Archive for July 2011
Healthy demand for broadband in the UK hides a viper’s net of problems that the government must address soon or fail its citizens.
The UK’s top four fixed broadband suppliers added 1.7 million subscribers in the past year, the firms’ quarterly results reveal, bringing the total some 16 million, a market penetration of 26% of the population.
However, in a submission to the department of culture, media and sport’s green paper on the upcoming communications act, the mobile network operators’ Mobile Broadband Group claimed 80 million mobile broadband users. The group noted that rapidly rising demand for data is forcing them into usage caps and throttling.
The big fixed broadband winners were BT and Sky who added 904,000 and 701,000 subscribers respectively.
The importance of a video component of the increasingly popular “multiplay” package is shown by the average monthly revenue per user (ARPU). Virgin Media led with £47.35, followed by Sky (£44.92), both almost twice the ARPUs of BT and TalkTalk.
Access to video content appears to be whetting an appetite for faster speeds.
Virgin Media says half its new customers subscribe to a service of 30Mbps or above. No doubt this is to provide enough capacity to run multiple services at once. Nearly two out of three of Virgin Media’s subscribers take a triple-play, and one in eight add a mobile service.
Sky, which delivers satellite TV, says 2.8 million (27%) its customers take a triple-play (TV, phone and broadband), a growth of 37% on the year. BT reports it now has 600,000 subscribers to Vision, its video on demand service.
If video on demand is driving broadband demand, Virgin Media is in a good position to take market share. Figures released by Ofcom this week showed that all of Virgin Media’s products provide speeds closest to their advertised headline speeds.
Virgin Media claims it can provide a 100Mbps service via a fibre to the cabinet (FTTC) network upgrade to a quarter of the UK’s homes, and that it is on target to pass almost 13 million homes within the year, half of which will have access to 100Mbps.
Virgin Media last month completed a successful test running its network at 1.5Gbps at London’s TechHub in Old Street, but this is unlikely to be offered to residential customers in the near future.
BT is continuing its own £2.5bn FTTC roll-out. It claims to pass more than five million homes, of which 200,000 have signed up. This gives BT a 4% penetration rate for its “superfast”, up to 40Mbps Infinity service. It is also claiming to be taking the lion’s share of new DSL or copper-based business, by 141,000 of 251,000.
Meanwhile, both TalkTalk and Sky are moving customers onto their own fixed networks as fast as they can to cut costs.
The future development of the market is interestingly poised. On the infrastructure side, dozens of counties are waiting for BDUK, the government’s broadband funding agency, to loosen the purse strings to the remaining £400m of the government’s initial £530m earmarked for broadband not spots. However, BDUK appears to have gone into its shell, frustrating counties and community network operators that want to get on with broadband procurements.
The future market may also be affected by two court decisions this week. In the first, BT was ordered to block access to Newzbin2, an index of websites that serve illegal copies of film and video content. BT welcomed the decision, saying it affirmed its long-held contention that rightsholders need to go through the courts to assert their rights.
In the second, Meltwater, a news aggregation website, lost its appeal against an earlier judgment that its activities infringe the Newspaper Licensing Agency’s terms. According to legal commentators, this decision effectively makes copyright pirates of millions of people who browse the web.
The Meltwater decision is likely to increase pressure on the government to address the widely-praised Hargreaves report. Hargreaves’ key recommendation is to set up a tiered online market for licences for digital content.
Providing a fast, simple, cheap way for content creators to earn money from their work, without making them the indentured slaves of record companies and film studios, is likely to encourage many more to try their luck. If people can access this extra content cheaply and legally, they are likely to demand more content, and drive up demand for broadband.
Unless the government gives some leadership soon on both broadband infrastructure and content , it may find its overall goal of the best broadband network in Europe slipping through its fingers.
Vodafone’s shareolders will be buoyed by the announcement that Verizon Wireless, the US mobile network operator in which Vodafone has a 45% stake, will at last pay a dividend of $10bn. This will enable Vodafone to pay a 4.0p special dividend, with the £800m balance going to pay down debt.
The Verizon dividend, announced last night, will be paid on 31 January 2012. It is the first money Vodafone has seen from its investment since 2005, since when Verizon concentrated on paying down debt. The timing of the Vodafone distribution will be announced on 8 November 2011.
Vodafone’s share price on Thursday closed at 165.40p, up from its opening at 163.20, up almost 11% on a year ago when the company started selling off firms in which it did not own a controlling stake.
Verizon’s dividend suggests Vodafone may hang on to the American carrier for a while yet. Vodafone CEO Vittorio Colao said, “Our long term partnership in Verizon’s strong and successful wireless business has seen the value of our investment increase significantly over recent years.
“The dividend from Verizon Wireless allows us not only to reward our own shareholders with an immediate and sizeable cash return, but also to continue to reinvest in our business to improve our customers’ experience, further strengthen our competitive position and create additional value for shareholders.”
Ofcom’s release of broadband performance figures this morning was pretty useless if you wanted to know where to get value for money.
After spending the morning messing around with a spreadsheet (caveat: I don’t quite trust OpenOffice yet), the service you want is Virgin Media’s “up to” 30Mbps service. At its worst, between 8pm and 10pm on week-nights, it still provides 100% of what you pay for.
As you can see from the graph, the service you want to avoid is KCom’s Karoo, but KCom recently said it is upgrading its network, so users in the Hull enclave can look forward to an improved service.
Ofcom said, “The average advertised speed in May 2011 was 15Mbps, 8.2Mbps higher than average actual speeds of 6.8Mbps. In November/December 2010 the gap was 7.6Mbps (when the average actual speed was 6.2Mbps and average advertised speed was 13.8Mbps).
Given that ISPs except Virgin Media deliver a level of service that is below what they advertise, I asked the ISPs’ association what they had to say for themselves.
In a statement ISPA said, “As speeds increase then the gap between actual speeds and advertised speeds may also increase, as the speed of copper ADSL is prone to outside factors, such as the distance a customer lives from the telephone exchange or the condition of a customer’s phone line.”
ISPA also said that subscribers should pick an ISPA member when choosing a supplier because the supplier would have to abide by the ISPA code of practice.
Since BT is a leading ISP, its view of the code is important, especially in rural areas where it may be subscribers’ only choice of ISP.
In a statement BT said, “We give bespoke speed estimates to all customers at the point of sale and this is now underwritten by the code of practice. No customer should be in any doubt as to the likely speed that they should expect from our service – before they make a purchase decision.”
Which suggests that the code of practice does not outlaw ISPs continuing to advertise headline “up to” speeds, knowing full well that they cannot deliver them.
Earlier in the year, the Advertising Standards Authority asked its code-writing bodies to look into this issue and whether broadband advertising was misleading the public.
It said in a statement Ofcom’s latest findings would be part of its investigation, which would be “concluded as soon as possible”.
The news is not all bad. Ofcom found that average speeds were up fractionally from 6.3Mbps to 6.8Mbps since November 2010. Almost half (47%) of UK residential broadband users are on packages with advertised speeds above 10Mbps in May 2011, compared to 42% in November 2010 and just 8% in April 2009.
This shift no doubt made it easier for BT to accept Ofcom’s decision to cut the price of its “up to” 8Mbps service by the retail price index minus 12% a year – more people are paying more for faster packages, but clearly not getting what they pay for.
It is regrettable that Ofcom does not provide a geographic breakdown of its results. Its new interactive map provides some information, but not enough for consumers to make a decision on which supplier and service to choose, where there is a choice.
Farmers who want a slice of the £400m the government hands out each year for environmental stewardship can now find out how to apply for the new three-tier higher level stewardship (HLS) system via two online webinars.
All you need to take part in the webinars is access to the internet and a telephone, they say.
The webinars, organised by Natural England, are for land agents or anyone interested in how the new streamlined fast-track, standard and complex tiers are assessed.
To register for one of the hour-long webinars or for further information please call 0300 060 1695, or email firstname.lastname@example.org, and quote the reference and dates NEME848 (19 August 2011) or NEME849 (2 September 2011).
“Once registered, you will receive easy telephone and online joining instructions,” says Natural England.
Br0kenTeleph0n3 would like to hear how this works out on the light of the apparently poor broadband service available in rural areas.
Given the government’s plans to do things digital by default, here is an opportunity to run a real live field test of the technology. If nothing else we might establish a baseline of the practicability of actually doing things online in the countryside.
Please send an email (ironic, this, I know) to email@example.com saying how the sign-up process was and why, and if you manage to get onto the webinar, what the experience was like, and whether you think this way of doing things is a go-er.
We’ll publish the results here, and send a copy to culture secretary Jeremy Hunt and communications minister Ed Vaizey for their comments, as well as BDUK, so they can take your plight to heart.
North Lincolnshire and North East Lincolnshire county councils are together seeking a minimum 30Mbps broadband service for all businesses, homes and community centres throughout the South Humber area.
In a prior information notice published in the Official Journal of the EU, the counties said, ” We will need to fulfil the EU Digital Agenda target at 30Mbps for 100% of customers” as a result of applying for EU funding with extra support from BDUK, the govenrment’s broadband delivery unit.
They expect to use a “mix of technologies” such as FTTC (fibre to the cabinet), FTTP (fibre to the premises) and wireless to cover the whole of North and North East Lincolnshire.
Priority areas will be based on existing suppliers’ coverage plans, councils’ “regenration aspirations” and housing plans, public service network sharing plans, and digital divide statistics.
“There are significant areas of deprivation, high customer usage and planned regeneration investment where super fast broadband will not be available without intervention,” they said.
They plan to submit a BDUK broadband plan by October 2011.
Interested suppliers should register at https://scms.alito.co.uk – Project Reference NLC 22985 by 26 August 2011. More details from www.northlincs.gov.uk/procurement
The government should use the money from the upcoming 4G spectrum to extend mobile coverage in the UK, Ofcom’s Communications Consumer Panel says.
The panel said the market has already delivered maximum economic coverage for 2G voice services. 3G and new 4G services were unlikely to extend existing coverage, and it doubted that consumer and small business needs would be met.
This was “creating significant problems” for small businesses, as well as the three million people living in not-spots, the people passing through them and passengers on the rail and London tube networks, it said.
The panel wants Ofcom to consider imposing coverage obligations on the auction winners for each of the UK nations and some English regions, or to retain money from the spectrum auction to fund a reverse auction run to upgrade rural coverage. “Operators that successfully bid for this should be required to provide roaming for these areas,” the panel said in a statement.
Panel chairman Bob Warner said most places that were mobile not-spots 10 years ago were still not-spots. “The spectrum auction presents perhaps the only chance we have in the next decade to improve coverage in the nations and for rural communities.”
The present auction foresees mobile coverage of 92% of the population. Cumbria and Border MP Rory Stewart persuaded parliament to vote unanimously to extend 800MHz mobile coverage to 95%.
He estimated the cost of the 1500 extra towers was only some £215m. This was tiny relative to the improvement in the quality of life and potential economic impact on people who were now excluded, and a fractin of the £3bn Ofcom hoped to raise form the auction, he told parliament.
Mobile data revenues surged almost 25% to form just under 14% of Vodafone’s total sales for the quarter to June, the mobile network operator reported this morning.
Excluding the effects of regulatory cuts in the price of mobile termination rates (MTR), business in northern Europe grew strongly in Germany (4.0%) and UK (5.3%), but southern Europe, Italy (-1.5%) and Spain (-9.9%) continued to reflect the wider economic problems facing the countries. Business in Asia, Middle East and Pacific regions continued to grow strongly, particularly India (16.8%) and South Africa (7.8%).
CEO Vittorio Colao said the company had made a good start to the year. “Revenue from our key focus areas of data, enterprise and emerging markets continues to grow strongly,” he said.
He confirmed dividend guidance for the year ahead. Vodafone’s currently pays 6.3% on a share price which 12% up on a year ago at 164p.