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.

Friends Disunited! Breaking up is so expensive……

It was reported in the weekend papers that ITV is to sell Friends Reunited.  ITV bought Friends Reunited back in December 2005 for an eye-watering £175 million ($280 million).  According to the story in the Sunday Telegraph, “Analysts believe that Friends Reunited is now worth significantly less because of intense competition from rivals such as MySpace and Facebook” or just maybe they overpaid in the first place.  Back in 2003, one of the major accountancy firms, BDO Stoy Hayward, was looking for a buyer on behalf of the original founders Steve and Julie Pankhurst and co-founder Jason Porter.  I was asked by a client to review the business and come up with a valuation.  The business was hugely profitable although there was obviously need for significant investment in their infrastructure.  However, the most “toppy” valuation I could come up with was in the region of £30 million which was higher than market sentiment suggesting a £25 million price tag.  In the event, Friends Reunited decided not to sell and brought in former Financial Times chief Michael Murphy as part of a global expansion plan.

This was a phenomenally successful move since Murphy increased the business’ valuation from £30 million to £175 million in just over two years.  The spirit of 1999 seemed to be in the air again!  Heady days indeed and at the time ITV said that the Friends’ team would have a leading role in developing ITV’s online and broadband strategy.

Sadly it hasn’t worked out as everyone had expected and yet another smart internet business failed to develop into a major force within the big company corporate world of ITV.  Now ITV will pay the price in what is likely to be a fire sale of the asset at a knock down price.  I wouldn’t be surprised to see Steve and Julie Pankhurst looking to use the money ITV paid them to buy back the company for a much lower figure.

I wonder whether ITV is still using the same analysts that thought £175 million was a good deal!  Well it would seem they maybe since today ITV is suggesting that the downturn in TV advertising revenues is temporary and is just down to the deepening recession.  Sadly anyone who follows new media with more than a passing interest will know that Google had their lunch last year and recession or not I just don’t see the Internet juggernaut altering course from taking a greater share of the converging TV and Internet advertising markets.

However, one potential future of TV lies not in traditional broadcast, but in the selective world of view-on-demand via the broadband Internet and content will be the key to its success.  Whilst we are all happy to catch an amusing 30 second clip of a cat flushing a toilet on YouTube, it is hardly compulsive viewing and unlikely to attract advertisers.  In reality, view-on-demand of quality content available at the user’s convenience is an attractive offering and one ITV is well placed to deliver.  ITV is content rich with access to a significant back catalogue and a continuing, although diminishing, commitment to developing new content.  Content will make Internet TV and IPTV fly.  As for the advertising model that is evolving for video content such as pre-rollers and mid rollers etc, the pricing level will be fundamental different from the millions of pounds once paid for a 30 second slot during Coronation Street and far closer to the Internet pricing model.

So as traditional broadcast advertising continues to decline, ITV must act quickly to build a content rich Internet based future.  The recent Kangaroo controversy is just a side show and quite frankly a waste of money for ITV as I believe was the development of the iPlayer a waste of licence payers money when there exists many fully developed home grown alternatives such as Vividas.  ITV should use some of the funds they get for selling Friends Reunited to look to develop content in collaboration with some of the current alternative Internet TV channels such as Joost, Blinkx or even Wii TV.  ITV could get into these areas with a much lower level of investment than the grand gestures of 2005 and they have the potential to offer a much more interesting future than managing decline!

Internet TV - Is it a viable alternative to Satellite?

With the advent of 20Mb Broadband service, Internet TV is beginning to look like a viable offering compared to costly satellite services such as Sky or Cable alternatives such as Virgin. 

In my definition of Internet television, the combination of digital TV and seamless Internet based TV services such as on-demand Internet services such as the BBC’s iPlayer or web based sites such as Joost, offer a credible alternative to the competitive products allowing viewers to choose the show they want to watch from a library of shows as well as a broad range of conventional TV.  With the fall in PC and TV prices the opportunity to join the two together to make a credible entertainment package with a relatively low investment.  The Internet TV service can ride on the back of existing infrastructure including broadband, ADSL, Wi-Fi, cable and satellite.

The primary models for Internet television are streaming Internet TV or selectable video on an Internet location, typically a website. The video can also be broadcast with a peer-to-peer network (P2PTV), which doesn't rely on a single website's streaming.

It differs from IPTV in that IPTV offerings, while also based on the IP protocol stacks, are typically offered on discrete service provider networks such as that from Tiscali in the UK or BT Vision.

Specialised PC/TV solutions like that offered by the  Sony VGF-HS1E, an all-in-one home server for total control of your multimedia entertainment.  Alternatively, there are a range of downloadable solutions which offer the opportunity to run a menu of services on a diverse range of equipment such as PS3 PlayTV  and Wii Games stations or even via your iPhone (see my blogcetera comment).

As we see traditional TV viewing habits fragment, the opportunity to create your own schedule to fit your life style will undoubtedly see the rise of a broad range of both equipment and software solutions that will drive new media options.  The key issue for content providers will be - how they make money from the punters of these new usage models?  Nintendo reckon that 18 million of their 40 million Wii are connected to the Internet and they can create a viable TV channel and delivered credible internet based advertising.  The key will be creating a viable programmable programme guide which the users can set-up and is easy to use and allow simple navigation both of digital TV offerings with Internet offerings.  We shall be following these developments in the Internet TV space, which clearly offer the user huge potential offerings from a boundless Internet and a powerful competitor to expensive satellite and cable services.  Whatever method you choose to view your TV content, the Government will still expect you to pay the licence fee!