---

 

 

Estimates calculated from operator figures indicate that broadband take-up has continued to grow in Wales over the quarter and that 44% of Welsh households had a broadband connection at the end of September 2006. This equates to 20.5 broadband connections per 100 inhabitants.

 

Availability of broadband services remains at over 99.5% of all households and continues to near 100%. LLU coverage has also continued to grow over the quarter, with a third LLU operator entering the Welsh broadband market and 23% of all households now connected to an unbundled exchange. However, despite this growth, LLU coverage in Wales remains lower than all other UK regions, except for Northern Ireland and, as such, infrastructure competition and the availability of higher-bandwidth ADSL2+ services remain lower in Wales than in the majority of UK regions.

 

More than three-quarters of all internet connections in the UK were accounted for by broadband at the end of September 2006, showing a continued trend for the substitution of dial-up connections with broadband.

 

The trend towards higher-bandwidths continued over the quarter particularly in the more advanced broadband nations. Fibre based broadband connections showed strong growth, particularly in North America and Asia Pacific, mainly at the expense of cable modem connections.

 

With the increasing use of higher-bandwidth services offered by ADSL Max and ADSL2+ within the UK, a number of bandwidth intensive applications and services are being brought to market, including a number of VoD and IPTV services. These bandwidth intensive applications and services are likely to create further demand for increased bandwidth. Evidence of this trend can be seen elsewhere in the world where fibre based connections are showing increased growth and have even surpassed cable subscriber numbers in the Asia Pacific region.

 

 

Coverage in Wales

 

 

 

The enablement of the RIBS exchanges has had little impact on the overall coverage of DSL in Wales. The increase was negligible because these exchanges serve very small populations. However, the RIBS programme has enabled DSL in rural areas which would otherwise need to rely on other sources for their broadband requirements and, as such, has reduced any 'digital divide' that exists between rural and urban areas of Wales.

 

The European Commission has received a complaint about the Regional Innovative Broadband Support (RIBS) project. The Welsh Assembly Government is working in partnership with BT to deliver the RIBS project which has been designed specifically to enable areas of Wales, described as broadband not-spots, to have access to first-generation (512kbps to 2Mbps downstream and 256kbps to 512kbps upstream) broadband services, at affordable prices comparable with urban areas of Wales.

 

Whilst the European Commission is considering whether to formally investigate the complaint, BT has decided that they will temporarily suspend engineering works associated with the enablement of broadband not-spots across Wales. BT will, however, continue with identifying solutions and planning work^[1] for any not-spots that are passed to them by the Welsh Assembly Government.

 

Engineering work will re-commence on enabling broadband not-spots as soon as possible. In the meantime, the Welsh Assembly Government will continue to gather information about customers who are unable to receive a broadband service in order to pass this information on to BT as soon as work is able to continue.

 

The allegations in the complaint are denied and the Welsh Assembly Government is co-operating fully with the Commission to bring this matter to a swift resolution.  

 

Residents in Wales who are still unable to receive a broadband connection even after their local telephone exchange has been enabled in the first stage of the scheme should register their details using the Broadband Wales Observatory Not-spot form, which can be found at www.bbwo.org.uk/not-spots or www.abec.org.uk/mannaugwael. Details provided in the forms will be used to locate the areas within Wales where broadband remains unavailable and, once identified, work can begin to enable broadband in these areas.

 

 

ADSL2+ services offering bandwidths of up to 16Mbps are available from a limited number of exchanges in Wales from some LLU operators, mainly in the Cardiff, Swansea, Newport and Wrexham areas. According to BT, its 21CN will deliver ADSL2+ based broadband services from January 2008. However, the 21CN deployment is not expected to be complete until 2011 which suggests that many households in Wales will not receive the benefits of the new network for some time. Furthermore, while 21CN will increase the coverage of higher-bandwidth broadband services in Wales, the speeds available to each household will depend on their individual local loop length and many households are unlikely to receive any increase in available bandwidth from the use of ADSL2+.  

 

BT's 21st Century Network (21CN) will be an end-to-end IP-based network and systems infrastructure that will ensure that the delivery of next generation converged services will be faster, more efficient and more cost-effective than over the current network.

 

According to BT, the 21st Century Network programme made significant progress during the quarter. The construction of 10% of the UK's core communications infrastructure is in place and fully operational. Site planning and preparation has been completed in all core and metro nodes in South Wales, and at a further 100 sites across the country. Within South Wales, nine new fibre rings, totalling 2,100 kilometres, have been installed. Cardiff and the surrounding area will be the first area in the UK to be connected when BT migrate around 350,000 residential end-user and business lines. The first migrations took place in Wick, near Cardiff, at the end of November 2006.

 

BT originally said the project would be carried out between 2004 and 2009, but the completion date has since slipped back to 2011 and any delays in 21CN is also likely to delay the rollout of ADSL2+.

 

Furthermore, a test facility in Swansea, where other communications providers can test their services, was opened on October 25, 2006.

 

Representatives from across the industry launched a single end-user communications programme, "Switched-On", in October 2006, to help consumers and single site small and medium-sized enterprises get a better understanding of what next generation networks are, and to provide a single source of detail and further information. The website can be accessed at www.switchedonuk.org/

 

There are currently no residential fibre based broadband services commercially available in Wales.

 

However, the Welsh Assembly Government's e-Wales unit launched a procurement contract for public sector broadband connections during August 2006. An OJEU notice was published, inviting tenders to supply high capacity links to sites across the country as part of the FibreSpeed - Open Access Networks for Wales initiative.

 

FibreSpeed is a key initiative within the Welsh Assembly Government's Broadband Wales Strategy 2005-2007 and, as well as addressing the objective of providing affordable 'fibre speed' broadband connectivity (a minimum of 10Mbps symmetric with multi-Gbps capability and greater as technology develops in the future) to business parks/locations in Wales, it will also meet the objective of ensuring that Wales has extensive access to competitive wholesale infrastructure.

 

The FibreSpeed network is an 'open access' network that will comprise both local access networks at the target locations, a backbone network interconnecting these locations to other telecoms networks and points of presence distributed across the network. FibreSpeed will make a range of wholesale products and services available to service providers on an open and equal basis.

 

While FibreSpeed will not directly determine retail pricing, wholesale prices will be set to enable key pricing objectives to be met. Prices will be benchmarked against the most competitive parts of the UK, namely London and the South East of England, and that for most products wholesale pricing will not vary by target location.

 

The project will initially deliver connectivity to 14 business parks in North Wales; with subsequent phases being developed to cover other parts of Wales, with an estimated 50 strategic sites in total throughout Wales.

 

Whilst businesses on strategic sites form the initial target sector, it is expected that FibreSpeed will in the future have the potential to support the requirements of citizens, communities and the public sector.

 

 

Despite the increasing number of unbundled exchanges, Wales remains as one of the poorest regions of the UK in terms of LLU coverage. According to Ofcom, 23% of Welsh households were connected to an LLU enabled exchange at the end of October 2006. Northern Ireland was the only region with lower coverage, at just 6% of households, whilst at the other end of the scale; London had a near 100% coverage.

 

Operator	Exchanges in UK	Exchanges in Wales
Enabled	Pending	Enabled	Pending
Carphone Warehouse	0	1303	0	61
Be	433	677	0	23
Easynet	738	0	15	0
Bulldog	626	0	9	0
Orange	305	0	12	0
Tiscali	250	0	4	0
Homechoice	145	0	0	0
Pipex	51	0	0	0
Edge Telecom	21	0	0	0
Lumison	5	0	0	0
Zen Internet	4	0	0	0
Node4	4	0	0	0
WB Internet	1	0	0	0

 

 

LLU coverage in Wales, as in many other parts of the UK, is likely to increase over the near future due to the roll-out plans of other LLU operators:

 

 

Cable modem Broadband Coverage

BBWO estimate that cable coverage in Wales has remained unchanged since Q1 2005. NTL, now the only cable operator in the UK after merging with Telewest, has a network capable of reaching within 500m of between 300,000 and 350,000 households in Wales.

 

Ovum figures suggest that around 25.1% of Welsh households are able to access broadband services via cable modem.

 

 

No figures for the overall coverage of Fixed Wireless Access broadband services are currently available for Wales.  However, FWA services are offered by a limited number of niche providers in Wales.

 

The Reynoldson Community Wireless Network is a community wireless scheme utilising 2.4GHz FWA products to supply broadband to about 40% of homes in the village of Reynoldston on the Gower Peninsula.

 

Broadband Wales utilises tower sites provided by TFL Group to facilitate FWA broadband and WiFi access. Supported sites include Llawhaden, Rhos, Botanical Gardens of Wales, Swansea Airport and areas of Pembrokeshire, Carmarthenshire and Ceridigion.

 

Gaia Technologies' 2.4GHz FWA network provides broadband to Rhosybol, Amlwch, Colwyn Bay, Old Colwyn, Rhos on Sea, Bodedern, Valley, Holyhead, Bethesda, Tregarth, Llanfairfechan, Rhiwlas, Menai Bridge, Llandegfa, Llandudno, Penysarn, Bangor and Upper Colwyn Bay. Their recently enabled 5.8GHz network covers a massive geographical area, extending the reach of their products. Gaia Technologies supplied wireless internet services for visitors and exhibitors at the 2006 National Eisteddfod.

 

The Digital Vale Project (Deudraeth Cyf) aims to deliver flat-rate, fast, always-on internet access to rural areas at an affordable price. Developed in partnership with Gaia Technologies Ltd, the project is initially targeting approx 1,500 homes in the Blaenau Ffestiniog, Maentwrog, Penrhyndeudraeth, Talsarnau, Harlech and Porthmadog areas.

 

A small FWA network is also operated in Lawrenny, Pembrokeshire. At this point, no further details are available.

 

 

BT announced in May 2006 that it would be covering the City of Cardiff with a Wi-Fi hotspot network. Cardiff will be one of 12 City centres covered by Wi-Fi as part of the Wireless Cities project. The project is due to be completed by March 2008.

 

Furthermore, TFL Group has announced plans to provide free Wi-Fi access in a number of locations in Pembrokeshire, including Milford Haven, Fishguard, Neyland, Pembroke Dock, St.Davids and Narberth. The service is due to launch in January 2007, with Milford Haven becoming the first area to receive an OpenAcess Wi-Fi Hotzone.

 

No new information was made available for 3G coverage over the quarter.

 

 

Satellite broadband services remain available to over 99% of all sites in Wales.

 

 

There have been no reported increases in the availability of SDSL services over the quarter and, as such, estimated coverage remains at just below 50% of UK households.

 

UKOnline, Bulldog, Be and Sky all offer ADSL2+ services over their unbundled networks. The availability of these services, which have a maximum download rate of 24Mbps, will increase in-line with the operators' respective LLU roll-outs, although the speeds available to each household will depend on their individual local loop length.

 

 

 

Satellite Broadband Coverage

 

Satellite broadband services remain available to over 99% of sites in the UK.

 

 

No further information was made available for fixed wireless access (FWA) services over the quarter. According to Ovum, FWA services were available to 11.2% of the population at the end of 2005.

 

 

No new information on international broadband coverage has been made available over the quarter.

 

According to figures from Analysys Consulting Limited, coverage of basic broadband services in Wales and the UK as a whole compares favourably against the world's major broadband nations, at almost 100% coverage.

 

However, Wales and the UK as a whole do not compare favourably with the world's major broadband nations in terms of higher-bandwidth service availability. Less than 10% of UK households were able to access a service offering a minimum downstream speed of 16Mbps during Q1 2006, compared to more than 80% of households in Japan and South Korea, and 50% of households in Sweden.

 

 

Research carried out by BBWO indicates that the costs of basic broadband services, for both residential and business customers, are the same in Wales as in the rest of the UK. Whilst the minimum consumer spend now buys 'up to' 8Mbps services in all areas, the service speeds available to businesses in Wales are lower than those available in London and the South East.

 

	Consumer	Business
	Minimum	Maximum	Minimum	Maximum
	£	Speed	£	Speed	£	Speed	£	Speed
London	9.75	8Mbps	14.00	24Mbps	13.61	8Mbps	75.00	24Mbps
South East	9.75	8Mbps	14.00	24Mbps	13.61	8Mbps	75.00	24Mbps
Welsh Cities	9.75	8Mbps	14.75	16Mbps	13.61	8Mbps	45.00	16Mbps
Welsh Towns	9.99	8Mbps	9.99	8Mbps	13.61	8Mbps	13.61	8Mbps
Welsh Villages	9.99	8Mbps	9.99	8Mbps	13.61	8Mbps	13.61	8Mbps

 

The highest speed available in the consumer market (i.e. 24Mbps) is not available in Wales to either business or household customers, and is only available to a limited number of exchanges in the UK. The highest speed available in Wales is a 16Mbps service supplied by Bulldog.  However, these services are only available in nine exchanges in Wales – in the Cardiff and Wrexham areas.

 

Research of global broadband tariffs by Point Topic has shown that the cost of FTTx services were lower than cable services in Q3 2006. FTTx tariffs fell by 12% to US$28.1, while the average monthly rental for cable modem services fell by only 2.1% to around US$29. However, DSL remains as the lowest cost access technology with an average monthly rental of under US$25, having fallen by 2.5% over the quarter.

 

Penetration of Broadband in Wales

 

Information regarding take-up of broadband was not available specifically for Wales during the quarter, but an estimate of take-up based on UK figures indicates that 10.7% of all households had a cable broadband connection in September 2006, while BBWO also estimates that 33.2% of BT landlines in Wales were using DSL broadband in September 2006. As such, BBWO estimate that around 44% of all households in Wales had a broadband connection in September 2006, an increase from 41.5% in June 2006. This equates to 20.5 broadband connections per 100 inhabitants in Wales.

Figure 4 - Broadband take-up by population, Analysys Consulting Limited & BBWO, September 2006

 

Wales and the UK as a whole compare favourably with many of the World's major economies such as, Japan, France, Germany and the USA in terms of broadband take-up. However, broadband take-up figures continue to trail the leading broadband nations by a sizeable margin. According to Analysys Consulting Limited, during the last quarter Denmark became the first nation to surpass 30 broadband connections per 100 inhabitants and, as a result, has a take-up rate of almost one and a half times that of Wales and the UK as a whole.

 

BBWO estimate that xDSL take-up has continued to grow over the last quarter and that around 33% of households and businesses in Wales able to access an ADSL enabled exchange had an ADSL broadband connection at the end of June 2006. This represents an increase of 11% in broadband take-up by households and businesses in Wales since September 2005.

 

	UK	WALES
	ADSL broadband connections	ADSL broadband connections	Percent of households and businesses [2]	Percent of population [3]
Dec 04	4m [4]	208,000 [5]	14.9%	6.9%
Mar 05	5m 3	245,000 [6]	17.5%	8.2%
Jun 05	5.6m 3	250,000 4	17.9%	8.3%
Sept 05	6m [7]	302,000 5	21.6%	10.1%
Dec 05	6.9m 6	370,000 5	26.3%	12.3%
Mar 06	7.9m 6	395,000 5	28.2%	13.2%
Jun 06	8.7m 6	435,000 5	31.1%	14.5%
Sep 06	9.3m 6	465,000 5	33.2%	15.5%

 

 

BBWO estimates that cable broadband take-up in Wales has continued to increase and that there are now around 150,000 connections, equating to a take-up rate of around 11% of all households.

 

	UK	WALES
	Number of  cable  lines	Cable broadband connections	Percent of households	Percent of population
Dec 04	2.2m[8]	110,000	7.8%	3.7%
Mar 05	2.1m1	105,000	7.5%	3.5%
Jun 05	2.3m1	115,000	8.2%	3.8%
Sep 05	2.5m[9]	125,000	8.9%	4.2%
Dec 05	2.6m[10]	130,000	9.3%	4.3%
Mar 06	2.8m3	140,000	10.0%	4.7%
Jun 06	2.9m3	145,000	10.4%	4.8%
Sep 06	3.0m9	150,000	10.7%	5.0%

Penetration of Broadband in UK

 

According to Ofcom, there were around 12.2 million broadband connections in the UK at the end of September 2006. As such, around 43% of all homes and businesses in the UK subscribe to a broadband service.

 

According to figures from the ONS, broadband connections accounted for more than three-quarters of all internet connections at the end of September 2006. Figures supplied by the ONS are subject to regular review and revision to optimise accuracy, and hence do not correlate exactly to those shown in previous benchmark reports.

 

 

BT reported in November 2006 that it had 9.3 million wholesale broadband connections at the end of September 2006. This figure included 838,000 local loop unbundled lines. Total connections increased by 2.8 million connections year on year and 626,000 connections over the quarter.

 

According to figures from the Office of the Telecoms Adjudicator (OTA), there were around 850,000 unbundled lines in the UK at the end of September 2006. This represents an increase of almost 730,000 lines over the year and 270,000 lines over the quarter. Recent figures released by the OTA show that the total of unbundled lines has now surpassed 1 million and, as such, the OTA has achieved its primary target of delivering a million unbundled lines by the end of 2006.

 

 

NTL reported in November 2006 that it had almost 3 million broadband subscribers at the end of September 2006.

 

 

There were no reported changes in wireless and satellite broadband take-up over the quarter in the UK, with wireless subscriber numbers remaining at an estimated 8,000 and satellite subscriber numbers remaining at an estimated 3,000.

A survey carried out by human behaviour research company Populus on behalf of AOL in August 2006, revealed that more than a third (35%) of the online population in the UK had access to a wireless connection. The majority (84%) of those have wireless access in the home, with 12% using it at the office and the remainder using public access hotspots. Furthermore, three quarters of wireless users have started using it in the last year and 39% have done so within the last six months, indicating rapid growth in uptake recently. The freedom of wireless was considered to be the greatest benefit for most of the people surveyed (63%), although nearly one in four (23%) felt that the main benefit was that it was tidier than a cabled connection.

 

Penetration of 3G mobile connections in the UK is similar to that of France and Germany at around 7.6% of the population. This figure does, however, place the UK far behind penetration figures in leading 3G nations, Japan and Italy. The 3G share of the mobile market is particularly high in Japan at 32%, compared to just 7% in the UK.

 

NTL and BT Wholesale have both seen their shares of the wholesale broadband market fall slightly over the quarter. This is mainly due to the growth in the share of the LLU operators, who, collectively, have seen their share increase from 5% at the end of June 2006, to almost 7% at the end of September 2006. The continued growth of LLU is likely to see this trend continue into the near future.

 

Despite its slight fall in market share, BT continues to be by far the dominant wholesale provider in the UK market. BT's share of the DSL market fell from 92.8% at the end of June 2006 to 90.4% at the end of September 2006. NTL's share of the market fell by twice that rate, suggesting that the cable sector is currently the biggest loser in the battle for market share with the LLU operators.

 

BT's share of the wholesale market remains relatively high when compared to other Western European incumbents. However, as LLU operators increase the coverage of their networks and, subsequently, increase wholesale competition, the incumbent's share of the market is likely to decrease. Many of the countries where the incumbent's share is lower tend to have higher penetration levels, whereas those countries where the incumbent is highly dominant tend to have lower penetration levels, although many other factors also affect this.

 

 

Having merged with Telewest, NTL became the largest retail ISP in the UK during March 2006. However, a report released by Point Topic in September 2006 covering UK ISP market share through Q2 2006, found that the cable operator's ability to add new broadband subscribers has been hampered by geographic limitations. As a result, NTL's broadband growth has slowed considerably. According to Point Topic, at this rate, BT will be re-established as the leading retail ISP by the end of 2006, with around 25% of all UK broadband subscriptions.

 

Whilst BT is highly dominant in the wholesale market, its position in the retail market is not as strong. In fact, the UK has the lowest incumbent share of the retail broadband market in Western Europe. This is due to the high number of significant ISPs and the resulting highly competitive market. As LLU operators increase the coverage of their unbundled services, it is expected that the highly competitive retail market will begin to translate into an increasingly competitive wholesale market.

 

According to Point Topic, the worldwide total of broadband lines reached 263.8 million by the end of September 2006. This represents an increase of 16.9 million lines over the quarter. The annual growth was 33.3%, which represents a significant drop compared to the 41.5% growth between Q2 2004 and Q2 2005.

 

South Korea continues to lead the world in terms of broadband penetration by households and has now surpassed 90 broadband connections per 100 households. Denmark, The Netherlands and Switzerland lead the way in Western Europe with between 60 and 70 broadband connections per 100 households. These figures suggest that Wales, with around 44 broadband connections per household, continues to have potential for further growth in new broadband connections.

 

Analyst firm Arthur.D.Little has claimed that by 2012 most European countries will have reached an 80-90% household broadband penetration rate. The firm also predicted that, as broadband in Europe nears saturation point, content and services will become increasingly important as operators fight for customers. Furthermore, next generation networks (NGNs), which offer high bandwidth that can support new broadband services, will become increasingly important. NGNs that are likely to dominate, says the firm, are VDSL, cable and fibre to the home.

Broadband services that will excel over these NGNs will be high-end video services such as high-definition digital video streaming and video on demand, and fixed-mobile convergence.

 

 

According to a survey conducted by ICM, online and mobile video viewing is on the increase in the UK with 9% of the population saying they do it regularly and another 13% said they watched occasionally, while a further 10% said they expected to start in the coming year. Furthermore, some 43% of those who watch video from the internet or on a mobile device at least once a week said they watched less normal TV as a result. However, two thirds of those surveyed said that they did not watch video online and could not envisage doing so in the next 12 months, indicating that there is still a sizeable barrier to video viewing online and via mobile.

 

Online and mobile video is far more popular amongst younger age groups, with 28% of those aged 16-24 saying they watched online video more than once each week. An average of 10% of those aged 25-44 used online video regularly, falling to just 4% of over-45s. Furthermore, Ofcom have stated that the number of 16 to 24-year-olds watching TV in an average day had dropped 2.9% between 2003 and 2005. These statistics are showing clear signs of a growing trend in the younger generation towards a change in the method of consuming media and entertainment.

 

 

In terms of mobile internet access, the UK had a high proportion of the adult population accessing news and information online via wireless devices in 2005. According to a survey undertaken by Ipsos, 29% of all adults surveyed used a wireless device to access news and information online, placing the UK second only to Japan (40%) out of all the countries studied.

 

 

 

The UK has one of the lowest paid-for VoIP penetration levels of the countries researched by Ofcom with only 0.4 users per 100 population. In contrast, VoIP adoption is very high in Japan (9%) and France (5.4%). However, Ofcom suggest that the number of people using VoIP, inclusive of free PC-to-PC calls, in the UK is considerably higher, with an estimated 1.8 million end-users in May 2006. 

 

 

During the quarter, Channel 4 launched an on-demand service, named '4 on demand' or '4oD', that allows viewers to catch up with their favourite programmes online using VoD. Viewers are able to download most of the channel's current schedule, including all home-grown shows commissioned since June 2006, for up to 30 days after transmission, or choose programmes from its archives. Each programme will automatically be deleted from users' computers 48 hours after they first start to watch. Charges for the service start at 99p per show, with monthly subscriptions planned for the New Year. As such, Channel 4 has claimed that it is the first major broadcaster in the world to offer all its home-grown programming on demand. The 4oD service is available on cable TV and computers, although only users of PCs running Windows XP and Media Player 10 and above can use the service.

 

Furthermore, Channel 5 has also launched its own download service, 'fivedownload', which allows users to download a limited amount of the channels programming for viewing. Viewers are able to watch the downloaded programmes as many times as they wish for up to 14 days after downloading it, with each episode available for the cost of £1.49. The service is available to all broadband users running Windows Media Player 9 and above.

 

The BBC Broadband website also has a range of online catch-up content that allows viewers to catch up on programmes they have missed.

 

 

Take-up levels of IPTV are very low throughout the world as it is still a relatively new application. Of the countries studied by Ofcom, Spain and France have experienced the greatest levels of uptake thus far, while the UK had one of the lowest levels of IPTV uptake. Research analysts, Jupiter Research, believe that even by 2011, IPTV will still be a niche service and forecast that IPTV uptake will have reached only 6% of European households by that time, up from 2% in 2006.

 

Furthermore, forecasts from Ovum seem to concur with the belief that IPTV will remain a niche product over the next few years, stating that they expect the number of IPTV subscribers to reach a moderate 29.5 million worldwide in 2010, from 5 million in 2006.

 

IPTV take-up may increase in the UK after the launch of BT's new IPTV service, BT Vision.  Subscribers to this new service will get access to Freeview digital TV channels, as well as on-demand content, such as, films, music, sport, children's programmes and popular TV programmes. The service is delivered by a set-top box that has a 160GB hard drive, allowing users to record up to 80 hours of television. The box also allows people to record, pause and rewind live TV.

 

However, one of the main barriers to the growth of IPTV is that sending television signals over the internet requires a lot of bandwidth and the current local loop infrastructure cannot provide the necessary bandwidth for the majority of end-users. This problem will get worse when consumers demand high-definition programmes which require far greater bandwidths than standard-definition TV. This barrier could, however, be overcome by running fibre-optic cables to the home or by using advanced high-speed connections, such as VDSL, which could overcome these infrastructure limitations. However, these connections are expensive to deploy and operators will find it difficult to create a business case that makes the deployment of these types of connections economically viable.

 

 

Mobile operator '3' launched a flat-fee data service for mobile phones on the 1^st December 2006. Named 'X-series', the service will allow unlimited data usage, subject to a fair usage policy, for applications and services, such as, web browsing, VoIP telephony, mobile TV, remote PC desktop access, e-mail and instant messaging. Three's partner list for the X-series includes: Skype, Sling Media, Yahoo, Nokia, Google, EBay, Microsoft's MSN, Orb and Sony Ericsson. The basic X-series subscription is £5 per month in addition to a mobile telephony contract, with the Orb and Slingbox services incurring an additional cost of £5 per month.

 

 

Research firm eMarketer state that there are 44.5 million 3G subscribers worldwide who watch mobile TV on their phone and predict that this number will double each year, reaching 520.9 million by 2009. However, despite this growth, analysts Informa Telecoms and Mobile, predict that just 10% of all handsets sold globally by 2011 will be able to receive TV broadcasts.

 

A potential barrier to TV over 3G is the fact that 3G networks have limited capacity. Within a 3G cell, it is estimated that around 10 to 15 TV consumers would consume all of the available bandwidth and, as such, 3G is not a scalable solution for the mass market delivery of mobile TV. Consequently, alternative technologies, such as HSDPA (also known as 3.5G) and WiMAX, may be considered as more viable solutions for the widespread distribution of mobile TV services.

 

 

According to Point Topic, DSL remains as the dominant technology in the broadband market with a worldwide total market share of 65.6% in September 2006. However, with the increasing demand for bandwidth, FTTx is becoming more popular, showing strong growth with a rate of 12.6% over the quarter, almost twice as fast as in cable modem and reaching 27 million subscribers at the end of Q3 2006. Growth of FTTx is particularly evident in regions such as Asia Pacific and North America, where the quarterly growth in FTTx has risen to well over 20% and the total number of FTTx subscribers in the Asia Pacific region has surpassed cable modem by 320,000 subscribers. Countries such as Japan and South Korea are driving the growth in fibre due to the majority of subscribers being located in high-rise apartment blocks, where FTTB is easier to deploy.

 

Within the UK, FTTx has yet to have an impact on the broadband market as there are no commercially available residential services. Due to the absence of FTTx and the geographical limitations of the cable networks, DSL is particularly dominant in the UK, with a 75.8% share of the total broadband market in September 2006.

 

The need for higher-bandwidths to support new advanced broadband services such as, gaming, IPTV, video-on-demand, and HDTV services will help drive demand for a growing FTTH market.

 

However, within the UK, BT has announced that it has abandoned trials of FTTH (fibre-to-the-home), stating that ADSL2+, which will be rolled out at the same time as 21CN, will provide sufficient bandwidth instead. At the same time that it started designing 21CN, BT commenced trials of fibre access for homes and businesses which, if deployed to the mass market, would have given users across the UK access to bandwidths of up to 100Mbps to their premises. Having worked extensively on the operational testing and deployment of fibre to the cabinet and FTTH, BT will now only offer fibre-to-the-home or business if other carriers demand it. For widespread fibre deployments, BT state that they have yet to see a business case that pays for such a deployment.

 

According to strategy research commissioned by UPC, a future trend for broadband operators in Europe will be that the broadband market will eventually become a battle for the consumer and will not be fought over access, but over content and services. Furthermore, Multiple-play services will evolve in terms of quality, availability, convergence and mobility and will become the main driver of higher-bandwidth requirements. Growth is expected in innovative broadband services, high-definition digital video streaming and video-on-demand, and fixed-mobile convergence.

 

 

Latest estimates indicate that take-up of broadband services is continuing to rise in Wales with around 44% of all households in Wales subscribing to a broadband service in September 2006, an increase from 41.5% in June 2006. This equates to 20.5 broadband connections per 100 inhabitants in Wales.

 

In terms of coverage, availability of basic broadband services continues to near 100% coverage, due to the Broadband Wales Unit's RIBS project. Furthermore, availability of higher-bandwidth services is also increasing as more LLU operators are beginning to invest in deploying ADSL2+ networks in Wales, offering services delivering up to 24Mbps. At the end of the quarter there were three LLU operators active in the Welsh broadband market and a further three have announced their intention to enter the market shortly. However, despite this increase, Wales remains as one of the poorest regions in the UK for LLU coverage. At the end of October 2006, only 23% of all Welsh households were connected to an unbundled exchange, compared to 99.9% of all households in London and 85% of all households in North West England, the regions with greatest coverage. Whilst increasing investment from LLU operators will further ADSL2+ coverage in Wales, significant coverage levels are unlikely to be achieved, particularly within areas of lower population density, until ADSL2+ services are rolled-out by BT as part of their 21CN deployment. However, these higher-bandwidth services are unlikely to be available to the whole of Wales until 2011 and the actual bandwidths achievable by individual households will be dependent upon their individual local loop lengths.

 

The issue of low availability of higher-bandwidth services within Wales is likely to become increasingly important when considering recent international trends. Fibre based broadband services are becoming increasingly popular, particularly in North America and Asia Pacific, as users seek greater bandwidths.

 

In terms of content delivery, a number of VoD and IPTV services have been launched over the quarter and these bandwidth intensive services are likely to drive requirements for higher-bandwidth services. Higher-bandwidth requirements over the next few years will also be driven by multiple-play services as they evolve in terms of quality, availability, convergence and mobility.

 

Increasing demand for broadband mobility has been evidenced by the impending launch of an unlimited data usage mobile phone package from mobile operator '3'. Subscribers can use a number of broadband applications when they are within the coverage area of the operator's 3G network.

 

In conclusion, the Welsh broadband market has seen continued growth over the quarter as well as increased coverage of LLU services, along with the UK as a whole. The number of bandwidth intensive services on offer in the UK broadband market has increased, suggesting that the demand for higher-bandwidth broadband services will continue to increase into the near future.

BBWO – Broadband Wales Observatory

OECD – Organisation for Economic Co-operation and Development

DSL – Digital Subscriber Line

ADSL – Asynchronous Digital Subscriber Line

Mbps – Megabits per second

ADSL2+ - Asynchronous Digital Subscriber Line 2+

LLU – Local Loop Unbundling

ISP – Internet Service Provider

SDSL – Synchronous Digital Subscriber Line

FWA – Fixed Wireless Access

Wi-Fi – Wireless Fidelity

3G – Third generation mobile communication

Ofcom – Office of Communications

SME – Small and Medium sized Enterprises

IEEE – Institute of Electrical and Electronics Engineers

G7 - Group of seven major industrialised countries

PPP – Purchasing Power Parity

WAG – Welsh Assembly Government

EU – European Union

ONS – Office of National Statistics

ECTA – European Competitive Telecommunications Association

OTA – Office of the Telecoms Adjudicator

ARCEP – Autorité des Régulation des Communications Electroniques et des Poste

ICT – Information Communication Technology

PC – Personal Computer

PDA – Personal Digital Assistant

GSM – Global System for Mobile communication

ISDN - Integrated Services Digital Network

TV - Television

IPTV – Internet Protocol Television

VoD – Video on Demand

VoIP – Voice over Internet Protocol

HSDPA – High-speed downlink packet access

NDSL – Naked Digital Subscriber Line

WiMax – Worldwide interoperability for microwave access

FTTH – Fibre to the home

FTTP – Fibre to the premises

---