Wales Programme to
measure and register demand for broadband in Wales. The Scheme is
targeted specifically at end-users that either can't access a
broadband service or require a faster service than is currently
available to them.
Broadband Brokerage Scheme figures indicate
that over 85% of registrations to the Scheme in both August and
September came from registrants from local authority areas
containing exchanges which have been deemed commercially unviable
by BT. In both months nearly a quarter of registrations (23%)
came from Powys, the Local Authority with the greatest number of
these "unviable" exchanges.
The information gathered through the Scheme to
date has been collated to inform Welsh Assembly Government
negotiations with potential broadband providers in relation to the
Regional Innovative Broadband Support (RIBS) project.
BBWO estimates indicate that 21% of sites in
Wales are currently able to access SDSL services. The UK
average is estimated to be 42% of sites, with only Scotland having
lower SDSL availability than Wales at 17%. Following BT
Wholesale announcing the halt of the SDSL exchange programme in
September due to lack of end-user demand, Neath exchange in Neath
Port Talbot (SWNM) was the last exchange in Wales to be upgraded
leaving Wales with nineteen SDSL-enabled exchanges.
Availability of Local Loop Unbundled (LLU) Broadband
Bulldog remains the only LLU company to have
rolled out ADSL broadband services in Wales. BBWO estimates that
Bulldog offers broadband services, of up to 8Mbps, to nearly 12% of
all sites in Wales i.e. to sites located within 'unbundled'
exchange areas in Cardiff and Wrexham.
BBWO estimates indicate that 25% of sites are
able to access cable modem broadband services. Standard cable
broadband offerings in Wales (from NTL) include up to 3Mbps
services, whilst those opting for the triple-play service residing
within the cable network can obtain broadband speeds of up to
2Mbps.
Satellite and Wireless Broadband Coverage
No new data on satellite and wireless
broadband coverage available for Wales.
Coverage in UK
BBWO estimates that availability of 512kbps
broadband is similar throughout the UK. However analysis of the
market indicates that availability of symmetrical and higher
bandwidth services (up to 24Mbps) are more widely available in
England than elsewhere in the UK.
Figure 2: Availability Of Broadband
Services By Percentage Of Sites September 2005,
BBWO
Whilst figure 2 provides an estimate of
coverage of the broadband technologies available in the UK, it
should be noted that there will be some overlap in coverage as more
than one technology can be available (e.g. areas where there is a
choice of broadband services such as cable and ADSL).
Similarly, there are cases where services are not available to all
sites within a postcode area, so these estimates should be treated
as such.
ADSL Broadband (Asymmetric)
BT Wholesale state that broadband is available
at exchanges serving more than 99% of all UK homes and businesses,
and that more than 99.8% of end users connected to an enabled
exchange can receive broadband services, The current BT
DSL coverage target for the UK is 99.6% by the end of 2005.
With the extension of BT "Max" to a further 53
exchanges in the UK including Greater London, Cornwall,
Strathclyde, Northern Ireland and South Glamorgan higher speed
services will be available to 50,000 customers in November 2005,
increasing to a possible 150,000 customers if the commercial trial
is successful and additional exchanges are enabled. With the
highest distribution of exchanges in the programme being located in
London and Strathclyde (only 4 exchanges in the scheme are in
Wales, and one in Cornwall) this may not equalise the distribution
of higher bandwidth services throughout the UK in the short term,
but could see new entrants into the LLU market in these regions,
and increased activity by BT resellers, as well as the introduction
of higher bandwidth applications. Providing commercial trials
are successful, BT intends to roll out 8Mbps services throughout
the UK in Spring 2006 (i.e. all ADSL enabled exchanges will be
capable of providing an 8Mbps service from that time)
SDSL Broadband (Symmetric)
BT Wholesale "paused" their SDSL roll out
programme in September 2005 with 801 exchanges (out of the
5,591exchanges) enabled in the UK.
Figure 3: UK SDSL Coverage,
September 2005, BBWO
Availability of Local Loop Unbundled (LLU)
Broadband
Figures from the Office of the Telecoms
Adjudicator (OTA) for indicate that the number of unbundled lines
in September 2005 was in excess of 123,000 (approximately 1.3% of
the total number of lines) with the current run rate of lines
provisioned being in excess of 4000 per week. The OTA
highlights continued concerns with deterioration in service
delivery which is currently being addressed by BT.
|
Country
|
Domestic LLU
availability
|
LLU Operators
|
|
England
|
37%
|
Bulldog, Easynet, HomeChoice, Node4,
Trilogy
|
|
Northern Ireland
|
0%
|
None
|
|
Scotland
|
29%
|
Bulldog, Easynet
|
|
Wales
|
11%
|
Bulldog
|
|
Total
|
34%
|
|
Table 1: UK LLU Coverage, September
2005, BBWO
BBWO estimates that LLU services are available
to 34% of UK households. These service providers offer
download speeds of up to 8Mbps and upload speeds of around
400kbps. Availability of LLU services is lower in Wales than
for England and Scotland where multiple operators are
operating. Bulldog, Easynet and HomeChoice have the greatest
overall coverage.
ADSL2+
The first commercial launch of a 24Mbps ADSL2+
service was made during Q3, by Be, and is expected to be followed
shortly by similar offerings from UKOnline and Pipex. At
present the full speed (24Mbps) services are only available to
subscribers located within 2km of the unbundled exchanges.
Estimates by Analysys Research indicate that ADSL2+ technology
could deliver 15Mbps services to 50% of lines in the UK.
Following the merger of NTL and Telewest in
October 2005, the company claims their combined fibre network of
the company will reach within 500m of more than 50% of UK
households. Ofcom figures for June 2005 indicate that 48% of
homes are passed by broadband enabled cable, which amounts to
approximately 11.5 million households The new company claims
to have nearly 5 million residential customers, comprising of 2.5
million broadband customers, 3.3 million cable TV subscribers and
4.3 million fixed telephony customers.
Satellite broadband services are available to
over 99% of sites in the UK.
Wireless Broadband Coverage
Ofcom indicate that wireless broadband
services are currently available to 13% of UK households.
Both UKBroadband (Now) and Telabria have announced plans to
increase their network coverage and subscription bases. UK
Broadband has changed the name of their brand from Netvigator to
Now, and has increased coverage within the Thames Valley into areas
of London, whilst Telabria has announced increased speeds (of up to
10Mbps) and expanded coverage to more than, 50% of Kent's 1.5
million residents and 60,000 businesses. Their initial roll out is
to include Canterbury and the borough of Swale, with additional
areas planned throughout 2005 and 2006
There is limited information on the
availability of various broadband technologies on a country by
country basis as the focus tends to be on take-up
figures. This section will be updated as new data becomes
available.
Analysis carried out by Point Topic indicates
that in the first half of 2005 UK broadband prices stabilised;
having fallen steadily for the last two to three years. Point Topic
suggests that the stabilisation of prices could be a sign that the
UK broadband market is reaching maturity, with key players offering
added-value services such as speed and other features (e.g. IPTV,
VoD etc.) rather than price to reach new and existing
customers.
Alternatively, the stabilisation of broadband
prices may reflect a period of consolidation; with the largest
broadband providers focused on retaining their customer-base
through the delivery of higher bandwidths at no extra cost to the
customer. Such tactics are aligned with the much anticipated
changes in the market place - where increased competition and
choice come to fore.
The UK is already one of the fastest growing
broadband markets in the OECD with a growth rate of over 30% since
Q4 2004, yet the market still has some way to go to reach European
leader, The Netherlands, in terms of take-up as percentage of
population. Consequently, as the increased range of product
offerings such as triple-play and VOIP become more widely
available, it is anticipated that the aggressive competition will
drive down prices in the future. For example, Be has already
announced up to 24Mbps ADSL2+ broadband services at £24/month and
UK Online has announced prices of around £30/month for similar
services.
The UK market continues to be dominated by the
top 6 ISPs in terms of "active" subscriptions: AOL, Wanadoo and
Tiscali have all seen an increase in market share since Q4 2004 at
the expense of rivals BT and NTL/Telewest. All ISPs have
experienced a growth in subscriptions, and much of the growth can
be attributed to widespread and high profile advertising
campaigns.
Figure4: ISP Market Share, Q2 2005,
Point Topic
Figure 5: Broadband Affordability -
Price / Technology Platform, September 2005,
BBWO
A price comparison of typical ISPs illustrates
the increased bandwidth on offer. DSL and cable modem
broadband service speeds currently start at 1Mbps - an increase
from the 512kbps service that was more generally offered in Q1
2005. Prices for speeds up to 2Mbps have remained broadly
constant with higher speeds (over 2Mbps) available (at higher
cost). The third quarter of 2005 has also witnessed the arrival of
24Mbps ADSL2+ services to niche geographical areas at extremely
competitive prices.
Figure 6: Broadband
Affordability, Price / Bandwidth, September 2005,
BBWO
It should be noted that the prices quoted for
UK Online are those that apply to customers in Wales – where
Easynet LLU is not available. Where UK Online can offer
customers broadband services using Easynet's unbundled network,
prices are substantially reduced, with their Broadband 500 (1Mbps)
service costing £9.99 per month (compared to £19.99 per month) and
Broadband 2000 (2Mbps) service costing £14.99 per month (compared
to £24.99 per month). This highlights the potential for a new
'digital divide' to emerge; where areas with low population density
are not seen as a lucrative proposition to local loop unbundlers
and, as a result, end-users are unable to access the most
innovative products and services at the most competitive
prices.
Penetration
In September 2005, 21.6% of homes and
businesses in Wales able to access an ADSL enabled exchange had a
broadband connection (i.e. in September there were 300,000 ADSL
broadband users in Wales). This compares to a UK average of
23.1% of homes and businesses (i.e. 23.1% of those able to access
an ADSL enabled exchange had a broadband connection in September).
This represents a continued increase in take-up of xDSL
services in Wales, but the gap between take-up of these services in
the UK and Wales has increased from 1.2% to 1.5% in Q3 compared to
Q2. These figures do not take into account those
accessing LLU services from Bulldog, details of which are not
currently available; however, with existing coverage at 11% of the
population, the impact of LLU is not likely to be significant at
this stage.
|
|
UK
|
WALES
|
|
|
ADSL broadband connections
|
ADSL broadband connections
|
Percent of households and businesses [1] |
|
|
Dec 04
|
4m
|
|
14.9%
|
6.9%
|
|
Mar 05
|
5m
|
|
17.5%
|
8.2%
|
|
Jun 05
|
5.6m
|
250,0003
|
17.9%
|
8.3%
|
|
Sept 05
|
Not available
|
302,0004
|
21.6%
|
10.1%
|
Table 2 ADSL broadband penetration
in Wales
Cable broadband
Ofcom figures for UK cable broadband take-up
have remained fairly stable since December 2004, at between 2.1 and
2.3 million connections to June 2005. From these figures the
BBWO estimates that take-up in cable broadband in Wales has also
remained stable at approximately 115,000 connections.
Figures released by Point Topic indicate that
the UK ranks 13th out of the top 16 broadband countries
for broadband take-up, with 13.71% of the population having a
broadband connection. From this figure it can be estimated
that approximately 32% of UK households had a broadband internet
connection in June 2005.
Figure7: Broadband Technologies In
"Top Ten" Broadband Countries Q2 2005, Point
Topic
Figure 7 places the UK in 6th
position in the world in terms of the total number of broadband
lines, reflecting the continued high growth over Q2. Indeed,
the UK has overtaken Germany during Q2 in terms of the number of
broadband lines, and some analysts anticipate that the UK will
overtake France before the end of 2005.
Figure 8: Subscriptions For Dial-Up
And Broadband Internet Connections, September 2005,
ONS
Figures from The Office of National Statistics
(ONS) show that the penetration of broadband has continued to
increase since the last report (Q2 2005); with broadband accounting
for more than 50% of all internet connections since May 2005.
Ofcom figures indicate that the UK had 8,095,000 broadband
subscribers in June 2005.
Figure
9: UK
Broadband Service Providers Market Share, Q2 2005, Analysys
Research
Market share statistics for June 2005 concur
with the figures provided by Ofcom in the August 2005
Communications Market Quarterly Update, and also provide an
indication of the division of market share held by the cable modem
companies Telewest and NTL prior to their merger (10.71% and 17.61%
respectively).
Figure 10: Incumbent Operator's
(BT) Share Of The UK DSL Market 2002-5, Analysys
Research
The latest figures available show that BT
Wholesale hold 70.3% of the broadband market with BT Retail
retaining a 34% xDSL market share in the UK; which is low when
compared against the market share held by the incumbent operators
in the rest of Europe. Other European markets with relatively low
incumbent share include Greece at 43%; Germany at 43%; and France
at 46.9%.
Figure 11: Incumbent Share Of
Retail DSL Broadband Market Q2 2002 - Q2 2005, Analysys
Research
BT Wholesale indicates that in September,
23.1% of UK homes and businesses able to access an ADSL enabled
exchange had a broadband connection in September. This
equates to approximately 6 million ADSL broadband connections (an
increase of 7% on the June figure released by Ofcom of 5.6 million
connections).
Figures from Point Topic indicate that since
Q4 2004, UK cable operators NTL and Telewest have added over
318,000 lines between them. NTL and Telewest combined with
satellite, wireless, fibre and other broadband technologies now
hold a 28.5% broadband market share. Figures published by NTL
and Telewest within their merger statement indicate that in
September, between them, they served nearly 5 million customers,
2.5 million of which being broadband customers.
Market share figures for wireless and
satellite broadband vary between 0.05% and 0.1%. Differences
can be accounted for by different data collection methodologies,
however, the low figure indicates that while there is potential for
growth for these technologies, it is unlikely they will become
dominant in the future. Ofcom figures from June 2005 indicate
there are 9000 satellite and wireless connections in the UK,
showing no change since June 2004.
Penetration of Broadband in the rest of the
World
Figure 12: Broadband Total
Penetration As A Percentage Of Population, Q2 2005,
OECD
There is a small difference in the statistics
provided by the key analyst firms and the OECD, with the OECD
continuing to place the UK behind the USA whilst Point Topic
figures place the UK ahead in terms of penetration as a percentage
of population. These variations are caused by differences in
methodology for data collection and a comparison of figures
released for the UK in Q2 shows a variation of approximately 0.7%,
with Analysys Research indicating UK take up as 13.3% compared to
Point Topic 13.7% and the OECD 13.5%. This small percentage
difference indicates how close broadband take-up as a percentage of
population is between certain OECD countries and their relative
position in any league tables.
|
OECD Country
|
DSL
|
Cable
|
Other
|
Total
|
|
Korea
|
13.9
|
8.9
|
2.7
|
25.5
|
|
Netherlands
|
13.6
|
8.9
|
0.0
|
22.5
|
|
Denmark
|
13.2
|
6.1
|
2.4
|
21.8
|
|
Iceland
|
21.0
|
0.3
|
0.4
|
21.7
|
|
Switzerland
|
12.7
|
7.2
|
0.4
|
20.3
|
|
Canada
|
9.4
|
9.7
|
0.1
|
19.2
|
|
Finland
|
16.3
|
2.2
|
0.2
|
18.7
|
|
Belgium
|
11.0
|
7.3
|
0.0
|
18.2
|
|
Norway
|
14.8
|
2.5
|
0.9
|
18.2
|
|
Sweden
|
11.3
|
2.7
|
2.5
|
16.5
|
|
Japan
|
11.0
|
2.4
|
3.0
|
16.4
|
|
United States
|
5.5
|
8.0
|
1.1
|
14.5
|
|
United Kingdom
|
9.7
|
3.8
|
0.0
|
13.5
|
|
France
|
11.9
|
0.8
|
0.0
|
12.8
|
|
Austria
|
7.0
|
5.4
|
0.1
|
12.5
|
|
Luxembourg
|
10.4
|
1.3
|
0.0
|
11.8
|
|
Australia
|
8.5
|
2.4
|
0.1
|
10.9
|
|
Germany
|
9.9
|
0.3
|
0.1
|
10.2
|
|
Italy
|
9.4
|
0.0
|
0.6
|
10.0
|
|
Portugal
|
5.1
|
4.7
|
0.0
|
9.9
|
|
Spain
|
7.0
|
2.2
|
0.1
|
9.3
|
|
New Zealand
|
6.4
|
0.3
|
0.3
|
6.9
|
|
Hungary
|
2.9
|
1.6
|
0.1
|
4.6
|
|
Ireland
|
3.5
|
0.4
|
0.5
|
4.3
|
|
Poland
|
2.5
|
0.7
|
0.1
|
3.3
|
|
CzechRepublic
|
1.8
|
1.0
|
0.0
|
2.8
|
|
SlovakRepublic
|
1.2
|
0.3
|
0.1
|
1.6
|
|
Turkey
|
1.1
|
0.0
|
0.0
|
1.2
|
|
Mexico
|
0.8
|
0.2
|
0.0
|
1.0
|
|
Greece
|
0.8
|
0.0
|
0.0
|
0.8
|
|
OECD Total
|
7.2
|
3.8
|
0.8
|
11.8
|
Table 3: Total Broadband
Penetration As A Percentage Of Population, Q2 2005,
OECD
These findings show world broadband
penetration has increased by a total of 15% over the combined
period of Q1 and Q2 2005 with Finland, Netherlands, Norway, Iceland
and the UK showing the highest rate of growth.
Figure 13:Total Broadband
Penetration By Population, Q2 2005, Point Topic And DSL
Forum
In the top 16 countries in the world with over
one million connections, at least one in ten of the population have
a broadband connection. Over one in ten of the population has
a broadband connection in nineteen out of the thirty OECD
countries, and thirteen of the top sixteen Western European
countries have over 10 percent broadband penetration.
Figure 14: European Broadband
Take-Up (Percent Of Population), Q2 2005, Point
Topic
In terms of take-up by household, South Korea
remains world leader at 87.1% of all households having a broadband
connection, the highest Western European country is the Netherlands
with 50.4% of all households having a broadband connection.
The UK does not feature within the top ten ranking with
only 32% of all households currently having a broadband
connection.
|
Rank
|
Current status
(Q2 2005)
|
Previous status
Q4 2004
|
|
1
|
South Korea (81.7%)
|
South Korea
|
|
2
|
Hong Kong
|
Hong Kong
|
|
3
|
Israel
|
Taiwan
|
|
4
|
Taiwan
|
Israel
|
|
5
|
Singapore
|
Singapore
|
|
6
|
Canada
|
Canada
|
|
7
|
Netherlands
|
Netherlands
|
|
8
|
Switzerland
|
Denmark
|
|
9
|
Denmark
|
Switzerland
|
|
10
|
Japan
|
Japan
|
Table 4: Change in ranking of top ten
countries by household penetration Q2 2005, Point
Topic
The UK is in tenth place in the OECD countries
in terms of cable modem penetration, the same position as in Q4
2004. Point Topic indicates that the UK has 2.3 million cable modem
lines, and has gained on Canada in ninth place with 3.2 million
lines. Whilst Canada has experienced growth in cable
penetration, the UK growth has exceeded that of Canada to close the
gap.
Figure 15: European Broadband
Market By Technology Type, Q2 2005, Analysys
Research
OECD and Point Topic figures concur that DSL
is continuing to grow at a faster rate than cable modems - even in
the USA and Canada where cable is the dominant broadband
technology. In June 2005, DSL accounted for 65% of world market
share and cable modems and other technologies accounted for the
remaining 35% share (other technologies include wireless and
satellite and have a market share of below 1%).
Figure 16: Broadband Penetration
(Per Head Of Population), Q2 2005, Analysys
Research
The Netherlands maintains first place in the
EU16 rankings in terms of broadband penetration per head of
population during Q3 2005. There is no change in the rankings
since Q2 2005.
Figure 17: Broadband Growth Q2
Compared To Q1, Q2 2005, Analysys Research
Greece continues to show significant growth in
DSL and wireless broadband penetration experiencing growth of 50%
since Q1 2005.
In contrast, Norway shows a significant
decline in the rate of growth of both cable and Ethernet broadband
access since Q1 2005. Point Topic suggests that this slow down in
growth is due to the near saturation of markets in countries with
established broadband. However, according to OECD figures, Norway
was one of the broadband leaders in terms of overall growth over
the first half of 2005 and remains in fourth position in the EU16
for broadband penetration per head. Norway has a highly competitive
broadband market with 115 broadband service providers.
Broadband Usage
According to the Small Business Service Annual
Survey of Small Businesses in Wales published in November 2005, the
proportion of Welsh business respondents stating that they do not
use computers and the internet was higher than that for the
UK. According to the survey, 58 per cent of all businesses in
Wales specify ways in which they use computers and the
internet. The UK-wide figure was 68% - leading to the
suggestion that Welsh businesses may be falling behind the rest of
the UK in terms of ICT adoption. Taking only businesses with
employees, 75% specify ways in which they use computers and the
internet compared to 81% for the UK as a whole.
The four typical ICT functions cited include
word-processing, accounting, record keeping and eMail.
It is disappointing that the survey did not
ask respondents about their use of broadband. However, the lack of
broadband was considered a barrier to the success of businesses for
a minority of survey respondents – although 6% of respondents cited
this as a barrier in Wales, compared to only 3% in the UK. [This
question was posed to those with and without ICT/Internet access].
To give an indication of the low numbers considering lack of
broadband to be a barrier to success, far greater numbers cited
regulations (41%) the economy (38%) and competition in the market
(36%).
According to the survey, nearly half of all
businesses (49%) said it would be helpful to be able to apply for
grants and claim grand payments via internet or eMail, with larger
businesses more likely to find this helpful (56% of micro
businesses, 65% of small businesses and 71% of medium-sized
businesses).
Of the 43% of Welsh businesses seeking advice,
only between 3 and 4 percent used the internet, library or
newspapers / press for general business advice; with the majority
preferring to approach their accountant, bank or business
colleagues.
The report is based on a telephone survey of a
sample of 1,000 businesses in Wales with between zero and 249
employees, as part of a UK wide survey of over 7,000
businesses. The fieldwork was carried out between Q4 2004 and
Q1 2005 and the sample weighted to be representative of small
businesses.
Another survey published this quarter showed
that business broadband take-up in the Republic of Ireland stood at
37% of organisations surveyed in May/June 2005. The findings from
IDC's annual business survey, IT Trends and Expenditure in Ireland,
suggest that penetration levels will cross the 50% mark within the
next year. The survey involved 301 IT executive interviews
from commercial and public sector organisations of all sizes and
across a range of industry sectors. Once new data is made available
for businesses in Wales and the UK, it will be interesting to
compare the findings with the results of this survey.
Applications and Drivers
IDC estimates that 6% of Western European
households will subscribe to IPTV services by 2009 with 30 telcos
and network operators - including BT - developing and offering IPTV
services. It is anticipated that the largest IPTV markets in
Europe in 2009 will be France, Italy and Spain, with strong growth
expected in Benelux and Nordic countries. The most successful
broadband operators are expected to differentiate product offerings
from those already available by providing high-quality content with
interactivity.
Ten million UK households currently have
access to movies on-demand from providers such as Sky and NTL /
Telewest, equating to 40% of UK households. Forecast figures
from Screen Digest indicate that by 2008, 60% of UK homes
(approximately 15 million households) will to be able to watch
on-demand television. Sky is expected to dominate the
on-demand market using existing technology, with only 6% market
share anticipated to be provided by IPTV. The
acquisition of Easynet by Sky, combined with the planned launch of
IPTV services by BT during 2006, and the continued expansion of
availability of higher bandwidth services required, reflects the
current interest in IPTV by key service providers in both telecoms
and broadcasting, and indicates that in the longer term, IPTV is
likely to become a standard broadband application in the
UK.
According to figures from the IFPI
(International Federation of the Phonographic Industry), music
download sales tripled to 6% of industry retail revenues between
January and June 2005.
Over the same period, there has been a decline
in sales of physical formats such as CDs by 1.9%, resulting in the
market for music downloads overtaking the value of the global
singles market. This increase is driven by the rising take-up
of broadband, 3G phones and portable MP3 players. Key markets
include US, Japan, UK, Germany and France.
|
Country
|
Change in physical format sales units
(e.g. CDs etc.)
|
Number of single track downloads
2005
|
Number of single track downloads
2004
|
|
UK
|
-1.7%
|
10m
|
1m
|
|
Germany
|
-7.7%
|
8.5m
|
1m
|
|
France
|
+7.5%
|
4m
|
1m
|
Table 5: Increase In Digital Music
Sales, Q1 to Q2 2005, IFPI
Industry analysts have given a cautious
response following the purchase by eBay of VOIP Voice over IP)
company Skype, suggesting that the returns may not be worth the
high purchase price. If there is not enough consumer interest, it
is unlikely that that eBay will be able to charge for the
service.
Forecasts from Analysys Research indicate that
the growth in the user base and the level of use is not growing as
rapidly as would be expected of an immature technology. However,
the potential to widen the current user base (eBay has 157 million
registered traders) could see it as a useful value-add application
for eBay.
Analysys Research also forecasts that, as a
result of strong broadband competition, VOIP will capture over 23%
of fixed voice minutes in France, Italy and Sweden by 2010.
However, in the UK - as a result of a market dominated by companies
with an interest in preserving traditional voice calls - the
penetration level for VOIP is expected to be just 9% by
2010,.
BT Wholesale has announced plans to run trials
to enable fibre to the cabinet (FTTC) or fibre to the kerb (FTTK)
in areas where there is limited broadband availability – amounting
to approximately 0.2% of BT customers. These technical and
commercial trials are planned for summer 2006 and involve placing
DSLAMs inside or adjacent to the street cabinet. The plans
announced to date do not include any exchanges in Wales.
BT Wholesale has also announced trials,
starting in December 2005, to use a similar technique to enable
areas unable to obtain ADSL broadband due to the installation of
fibre between the exchange and the cabinet. Findings from the
Broadband Brokerage Scheme show that a small minority of potential
end-users in Wales are currently affected by this issue. .
According to ADSLGuide, BT has been trialling
'blown fibre droptube' in Pembrokeshre to provide a private circuit
for a multi-media production company near Haverfordwest. The
process removes the requirement to strengthen telephone poles or
pay for trench work to bury the cable. They are planning to
extend the trial to other parts of the UK, which could potentially
lead to provision of VDSL to residential customers using existing
telegraph poles.
The UK is among the top five OECD countries in
terms of growth in broadband take-up since December 2004.
Whilst some market analysts speculate the slow-down in price
competition suggests the UK broadband market is reaching maturity,
it is clear that UK broadband penetration still has some way to go
to reach the levels achieved in the Netherlands where over 50% of
households (and 22.5% of the population) have a broadband internet
connection.
Similarly, the take-up figures released by BT
wholesale for September 2005 show take-up of xDSL broadband in
Wales to be lower than the average for the UK as a whole (i.e.
21.6% of the population in Wales; compared to 23.1% of the
population in the UK). The findings are of concern as they suggest
that take-up of broadband in Wales could fall behind - rather than
keep pace with – the rest of the UK. Further research is required
to better understand the unique characteristics of the market in
Wales and, if relevant, to identify the additional barriers to be
overcome if Wales is to achieve high broadband penetration levels.
Whilst availability of first generation
broadband services is now similar in Wales to the rest of the UK,
BBWO estimates that the availability of second-generation services
across Wales is some way behind the UK average. Developments
in the LLU market have seen England – particularly London and the
South East region - move ahead of the rest of the UK in terms of
availability of higher bandwidth services (up to 8Mbps). However if
the BT Wholesale "Max" trial proves to be a commercial success,
then the proposed roll out to all BT xDSL enabled exchanges may
provide an opportunity for ISPs to offer higher bandwidth services
(up to 8Mbps by Spring 2006) to the majority of sites located
across Wales.
Methodology
The Welsh Assembly Government has asked the
Broadband Wales Observatory to benchmark the broadband market using
the findings of the NOP and ORC research commissioned by the Welsh
Assembly Government's Broadband Wales Unit.
The data has been analysed and, where
possible, compared with data sourced from third party survey
findings to help benchmark the broadband market in Wales against
the broadband market in the UK, Europe and the rest of the
world.
Readers should be aware that the surveys
sourced have, in the main, used different sampling methodologies
and posed different questions. Equally fieldwork has been
undertaken during different time frames and a significant time
period has often elapsed before the survey data has been analysed
and the findings published. This leads to the creation of
inconsistent data sets that provide less than complete comparisons
between countries, regions or users.
Similarly, as there is no agreed definition of
broadband agreed within the UK or elsewhere in the World – the data
sourced from differing surveys is often based on conflicting
definitions of what is regarded as 'broadband'.
For example, survey findings may be based on a
definition of broadband as any connection over 128kbps (Ofcom
[5]); as
an 'always-on connection' (ONS); as defined by the broadband user
(subjective); and / or as defined by the broadband provider (e.g.
BT definition is 512kbps or above).
To make the benchmark exercise more relevant
to Wales, BBWO has, where possible, drawn comparisons based on
the clear definition of broadband as defined by the Welsh Assembly
Government in the Broadband Wales Programme Strategy Document 2005
to 2007:
Asymmetric speeds of 512kbps to 2Mbps
downstream (i.e. to the customer) and 256kbps to 512kbps upstream
(i.e. from the customer) are considered as first generation or mass
market broadband.
Bandwidth between 2Mbps and 10Mbps is deemed
to be second generation broadband. This includes asymmetrical
speeds between 2Mbps and 10Mbps downstream and 512kbps and 1Mbps
upstream as well as symmetrical speeds (where upstream and
downstream speeds are equal).
Very high speed broadband (10Mbps and over
symmetrical) is defined as fibre speed.
Equally, readers should be aware that whilst
BBWO has examined market data (connections sold in Wales), as
supplied to the Welsh Assembly Government by broadband providers
under non-disclosure agreements (NDA), such data is commercially
sensitive and has therefore been omitted from this report.
Supplier-based data that is already in the
public domain has been included where relevant. However, such data
tends to be made available on an ad hoc basis for publicity (PR)
purposes and, as a result, there is no commitment from any
broadband provider to provide BBWO with such details on a regular
basis.
There is also a degree of difficulty in
comparing competitive data, as suppliers package products, services
and solutions in different ways to offer unique selling
propositions (USP) targeted at specific groups of potential
broadband users.
Similarly, market data sourced will be based
on the 'fixed' broadband market such as xDSL, Cable modem, Fixed
Wireless Access (FWA), Wi-Fi Hot-spots and Satellite. BBWO is
therefore unable to provide market data to help track or benchmark
progress achieved in the emerging nomadic broadband market where 3G
and WiMax technologies are forecast to gain significant market
share from 2008 onwards.
In the same way, market data sourced will not
reflect the infrastructure issues faced by the various geographical
markets observed – although such issues are known to differ by
technology, country and application. For example, the data
benchmarked will not address any perceived or real issues that may
be related to contention, compression, line length, quality of
copper etc or the potential impact of inclement weather or regional
topology on service provision.
Finally, the data sourced from other
'non-commercial' third parties – in the UK, Europe, G7 or rest of
the World - is often made available on a 'one-off' basis.
Where there is a commitment to survey the
market on a regular basis, there is rarely an assurance as to when
future survey findings may be made freely
available.
Whilst BBWO aims to identify good data
sets (reliable, valid and repeatable), initial analysis has
confirmed the paucity of such data. This means that future
benchmark reports produced by BBWO may not include an update on all
of the data that is referenced in this document.
In summary, due to the methodology used to
prepare this report, readers are asked to note that comparisons
made by BBWO are, at best, indicative of what is happening in
the marketplace. As such any conclusions drawn will, by necessity,
be based on third party approximations and extrapolations and
should therefore be treated with a degree of caution.
As such, this benchmarking exercise should be
used as a helpful guide to the market as opposed to a definitive
report on the status of broadband per se.
This broadband benchmarking report highlights on-going
issues in terms of identifying research where the data for Wales is
comparable with data available for other countries and
regions.
Whilst some of the issues identified may be
overcome via primary research commissioned by the Welsh Assembly
Government during the life of the Broadband Wales Programme (BBW),
BBWO acknowledges that comparable data sets are unlikely to be
sourced via secondary research or supplied by broadband providers,
regulators, or other third parties.
Consequently,BBWO notes that a key requirement
of any primary research commissioned by BBW is that the survey
findings should provide a measure of the progress made against the
targets stated in the BBW Strategy for 2005-07. In particular, the
research findings should enableBBWO to benchmark Wales against the
UK nations and regions as well as other countries on a range of key
indicators.
As a minimum, to facilitate effective
benchmarking, BBWO concludes that any primary research
undertaken by BBW should use 'anchor questions' for comparison with
pre-identified questions used in third party surveys. In addition,
fieldwork should be undertaken during comparable time periods to
the fieldwork being undertaken by the third parties and comparable
sampling methodologies should be utilised.
Note:
BT figures are based on the number of
households and businesses that are able to access ADSL broadband at
that point of time; with the calculations based on the number of
customers rather than connections.
This methodology recognises that not all
customers have historically had access to DSL broadband. It also
recognises that a customer may require more than 1 ADSL connection
per location or site which, if counted separately, could lead to
confusion as penetration moves closer to 100% of the
customer-base.
However, market figures reported by the
regulator and other suppliers are based on the 'number of actual
broadband connections' rather than customers – which makes it
impossible for true comparisons to be made.
Note:
According to the DTI Small Business Service
(SBS) statistic for December 2004, there are estimated to be 4
million enterprises in the UK and, through re-weighting of previous
statistics, there are 190,000 in Wales, 280,000 in Scotland and
100,000 in Northern Ireland. The remaining 3.5 million are located
in England.
For each country and region, no more than 0.2
per cent of businesses are classified as large (employ over 250
people) and at least 98.9 per cent are small (employ between 0 and
49 people). Nevertheless, besides Northern Ireland, Wales has the
highest proportion of small businesses and the lowest proportion of
large businesses.
[1] Based on approximately 1.4 million households and
businesses in Wales.
[2] Based on Wales population of approximately 3
million.
[3] Source: BT Wholesale press releases from April and
July 2005.
[4] Source: BBWO estimate derived from Ofcom UK
figures. Assumptions: Wales population and hence penetration
approximately 5% of that for the rest of the UK.
[5] Ofcom was established in 2004. From 2005, Ofcom
intend to publish an annual Communications Market report in
October. This report will be supplemented by quarterly updates
published in October, January and August every year.