UK ISP, Mobile Internet and Cable Subscriber Numbers - December 2013

Here is an update of the UK ISP market covering DSL and Cable Access market as well as the Mobile Dongle market in the UK.  I have also added in the published figures for 3G and 4G mobile access devices. I have used ITU published data for Broadband usage numbers and Neilson Ratings and ISP published figures to get an accurate picture as well all the reports and disclosures for each of the companies shown below. I believe these figures represent a reasonably accurate representation of the genuine adoption of broadband either via DSL, Cable or mobile dongle. Broadband connections included in this data cover download speeds equal to or faster than 256kbit/s.

Table 1. Broadband ISPs (Source: ITU, Neilsen, OFCOM & ISP Published Figures)

No.	ISP/Provider	User Numbers	% of UK Market (inc Mobile)
1	BT Retail	6,961,000	26.07%
2	Sky Broadband	5,017,000	18.79%
3	Virgin Media	4,488,600	16.81%
4	TalkTalk Group	4,076,000	15.27%
5	Orange	714,000	2.67%
6	Kingston Comms	178,200	0.67%
7	Zen Internet	94,000	0.32%
8	Vodafone UK	85,000	0.31%
9	Thus Group	80,000	0.30%
10	Entanet	70,000	0.26%

BT continues to grow its user base at the expense of the smaller players.  Sky Broadband has continued to grow, primarily by acquisition having taken over O2’s broadband user base.  However, although BT Sport is still in its early days, it is clearly impacting Sky’s organic growth.

The total UK Internet connectivity market is not only made up of Broadband ISPs, but connection is now frequently through 3G and a growing 4G user base. Consequently I have taken the total market as being made up of both the fixed-line broadband and mobile internet access as I think it would be erroneous to suggest that they are not part of the same competitive market. The Broadband ISP market size is estimated to be just under 22 million broadband connections. OFCOM estimates the mobile internet connectivity to be in the region of 5.0 million mobile broadband users in addition the 21.7 million fixed line users.  So the total market is estimated at 26.7million subscribers.  Of these super broadband users make up just 3.7million.

4G licences only raise £2.34 billion in auction

It beggars belief that the UK Government has only managed to raise just £2.34 bn in licence fees for the the 4G licences.  It really does suggest that both the UK Government and Ofcom are totally disconnected either from the potential of the mobile internet market or they are totally incompetent at running an auction.  Whilst it was clear from the start that the market would not pay the astronomical figures paid for the original 3G licences of £21 billion raised by Gordon Brown,  the value of these licences should have achieved far beyond the Office of Budget Responsibilities own projection of £3.5bn, let alone the £2,34bn delivered.  Everything Everywhere, Hutchison 3G UK, Telefonica (O2), Vodafone (VOD) and BT (BT.A)'s Niche Spectrum Ventures secured the 4G licences.  It is a little disappointing that the winning bids all came from the usual suspects and that we will not see any new entrant to spice up the cosy market carve up between the major mobile networks and BT.


Given that the UK is one the largest mobile internet markets and combined with the superior quality of coverage and speed of performance offered by 4G’s 800 MHz network, the winning network providers and service providers stand to make significant revenue.  The mobile broadband should provide smartphone and tablet computer users with "superfast" download speeds, and will provide £20 billion of benefits for UK consumers over the next ten years, Ofcom said. 

However, when mobile operator EE, a joint venture between T-Mobile and Orange, became the first to launch a 4G service in October 2012 in a brief monopoly, it struggled to attract users. It was forced to cut its prices in January, lowering its entry price to £31 from £36 a month.

Despite this slow take up, I still believe that 4G has the power to become the de facto communications network for Internet access in the UK - a view clearly shared by BT - which is why they entered the auction to secure 4G capacity which they are using to extend their WiFi network.  4G has the capacity to be a game changer in technology terms and could change the local access in remote locations of 100 MHz Ethernet speed access reducing the need to take fibre to the home.

There may not be champagne corks popping in No 11 tonight, but I am sure they will be in the HQs of our major mobile providers.

Will the 4G Auction exceed £3.5bn? You bet!

Although Chancellor George Osborne is unlikely to raise anywhere near to Gordon Brown’s £21bn for 3G licences, I believe he may do rather better than is being reported.  Recent auctions in Europe have raised £3bn which suggests that the UK 4G licences will achieve £3.5bn.  However, it is suggested that Private equity firms, retail groups and banks as well as international telecom players have entered the fray alongside the UK’s Big Four mobile operators, EE, Vodafone, O2 and Three to win a slice of these 4G licences.

Ed Richards, chief executive of Ofcom, the telecoms watchdog, said that it had “fired the starting gun” on an auction process that would “release crucial capacity to support future growth, helping to boost UK productivity”.  Even in these recessionary times, the total U.K. Internet traffic is currently projected to increase by an average of 37 per cent each year until 2015. Although the majority of traffic remains on fixed networks, traffic on mobile networks is growing at a faster rate of 84% year-over-year and is expected to account for 11% of total traffic by 2015. 

Mobile access to the Internet accounts for even more time spent browsing, communicating, and transacting than this traffic data suggests, with fixed lines being used to consume bandwidth-intensive services such as video and mobile used more for social media. Indeed, the Internet is increasingly being accessed on mobile devices, whether through mobile connections or Wi-Fi networks, and the next generation of mobile communications of 4G will continue to shift this dynamic and economists have suggested could add as much as 0.5% to GDP in infrastructure investment alone not to mention the enhanced capability of the mobile web usage.

The superior quality of coverage and speed of performance offered by 4G’s 800MHz network offers significant improvement over the current 3G licences.  This superior system will add significantly to the opportunity for both network providers and service providers to make significant revenue.  The UK is one the largest mobile internet markets and consequently the opportunity  to own a slice of this market will in my opinion drive the value of these licences far beyond the projected £3.5bn and along with the additional impact 4G will have on the UK economy, the auction could bring a welcome additional windfall for Mr Osborne.

UK ISP, Cable, Dongle and 3G and 4G User numbers November 2012

Here is an update of the UK ISP market covering DSL and Cable Access market as well as the Mobile Dongle market in the UK.  I have also added in the published figures for 3G and 4G mobile access devices. I have used ITU published data for Broadband usage numbers and Neilson Ratings and ISP published figures to get an accurate picture as well all the reports and disclosures for each of the companies shown below. I believe these figures represent a reasonably accurate representation of the genuine adoption of broadband either via DSL, Cable or mobile dongle. Broadband connections included in this data cover download speeds equal to or faster than 256kbit/s.

Table 1. Broadband ISPs (Source: ITU, Neilsen, OFCOM & ISP Published Figures)


No.	ISP/Provider	User Numbers	% of UK Market
1	BT Retail	6,444,600	30.43%
2	Virgin Media	4,413,400	20.84%
3	Sky Broadband	4,103,000	19.47%
4	TalkTalk Group	4,043,000	19.09%
5	Orange	723,000	3.41%
6	O2	579,000	2.73%
7	Kingston Comms	178,200	0.84%
8	Zen Internet	94,000	0.44%
9	Entanet	92,000	0.43%
10	Thus Group	87,000	0.41%


The major change over the past year has been been the continued growth of Sky Broadband which has seen it rise above TalkTalk.  Undoubtedly the combination of the Sky bundled offerings with its satellite TV content has driven this growth.  Recent launch of Talk Talk's TV set-top box plus the major BT play into football are both aiming at trying to redress this strategy.  Clearly Orange and O2 are seeking to enhance their position in the UK market through growth in the connected Tablet market which is experiencing phenomenal growth as eluded to below. 

The total UK Internet connectivity market is not only made up of Broadband ISPs, but connection is now frequently through 3G and most recently 4G mobile network connections.  The Broadband ISP market size is estimated to be just over 21 million broadband connections. The figures for mobile connectivity is much harder to obtain, however, given that there are now many millions of Internet enable phones in use today. However, OFCOM indicate in their latest facts on the market that there are 5.1 million mobile broadband users in addition the 21 million fixed line users.

Why Stephen Hester should visit O2

Recently two of the UK’s largest companies, the bank RBS and the telecoms company O2, suffered serious technical problems that had a critical impact on millions of their customers.  In June, during a ‘routine’ software upgrade RBS managed to corrupt their entire High Street banking operation of RBS and NatWest which left millions of customers unable to access and operate their accounts.  Mortgages went unpaid, deposits were not credited and customers were unable to access their via ATM machines.  The outage caused huge disruption and lasted more than a week and effected both retail and business customers.

In a similar computer upset, O2 had a network failure of their 2G network. The outage lasted two days before it was resolved.

What is interesting is the difference in the response to customers that each company adopted.  RBS took several days to make the problem public and communicate their concerns via the media.  The severity of the problems was never fully exposed and when RBS Boss, Stephen Hester, was interviewed, he seemed unable to explain what had gone wrong nor whether they would compensate customers.  They only made a vague promise that no one would be out of pocket.  As a business customer of RBS I have not received any apology from either the staff in my local branch or from my ‘Account Manager’.  Not even a phone call to check I was having any problems even though payments for thousands of pounds into and out of my business account had ‘failed’.  I was left to apologise to suppliers to avoid having my credit rating damaged.

Contrast this with O2, with whom I am also a customer.  Despite the fact that  as a 3G network user I didn’t appear to have any problems, O2 immediately contacted me and apologised for the outage and as soon as the problem was resolved provided me an email detailing compensation in the form of a 10% reduction in my monthly contract and a voucher to use in their O2 shops.  This was a genuine no quibble guarantee.

What a difference it makes when a company is genuinely customer focused.  I have always found that O2 has a world class customer service operation and their reaction to their recent problems was case study in how to deal with a major business problem.  RBS on the other hand only seems to be focused on their bonuses and not the customer.  It is now a month on from their problems and they have still not contacted me other than sending out their usual bank charges without any reduction for the outage period.  Bankers still do not seem to get it.  Customers are the people they should be concerned about losing, not their highly paid investment bankers.  Stephen Hester should be beating a path to O2’s customer service department and find out how to build a customer focused business operation rather than continuing to defend their bonus policy.

Virgin Media sinks deeper into the red but grows broadband!

The cable services provider Virgin Media had a difficult last quarter of 2008, with new customer sign ups dropping by a massive forty per cent.

The company posted losses of £50 million for the same quarter, which it said was due to the fact that it only managed to attract 14,800 new customers compared to 24,000 in the same period in 2007.  At the same time Virgin Media has seen a fall in customers taking out the profitable broadband, TV and phone packages, with only 185,000 sales in the last quarter compared to 272,100 in the same quarter of 2007.   However Virgin Media claims that "record numbers of customers" are now making use of its services and despite the economic crisis they have seen an increase of 57,100 on-net broadband customers, taking their total to 3.68 million.  This is just 1.5% growth in user numbers at a time when Virgin has been advertising heavily and launching new services such as the new 50Mb package at the end of last year

Virgin Media also noted an improvement in tier mix, with a third of their users now subscribing to their next-generation (10Mb and above) services.   Virgin Media also announced this week that it will be upgrading its 2Mbps broadband customers to a superfast 10Mbps service as it steps up its bid to become "the highest-quality broadband service in the UK". Indeed Virgin will begin migrating customers to the new connection in May, with prices for the 10Mbps package starting from £14 a month.

With Virgin’s broadband user numbers growing slower due to the economic downturn and increasing numbers of broadband users choosing to go to 3G Mobile broadband rather than tethered broadband.   Recently the Office of National Statistics indicated that fixed broadband has started to fall for the first time and this trend looks will have an impact on the major operators.  Expect to see aggressive price cuts to lure new customers from the major broadband ISPs such as BT and Sky during to spring of 2009 to compete with Virgin’s £14 a month 10Mb service.

At least Virgin has not yet decided to opt for Phorm like BT, however, there remain a number of legitimate revenue generating activities it could opt for now that it has deployed DPI (deep packet inspection) such as DNS and HTTP error monetisation.

Is the 3G Dongle the best broadband option for you?

With the 3G Mobile Dongle you no longer need to be tethered to a fixed line or a long term commitment to BT or Talk Talk.  Today there are almost 1 million dongle users in the UK and demand is growing so much so that, for the past two quarters that the number of fixed-line broadband connections in the UK has started to fall for the first time ever, according to the Office of National Statistics. 

With near saturation of mobile phone ownership, the option to go with a mobile dongle is winning over many new users with the promise of broadband that goes with them and it doesn't require them to pay twice: once for the broadband and once for the phone line.

What is the best dongle broadband option for you?  The answer to this question depends why you surf the net, whether for business or leisure or indeed a combination of both.  Equally is you usage occasional or regular usage.  In some cases, the mobile companies are offering laptops or notebooks as part of the tariff options.   However, the two primary options are Pay-as-you-go or Contract in the same way mobile phone service is offered.  So what are the options:-

Pay-as-you-go Dongles

Pay As You Go dongles are growing very rapidly in popularity as they do not require a long-term contract to enable a PC, laptop or notebook user to connect to the internet. The customer simply buys a dongle which has a set amount of time and data download capabilities.

The dongle is then plugged in to the computer as a plug-and-play device allowing for instant broadband access to the internet without a contract. The customer just uses the connection until they have used up the available amount of cash they originally purchased.

They can then just repeat the process thus avoiding a contract commitment of 12, 18 or 24 months to a mobile broadband operator. This system works very well for many users, providing them with access to the Internet, albeit with a limit in the time and the amount of available download before the credit is exhausted.

Customers who make use of their computer for longer periods of time each month very often opt to sign up for a contract with one of the big operators such as Vodafone, 3, Carphone Warehouse or Orange.

Contract Dongle

Although the same operators also offer pay-as-you-go deals, many people prefer the added convenience of long-term contract connection. The two systems basically operate in the same way making use of a broadband dongle to connect the computer to the Internet.

A contract connection offers the advantage of being simpler and cheaper to run on a month-to-month basis than pay-as-you-go wireless Dongles. The savings can actually be quite considerable if you make a large amount of use of your internet connection each month.

Downloading can be far more practical financially with a long-term contract. Many people feel that 18 or 24 month commitments can be outpaced by developments in the mobile broadband connection field. Therefore the most popular contract is one for 12 months giving a good degree of flexibility to move with the ever-changing broadband times.

In this way should you find a deal that suits your needs better, or there is a new technological developments with connection capabilities it is not a prohibitively long period until your contract comes up for renewal.

Both Pay As You Go and contract connections offer advantages and disadvantages. It is wise to consider which best suits your personal broadband Internet needs. As a rule of thumb longer hours spent surfing the web each month or large amounts of data download requirements favour a long-term contract.

Less time spent surfing and little need for major amounts of data download are best suited to be more flexible Pay As You Go dongle connections. 

Network Issues

However, not everyone is convinced that mobile broadband is up to the job.  3G Mobile network availability is clearly an issue in much the same way it is for some mobile operators.   There are also issues with the network when too many people are online and services drop off.  As an alternative, there are a couple of firms offering satellite broadband which has been touted as a solution for rural areas, but it is comparatively expensive with Avanti offers a 2Mb service for £45 a month.

UK Mobile Dongle User Numbers – Feb/March 2009

I have been researching the number of users now using 3G mobile dongles to link to the Internet in order to offer some insight into this largely hidden phenomenon.

Globally the market for 3G dongles is set to grow from 20 million units in 2008 to 26 million units in 2009 despite the downturn.

In Europe, some of the strongest growth has been recorded mainly due to the near saturation level of mobile usage compared to other parts of the world due to aggressive marketing push from the operators and the handset manufacturers.  This has resulted in an interesting development amongst Generation Y, those users born between 1978-2000.  This group have led the way in not bothering with fixed access telephony and are consequently adopting the 3G Dongle as their preferred method of Internet access.  Much of this growth is based on competitive all-you-can-eat tariffs and ease of use.

In the UK, which makes up approximately 3.5% of worldwide dongle sales, the mobile dongle user community now makes up over 4% of the overall broadband market.  These figures may not seem very impressive; however, with overall dongle sales set in 2009 to see 15% growth over 2008 and with the traditional broadband market at a standstill, the dongle market is likely to continue to make significant in-roads into the broadband market in 2009.  With increasing choice of low cost tariffs and user numbers in the UK could easily top one million by the end of 2009.

UK Market – February 2009

No	Operator	Number of Users	% Share	Comment
1	3	255,000	34%	The established leader of the dongle market, 3 has led the pack with its innovative pricing packages.
2	T-Mobile	161,000	22%	T-Mobile has used the UK as its primary test market for their dongle strategy and their innovative “webNwalk” service.
3	Vodafone	132,000	18%	Vodafone is the fastest growing of the major networks aggressively promoting and subsidising dongles because they are viewed as a secondary device that provides additional revenues for carriers beyond a traditional handset.
4	O2 (Dongles only)	122,000	16%	02 were the first major mobile network to enter the broadband market in the UK following its acquisition of Be, however, this seems to have been a distraction which has slowed their adoption of a dongle strategy.
5	Orange	57,000	7.7%	Orange seem to stumble from drama to crisis.  Their 3G Dongle strategy is little better.  They are seeing declining share of the broadband market and have been slow to put together a competitive offering for the dongle market.
6	Virgin Mobile	15,000	2%	Somewhat off the pace with their 3G dongle priced at £15 per month running over T-Mobiles network as MVNO.
	Total	742,000

To get an accurate picture, a number of published and unpublished sources have been used.  One needs to guard against the marketing hype that is put about regarding sales of individual networks, but the 3G dongle market is viewed as an area of vital importance by the mobile networks.  It will be interesting to see how the traditional ISPs respond.  Late in 2008, BT Broadband started to offer a WiFi dongle that connected to their network hotspots, BT Openzone, to their customers as an extension of their standard contract.  Neither  Sky or Tiscali have a competitive offering as yet, although Tiscali could still make a good fit for Vodafone.