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  • June 17, 2019

    UK mobile market Q1 2019 – Pressure to mount after mixed bag in [...]

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    The UK mobile market posted its slowest growth in more than two years this quarter; just 0.5% service revenue growth although net adds were strong and churn was down. ARPU is under considerable pressure thanks to regulation limiting out-of-bundle spend which will exacerbate as the year progresses. Several other negative developments look set to be layered on the pressures this quarter, including a step-up in competitive intensity as 5G launches –  with H3G’s pricing of unlimited data a sign of a resurgence in its aggression
    The UK mobile market posted its slowest growth in more than two years this quarter; just 0.5% service revenue growth although net adds wer [...]
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  • June 5, 2019

    UK HFSS advertising ban consultation

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    The UK government is now consulting on a wider TV advertising ban until 9pm for food and drink high in fat, salt and sugar (HFSS), to combat childhood obesity. TV and TV advertising are not the cause of children being overweight or obese (O+O). Policy change in this area should inform and educate parents and young children, as they have in Leeds and Amsterdam. With 64% of the UK population being O+O, obesity is a complex societal issue requiring a multifaceted approach. The evidence from existing rules, and plummeting TV viewing amongst children, says that further restrictions on TV advertising will be ineffective in curbing the rise of obesity in the UK.
    The UK government is now consulting on a wider TV advertising ban until 9pm for food and drink high in fat, salt and sugar (HFSS), to comb [...]
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    February 1, 2019

    Netflix’s local content push in the UK

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    With the UK perhaps Netflix’s most valuable market outside the US—home to a stellar production sector—the streaming service is escalating its foray into local production, opening a content hub in London and moving from co-productions to direct commissions. As UK content completely dominates UK video viewing outside of the SVODs, to expand subscription reach Netflix is endeavouring to become an alternative to the PSBs’ entertainment output; this local spend is efficient given the universality and worldwide appetite for British content. With a growing proportion of local content expenditure now coming from Netflix and other SVODs, there are ramifications for both broadcasters and producers—loss of viewing, potential market pressure, increased competition for premium content and hesitancy around their own SVOD plans—along with implications for the cultural landscape.
    With the UK perhaps Netflix’s most valuable market outside the US—home to a stellar production sector—the streaming service is escalating its foray into l [...]
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  • April 19, 2018

    Fox offers sale of Sky News to clear merger

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    The Competition and Markets Authority (CMA) will report on the public interest (PI) aspects of the Fox/Sky merger on 1 May to Secretary of State (SoS) Matt Hancock, who will announce his decision on 13 June to the Commons. Fox has offered to sell Sky News to Disney, which will prevent the Murdoch family from ever exercising control or influence and might appease opponents of the merger. The CMA is likely to advise the SoS to clear the merger, conditional on the Sky News sale to Disney, which the SoS could accept. Fox will then participate in the end-game for Sky, where Comcast is also a determined bidder.
    The Competition and Markets Authority (CMA) will report on the public interest (PI) aspects of the Fox/Sky merger on 1 May to Secretary of State (SoS) Matt Hanc [...]
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  • March 2, 2018

    UK broadband, telephony and pay TV trends Q4 2017

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    UK residential communications market revenue growth fell again to 1.2%, with weakening ARPU growth the main driver. New customer pricing remains flat to down, and existing customers are being increasingly discounted, fuelling the ARPU weakness. High speed broadband adoption is proceeding apace, but the high speed premium is fairly thin, muting the impact on ARPU. Regulated wholesale price cuts from Openreach finalised today and due in April 2018 will not help. Looking forward, the March quarter will benefit from price timing effects at BT and Virgin Media, but we fear that the rest of 2018 will follow the current downward trend and the operators will need to adjust to an ex-growth environment.
    UK residential communications market revenue growth fell again to 1.2%, with weakening ARPU growth the main driver. New customer pricing remains flat to down, a [...]
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  • June 10, 2017

    BT Q4 2016/17 results: Mobile strength, pressure elsewhere

    BT had a reasonable quarter in its consumer broadband business given market pressures, and a very strong one at EE with continued growth acceleration. It had a good quarter for fibre adoption as well, helping its wholesale divisions stabilise their revenue, but business/IT was weak as expected.Regulatory pressure remains intense despite the (welcome) Openreach agreement, with price cap regulation proposed or due on a range of products, and a regulatory approach which is far from investment-orientated. Pressures in the business/IT market are likely to continue, and pressures in the consumer broadband market are likely to intensify, justifying BT’s current cautious approach to guidance and dividends.

    BT had a reasonable quarter in its consumer broadband business given market pressures, and a very strong one at EE with continued g [...]

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  • March 21, 2017

    21CF and the bid for Sky: state of play

    Secretary of State Karen Bradley has intervened on two UK public interest grounds in 21CF’s bid for 100% ownership of Sky: media plurality, as in 2010, and a commitment to broadcasting standards, new in 2017. Ofcom will assess any implications of 21CF’s full control of Sky on whether it is ‘fit and proper’ to hold a broadcast licence, reporting back on 16 May. Undertakings are a live issue in the 2016 bid, notably to protect the editorial independence of Sky News, noting the bid faces determined opposition from certain quarters.
    Secretary of State Karen Bradley has intervened on two UK public interest grounds in 21CF’s bid for 100% ownership of Sky: media plurality, as in 2010, and a [...]
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    August 12, 2016

    US and UK: Cord-cutting-shaving-nevering

    Cord-cutting has become a major headache for US pay-TV operators in the last three years, while cable network channels face further erosion due to cord-shaving and we now see a rapidly growing population of cord-nevering households that have never taken a pay-TV subscription. Should we expect it to be only a matter of time for the UK to follow the US? The short answer is no, due to major differences in the pay-TV market infrastructures of the two countries, which leave the UK much less exposed. However, downward pressures from the online space do exist in both countries, while the big cord-cutting-shaving-nevering threat we now see in the UK has most of all to do with the chill Brexit winds on the economy.

    Cord-cutting has become a major headache for US pay-TV operators in the last three years, while cable network channels face further [...]

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    August 4, 2016

    Openreach: The Seventh Degree of Separation

    Ofcom’s latest proposal for the structure of BT’s Openreach sits neatly between BT’s offer and its competitors’ demands, and is broadly sensible if the Pension Fund and cost issues can be resolved. Ofcom has been under pressure from MPs, consumer groups, BT’s competitors and others to ‘sort out’ BT given its perceived under-investment, despite UK broadband consumer outcomes being the best among European peers on nearly all objective measures. Ofcom’s focus on separation is therefore understandable, but we believe misplaced; while technical governance details are debated, BT’s share price (and hence ability to invest) languishes, and more concrete steps to give investment certainty get put on the back burner. Ofcom might be encouraging investment in theory, but not in practice.

    Ofcom’s latest proposal for the structure of BT’s Openreach sits neatly between BT’s offer and its competitors’ demands, an [...]

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    March 30, 2016

    Ofcom’s Digital Communications Review: Blessed are the investo [...]

    Ofcom is encouraging competitive investment in local access networks using BT’s ducts and poles; in our view this is very unlikely to happen on a large scale, due to both the lack of spare capacity in existing plant and the generally poor prospective economics of a third local access network in the UK. Ofcom’s favoured model for Openreach is an enhanced version of the current structural separation model, and this is most likely to be reached via a negotiated settlement with BT; this and a number of other proposed measures, if implemented, will increase Openreach’s costs, and these costs will be re-charged to both BT’s retail division and its DSL competitors. Ofcom remains keen to retain four mobile network operators, in spite of clear evidence that at most three are viable at current retail price levels, and it is keen to implement a number of interventionist consumer protection measures that suggest it is keen on competition in theory, but not so much in practice.
    Ofcom is encouraging competitive investment in local access networks using BT’s ducts and poles; in our view this is very unlikely to happen on a large scale, [...]
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    March 23, 2016

    Apple’s iPhone bargain

    More attractively priced than previous entry level iPhones, the new SE extends Apple’s smartphone lineup down towards the mid-price segment to better compete with Android over price-sensitive users. At a time of investor concern over slowing down iPhone unit sales, the SE marks the first shift in Apple’s strategic calculus for the iPhone from gross margins to unit volumes. SE supports the iOS ecosystem in a crucial period of growth for mobile payment services, making the entire iPhone roster Apple Pay compatible.

    More attractively priced than previous entry level iPhones, the new SE extends Apple’s smartphone lineup down towards the mid-pri [...]

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    February 24, 2016

    A future for tablet publishing? La Presse case study

    Montreal’s La Presse follows a unique tablet-focussed, free access, fast track digital strategy. It said adieu to weekday print editions in December. An in-house developed app – La Presse+ – sets new benchmarks: advertising friendly, easy to navigate, and engaging. High ABC1 market share in French speaking Quebec helped build digital scale rapidly. La Presse+ has broken circulation records thanks to an influx of younger readers. Advertising is sold at a premium to print and the newsroom has expanded. In a tougher market The Toronto Star launched the app last September with positive initial results. The Star Touch approach is additive rather than substitutional to print and may be more relevant to newspapers elsewhere. Slower tablet penetration growth is no big worry as phone screen sizes increase and PCs converge towards tablets.

    Montreal’s La Presse follows a unique tablet-focussed, free access, fast track digital strategy. It said adieu to weekday print e [...]

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    September 26, 2006

    UK termination rate cuts… and increases

    Ofcom has reintroduced price reductions for UK mobile call termination charges, cutting 2G termination rates in real terms by between 6% and 16% over four years and introducing regulation for 3G call termination that will cut rates by almost 50% from current levels
    Ofcom has reintroduced price reductions for UK mobile call termination charges, cutting 2G termination rates in real terms by between 6% and 16% over four years [...]
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