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United Kingdom Telecommunications Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: August 2009 Product Code: R302-7546 Description In BMI’s United Kingdom Telecommunications Report for Q309 we extended our fixed-line andbroadband market data analysis sections, and as a result we have left the mobile market data analysissection unchanged, to be updated in full in the subsequent quarter.The UK remains at the top of our Business Environment Rankings table for Western Europe despiteseeing its Telecoms Market score fall slightly as pressure on ARPU rates intensifies amid the country’seconomic downturn. However, the UK’s telecoms sectors are heavily geared towards the attraction ofhigher value customers to advanced services such as 3G, super high-speed broadband and IPTV, whichwill go some way to countering competitive and economic pressures on ARPU. As a consequence of the popularity of prepaid mobile services in the UK, we believe that the marketholds a large number of inactive SIMs which has left some growth opportunities. Nevertheless,penetration in the mobile sector surpassed 125% in 2008 and we are expecting growth to continueslowing over the remainder of our forecast period as the market approaches saturation. A further risk togrowth is consolidation in the mobile sector. Speculation over the future of T-Mobile UK has beengrowing, with media reports suggesting Vodafone, Telefónica and France Télécom are all consideringbidding for the Deutsche Telekom-owned operator. At the time of writing no formal confirmation hadbeen given regarding whether or not Deutsche Telekom would divest T-Mobile UK, but if it does gothrough, growth in the sector would likely slow as pressure on prices relaxes. The UK’s fixed-line sector is in a steady state of decline as it continues to suffer from fixed-to-mobilesubstitution and the growing popularity of VoIP services. Nevertheless, fixed-line penetration was stillabove 50% at the end of 2008 as the sector continues to hold up well, driven by two factors. The firstfactor is the abundance of flat-rate tariffs offering inclusive minutes, which has resulted from intensecompetition between the incumbent BT and alternative operators such as Virgin Media and CarphoneWarehouse, as well as competition with the different technological platforms. The second factor which isstemming the decline in the sector is the popularity of ADSL broadband, which currently requires a fixedlinesubscription. Once ‘naked’ ADSL is allowed we are expecting a sharp drop-off in the number offixed-line subscriptions in the UK. The acquisition of Tiscali UK by Carphone Warehouse in May 2009 has seen the emergence of a thirdcontender for broadband market leadership in the UK, to compete alongside BT and Virgin Media. Theacquisition makes Carphone the second largest broadband operator in the country, just behind BT. TheUK’s broadband operators are attempting to connect their customers through their own networkinfrastructure and the unbundled local loop (ULL). While broadband speeds in the UK areunderdeveloped compared to some of its regional peers such as France and Germany, networks are beingdeveloped. This year has seen Virgin Media upgrade its cable network to be capable of offering downloadspeeds of up to 50Mbps, while BT has announced that it is in the process of upgrading its ADSL networkto ADSL2+ capable of offering download speeds of up to 20Mbps. The development of next generationfibre networks was also given a boost by the release of the Digital Britain report, with BT saying it wouldaccelerate its fibre network deployment. Table of Contents
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