---

 

 

Figures released by the OECD place the UK in thirteenth position out of the OECD countries in terms of broadband penetration per head of population; with a take-up of 15.9% (i.e. there are nearly 16 broadband connections per 100 inhabitants). For the first time since the OECD began monitoring broadband penetration, Korea has been displaced as the leading nation for broadband penetration per population after being overtaken by Iceland, where there are almost 27 broadband connections per 100 inhabitants.

 

Forecasts from Datamonitor predict that 60% of European households will have a broadband connection by mid-2008, after which the level of demand will decrease. Current estimates indicate that 35% of UK households have a broadband connection. To reach 60% household penetration in the UK would require a near doubling of broadband connections over the next two and a half years. The Netherlands seems set to become the first European nation to reach the 60% household penetration mark having already passed 50% by the end of 2005.

 

The dominant broadband technology continues to be DSL, which has grown by 42% between Q4 2004 and Q4 2005 compared to cable modem and other technologies which grew by 27% during the same period. Point Topic figures show that DSL accounts for 66% of the world's broadband lines at the end of 2005.

 

Results from the ORC market survey, commissioned by the Welsh Assembly Government, indicate that 39% of households in Wales currently have a broadband connection. This equates to 18 broadband connections per 100 inhabitants in Wales, ahead of the comparative figure for the UK at 16 connections per 100 inhabitants.

 

Every BT exchange in Wales will be enabled for broadband services by the end of summer 2006. The Welsh Assembly Government's Broadband Wales Programme awarded a contract to BT Group to provide infrastructure for the final exchange areas in Wales that are without broadband as part of the Regional Innovative Broadband Support Scheme (RIBS). In addition this programme will also address broadband not-spots across wales.

 

Competition to provide higher connection speeds in the UK has increased. BT launched its ADSL Max service nationally at the end of March, offering download speeds of up to 8Mbps to end-users. Bulldog, UKOnline and Be have all launched services over ADSL2+ offering maximum download speeds of up to 24Mbps.

 

Bulldog remains as the only local loop unbundling operator active in Wales and now offers services of up to 16Mbps using ADSL2+ technology. However, competition looks set to increase in the LLU sector with a number of ISPs announcing LLU rollout plans throughout the UK. Both The Carphone Warehouse and Wanadoo (which will be rebranded as Orange in June 2006) have indicated that exchanges within Wales will be part of their respective rollout plans

 

Korea has shown signs that its broadband market has moved on to the next stage of development. After experiencing growth of just 2% in broadband connections over 2005 the Korean broadband market looks to have reached saturation. The focus in the market has now changed to accessing higher bandwidth services, evidenced by the growing number of end-users switching from DSL and cable based services to the higher bandwidth services offered by fibre.

 

Coverage in Wales

 

 

BT data from January 2006 shows that 99.5% of premises in Wales were connected to DSL enabled exchanges. However, due to localised technical issues such as distance from exchange or poor quality of networks, some premises within these exchange areas are not suitable for delivery of broadband services, or can only access services at very low speeds.

 

BT launched its ADSL Max products nationally on the 31^st of March 2006. These products offer theoretical line rates of up to 8Mbps to end-users. While these products will increase the connection speeds that are available to many people in Wales, only a relatively small percentage of users will receive full 8Mbps connectivity due to a range of physical factors, including line length and the quality of the line. According to BT Wholesale figures only 25% of its customers will be able to receive 6.5Mbps or above and 78% will be able to receive 4Mbps and above.

 

Maximum line speed	% of BT customers able to receive
6.5Mb and above	25%
6Mb	42%
4Mb	78%
2Mb	93%

 

 

There are a greater percentage of households in Wales (18%) that are further than 5km from a BT exchange than in the UK as a whole (14%). As such, fewer households will receive any benefit from the ADSL Max products in Wales than in the UK as a whole. However it is also worth noting that a greater percentage of Welsh households are within 2km of a BT exchange than in the UK, and as a result, a greater percentage of households will be able to achieve line rates that are at the higher end of what the products can offer.

 

 

ADSL2+ is capable of delivering much higher downstream speeds to the end-user – up to 26Mbps compared to 8Mbps with ADSL. However, higher speeds are only achievable with ADSL2+ over short local loop distances as once the distance from the exchange exceeds 1km, downstream speeds achievable fall rapidly. Figure 2 shows that ADSL and ADSL2+ offer similar speeds where the line length exceeds 3km. ADSL2+ does not therefore extend the reach of DSL services.

 

Figure 3 shows that in theory 50% of households in the UK are serviced by lines that can achieve downstream speeds of 15Mbps using ADSL2+. However, all these distances are estimates.  Telephone lines follow streets rather than connect "as the crow flies".  Exchanges often have extra cabling within the building which adds to the distance the signal travels prior to leaving the exchange building. Point Topic figures suggest that only 19% of Welsh households have a local loop that is 2km from the exchange and, as such, only 19% of Welsh households would be able to achieve download speeds of 15Mbps. 

 

On 14th March 2006 the Welsh Assembly Government's Broadband Wales Programme awarded a contract to BT Group to provide infrastructure for the final exchange areas in Wales that are without broadband, as part of the Regional Innovative Broadband Support Scheme (RIBS).

 

The broadband rollout will be implemented in a two-stage approach. The first stage will concentrate on enabling the 35 remaining exchanges in Wales that are not broadband enabled. Once this work is completed there will still be a small proportion of the population who live inside enabled exchange areas but still cannot access broadband due to a variety of technological issues. The second stage of the rollout will then focus on identifying these remaining not-spots and exploring ways of bringing broadband to these residents. These not-spots will be identified through the Broadband Brokerage website at www.bbwo.org.uk or www.abec.org.uk and anyone living within a not-spot area should register their details.

 

Exchange Name	Local Authority	Ready for Service Date
Gwynfe	Carmarthenshire	30-Jun-06
Llangurig	Powys	30-Jun-06
Llanarmon	Wrexham	30-Jun-06
Moylegrove	Pembrokeshire	30-Jun-06
Llanwddyn	Powys	07-Jul-06
Penmaen	Swansea	07-Jul-06
Cynghordy	Carmarthenshire	14-Jul-06
Merthyr Cynog	Powys	21-Jul-06
Pantydwr	Powys	21-Jul-06
Rhandirmwyn	Carmarthenshire	22-Jul-06
Angle	Pembrokeshire	22-Jul-06
Capel Curig	Conwy	28-Jul-06
Castle Caereinion	Powys	28-Jul-06
Gladestry	Powys	28-Jul-06
Abergynolwyn	Gwynedd	28-Jul-06
Whitton	Powys	28-Jul-06
Skenfrith	Monmouthshire	28-Jul-06
St Nicholas	Pembrokeshire	28-Jul-06
Llangunllo	Powys	05-Aug-06
Bryneglwys	Denbighshire	05-Aug-06
Cyffylliog	Denbighshire	05-Aug-06
Llantilio	Monmouthshire	05-Aug-06
Pennal	Gwynedd	11-Aug-06
Rhydymain	Gwynedd	11-Aug-06
Ganllwyd	Gwynedd	11-Aug-06
Glandyfi	Ceredigion	19-Aug-06
Beguildy	Powys	25-Aug-06
Llannefydd	Conwy	01-Sep-06
Bontddu	Gwynedd	02-Sep-06
Hundred House	Powys	08-Sep-06
Painscastle	Powys	22-Sep-06
Cross Ash	Monmouthshire	22-Sep-06
Rhiw	Gwynedd	To be confirmed
Llawhaden	Pembrokeshire	To be confirmed
Rhos	Pembrokeshire	To be confirmed

 

 

BT has made no further announcements regarding a restart of SDSL roll-out in the UK. As such, BBWO estimates that there has been no change in the availability of SDSL services in Wales and that SDSL covers 25% of all domestic sites and 29% of all non-domestic in Wales.  The UK average is estimated to be 42% of sites, with only Scotland having lower SDSL availability than Wales at 17%.  Neath exchange in Neath Port Talbot was the last exchange in Wales to be upgraded leaving Wales with nineteen SDSL-enabled exchanges.

 

Bulldog continues to be the only LLU operator to have rolled out DSL broadband in Wales so far. During April 2006 Bulldog announced that it had doubled the speed of its services from 8Mbps to 16Mbps, for home and small business users, through the use of ADSL2+ technology. Bulldog offers broadband services to around 15.4% of all sites in Wales, or an estimated 10-15% of the population. These sites are located within the unbundled exchange areas of Cardiff and Wrexham.

 

The Carphone Warehouse have plans to unbundle 30 exchanges in Wales by the end of July 2006 as part of their plan to create a network covering 70% of UK households. Many other LLU operators have announced plans to extend their coverage throughout the UK but it is unclear as yet to what extent they will be investing in Wales.

 

Wanadoo have indicated that they will unbundle 12 exchanges in Wales by the end of September 2006 as part of their plans to unbundle 500 exchanges throughout the UK.  (Wanadoo will be rebranded as Orange in June 2006.)

 

 

Cable Modem Broadband Coverage

 

BBWO estimate that NTL cable broadband coverage in Wales has remained stable since Q1 2005 with their fibre network reaching within 500m of between 300,000 and 350,000 households in Wales. Figures from Ovum suggest that 25.1% of Welsh households are able to access broadband services via cable modem.

 

 

 

Figures from Ovum suggest that Fixed Wireless Access broadband is unavailable in Wales. However it is known that FWA is offered by a limited number of niche providers in Wales, including TNS, Gaia Technologies, WB Net, Dragon Net, England Comms, Updata and Deudraeth Cyf.

 

BBWO estimates that there are more than 500 public access wireless hotspots in Wales.

 

 

3G data services can provide download speeds to end-users of up to 384kbps. 3G network coverage in Wales is inferior to the UK as a whole. According to Ofcom 75.9% of postal districts with at least 25% area coverage in Wales are covered by at least one operator compared to 90.5% for the UK as a whole. Furthermore, only 10.1% of postal districts with at least 25% area coverage in Wales are covered by 4 or more operators compared to 46.2% for the UK as a whole.

 

 

Satellite broadband services are available to over 99% of sites in Wales. According to Ofcom there are 67 operators currently offering satellite broadband services in Wales.

Coverage in UK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

According to figures from Ovum, 99.7% of UK households were covered by broadband technologies in Q3 2005. Furthermore, 45% of all households had a choice between two broadband technologies and 7% had a choice between three.

 

 

 

Overall coverage of broadband in rural areas of the UK has almost caught up with coverage for the UK as a whole, with 98.6% of rural households now covered by a broadband technology. However, there is still a significant difference between choice of broadband technologies in urban, suburban and rural areas, meaning that competition between technologies is significantly lower in rural areas.

 

 

BT figures indicate that 99.9% of UK households and businesses are now served by exchanges that have been ADSL enabled and that more than 99.8% of all end-users connected to an enabled exchange can receive ADSL broadband services. As such, it is estimated that 99.7% of all UK households and businesses can receive ADSL broadband services. 

 

The Local Development Agency, Yorkshire Forward, announced that at the end of 2005 every exchange in the Yorkshire and Humberside region had been enabled for ADSL broadband. This was the result of funding provided by Yorkshire Forward to enable the 24 exchanges that had been deemed commercially unviable by BT.

 

No further announcements have been made by BT regarding further SDSL roll-out in the UK, and, as such, estimated coverage remains at just below 50% of UK households.

 

There are a number of operators now actively involved in local loop unbundling in the UK.

 

Pipex has started to migrate its customers onto unbundled exchanges during April 2006 and has announced plans to unbundle 100 exchanges by the end of the year.

 

The Carphone Warehouse has announced plans to unbundle 1,018 exchanges throughout the UK by the end of July 2006. In April 2006 it announced that it would offer 'free' broadband to end-users living within its exchange areas. To take up the offer customers must subscribe to Carphone's TalkTalk fixed line phone service for £9.99 a month for a minimum of 18 months. A monthly line rental charge of £11.00 will also apply making a total cost of line rental, calls and broadband of £20.99 a month.

 

AOL announced in January 2006 that it would invest £50 million in unbundling 300 exchanges in the UK, giving it access to around 20% of the population. If this first stage proves a success, AOL then intends to invest a further £70m to unbundle 1,000 more exchanges.

 

Wanadoo (rebranded as Orange in June 2006) has already unbundled 200 of BT's exchanges and 500 are planned by the end of the year, Tiscali had unbundled 241 exchanges by mid-March 2006.

 

Bulldog has launched a new suite of products aimed at Small and Medium Enterprises (SMEs). Research carried out by Bulldog showed that 45 percent of businesses felt they could grow faster if they had access to the right information and communications technology at the right price and with the right support. The SME packages are targeted at businesses with up to fifty staff.  Bulldog have unbundled more than 400 exchanges throughout the UK and expect to increase this to almost 600 by the end of August 2006.

 

UKOnline claim to have a network that reaches 4.4 million households across the UK, and offers 22Mbps services to these households using ADSL2+ technology. Sky has now installed its own kit in 259 BT exchanges. With around a dozen exchanges being unbundled each week, it plans to reach around 379 BT exchanges by the end of June. This would mean that some 7.5m (30 per cent) of UK homes would be connected to a Sky-unbundled exchange. The operator is looking to increase coverage so that 70 % of UK homes can access its broadband service by the end of 2007.

 

After undergoing trials, Bulldog launched ADSL2+ services over its network in April 2006. The services are available in all Bulldog's unbundled exchanges offering download speeds of up to 16Mbps.

 

At the end of April 2006, Swedish ISP Be had unbundled 130 exchanges in the UK, while a further 324 exchanges had been assigned dates for unbundling. Be offers 24Mbps services over its network.

 

 

 

The consolidation of the cable sector in the UK has seen NTL and Telewest merge to become NTL Incorporated. According to NTL Incorporated its network pass more than 12 million UK households and businesses (NTL networks pass around 7.7 million and Telewest pass around 4.7 million). Cable services are available to 50% of UK households and 85% of UK businesses.

 

NTL confirmed early in April that it is to acquire Virgin Mobile for £962 million. The deal will allow NTL to offer services under the Virgin brand and will also allow them to extend their 'triple play' offerings to a 'quad play' and create greater scope for new converged services.

 

 

 

Satellite Broadband Coverage

 

Satellite broadband services are available to over 99% of sites in the UK.

 

 

According to figures from Ovum, 11.2% of the UK population are able to receive broadband services via fixed wireless access (FWA) technology.

 

 

Broadband coverage for countries, as shown in Figure 7, indicates that the UK has one of the widest reaching broadband networks of the listed countries. A number of countries are nearing 100% broadband availability, headed by the UK, Belgium and The Netherlands.

 

 

The percentage of end-users that preside within the range of 2Mbps ADSL services varies from country to country. Local loop lengths tend to be very short in Italy, where more than 95% of premises could receive services of 2Mbps or above using ADSL technology. In contrast, within the US, local loop lengths are much longer on average leaving only as little as 60% of premises being able to receive services of 2Mbps or above using ADSL technology. The IEEE estimates that around 90% of UK premises can receive services of 2Mbps or above using ADSL technology. Within countries, local loops tend to be longer in rural and remote areas, so it is particularly difficult to provide broadband services by DSL in these areas. (The figures given are theoretical and can in practice be complicated by other factors).

 

 

Research carried out by BBWO indicates that the costs of basic broadband services, for both residential and business customers, are the same in Wales as in the rest of the UK. The service speeds available in Wales, however, are lower than those available in London and the South East.

 

	Consumer	Business
	Minimum	Maximum	Minimum	Maximum
	£	Speed	£	Speed	£	Speed	£	Speed
London	9.75	8Mbps	14.00	24Mbps	13.61	8Mbps	75.00	24Mbps
South East	9.75	8Mbps	14.00	24Mbps	13.61	8Mbps	75.00	24Mbps
Welsh Cities	9.75	8Mbps	14.75	16Mbps	13.61	8Mbps	45.00	16Mbps
Welsh Towns	9.99	1Mbps	13.99	8Mbps	13.61	8Mbps	13.61	8Mbps
Welsh Villages	9.99	1Mbps	13.99	8Mbps	13.61	8Mbps	13.61	8Mbps

 

 

The highest speed available in the consumer market (i.e. 24Mbps) is not available in Wales to either business or household customers, and is only available to a limited number of exchanges in the UK. The highest speed available in Wales has doubled since the last quarter, from 8Mbps to 16Mbps, after Bulldog doubled the speeds of its services through the use of ADSL2+. However, these services are only available in nine exchanges in Wales in the Cardiff and Wrexham areas.

 

The recent launch of BT Max 8Mbps services nationwide has made higher speed services available to a large number of households and businesses throughout the country. Prices for the BT Max services start from £14.99 per month – a competitive price when compared to the cheapest widely available 8Mbps service in Wales at £13.99. Bulldog's 8Mbps services start from £9.75 per month.

 

	Index value Q3 2005	G7 Rank Q3 2005	Index value Q1 2005	G7 Rank Q1 2005	G7 Rank Q3 2004
Japan	0.98	1	0.98	1	1
France	0.85	2	0.94	2	2
Canada	0.80	3	0.77	3	3
UK	0.76	4	0.72	4	4
Ireland	0.75		0.67
Italy	0.70	5	0.50	6	7
Australia	0.69		0.63
Sweden	0.65		0.63
US	0.62	6	0.62	5	5
South Korea	0.54		0.53
Germany	0.46	7	0.41	7	6

 

 

 

The most significant change in index value over the period was experienced in France, where the index value dropped from 0.94 to 0.85. Its high position at Q1 2005 was the result of price cuts in the market driven by the increased coverage of LLU and the aggressive pricing strategies of the LLU operators. However, price increases introduced by Wanadoo during the period between Q1 2005 and Q3 2005 have seen the price index fall. Despite this decrease in index value, France remains in a strong position, placing second in the G7 ranking.

 

Penetration of Broadband in Wales

 

Results from the ORC survey commissioned by WAG in January 2006 indicate that 39% of Welsh households have a broadband connection (of 512kbps or above). This equates to 18.2% of the population in Wales.

 

BT Wholesale estimates that 26.3% of BT landlines in Wales were using DSL broadband in Q4 2005. Information regarding take-up of cable broadband is not available specifically for Wales, but an estimate of cable penetration in Wales based on UK figures indicates that approximately 10% of households have a cable broadband connection. This would total to suggest a penetration figure of around 36% for Wales, a slightly more conservative estimate than the ORC figures. The ORC study provides a breakdown of cable, DSL, wireless and satellite connections. This can be used to provide a more accurate estimate.

 

With regards to regional broadband penetration in Wales, the level of broadband connectivity has remained static in Cardiff at 41% of households, while take-up in other areas has increased markedly over Q4 2005. The ORC figures show that the highest levels of broadband penetration in Wales are in the Vale of Glamorgan at 51% of households and in Newport at 48% of households. Areas showing particularly high growth over the last period include Carmarthenshire (up to 33% from 13% last time) and Conwy (up to 38% from 20%). These figures suggest that the expansion of broadband in Wales is of truly national proportions.

 

 

The results of the ORC survey suggest that Wales has overtaken the UK as a whole in terms of broadband penetration.

 

Welsh speakers can now order broadband from BT through the medium of Welsh. The service is provided by telephone through BT's Welsh language bureau.

 

 

The ORC figures place Wales ahead of both the EU-15 and EU-25 averages for broadband household penetration, indicating that Wales is in a strong position. Whilst Wales is in a strong position when compared to nations such as Germany and Spain, it is still some way behind broadband leaders Iceland and The Netherlands.

 

 

At the end of 2005, 26% of households and businesses in Wales able to access an ADSL enabled exchange had a broadband connection. This represents an increase of 11% in broadband take-up by households and businesses in Wales since the end of 2004.

 

	UK	WALES
	ADSL broadband connections	ADSL broadband connections	Percent of households and businesses [2]	Percent of population [3]
Dec 04	4m [4]	208,000 [5]	14.9%	6.9%
Mar 05	5m 3	245,000 [6]	17.5%	8.2%
Jun 05	5.6m 3	250,000 4	17.9%	8.3%
Sept 05	6.m [7]	302,000 5	21.6%	10.1%
Dec 05	6.9m6	370,000 5	26.3%	12.3%

 

 

 

 

Market share figures for Q4 2005 show that there has been a fall in the market share of cable broadband operators over the last year. NTL and Telewest accounted for 31.8% of the broadband market in Q4 2004. However this had dropped to 26.8% in Q4 2005. This has been to the advantage of DSL operators with BT and LLU operators showing an increase in their market shares over the same period. Despite a fall in relative market share, the continued growth in broadband penetration in the UK has enabled continued growth in cable broadband take-up.  In the absence of specific figures for Wales, BBWO estimates that cable penetration in Wales has continued to increase and currently stands at approximately 140,000 connections, which equates to approximately 10% of households and businesses in Wales (i.e. 5% of total cable broadband connections in the UK).

 

 

 

Penetration of Broadband in UK

 

The UK is now in seventh position in the world in terms of the total number of broadband lines, falling one place from its position in September 2005 after being overtaken by Germany. Analyst firm Point Topic had predicted that the UK would overtake France for the first time by the end of 2005. However, higher levels of growth than expected were experienced in France during the final quarter of 2005 allowing it to stay fractionally ahead of the UK.

 

 

While coverage of broadband in rural and suburban areas has now almost caught up with coverage in urban areas, there is still a significant disparity between the penetrations of broadband in these areas. At 24% of households, the broadband penetration in urban areas is more than double that of rural areas. Broadband penetration of businesses is also considerably higher in urban areas than in rural areas.

 

 

Figures from the Office of National Statistics (ONS) indicate that broadband connections continue to account for an increasing proportion of internet subscriptions in the UK. Figures supplied by ONS are subject to regular review and revision to optimise accuracy, and hence do not correlate exactly to those shown in previous benchmark reports.

 

 

BT Wholesale figures indicate that there were 6.9 million DSL broadband connections in the UK at the end of December 2005.  

 

 

NTL reported their end year results for 2005 in February 2006 along with summary results for Telewest. The results indicated that NTL had 1.8 million broadband subscribers and Telewest subscriber numbers surpassed 1 million during the final quarter of the year. The combined group will therefore have 2.8 million broadband subscribers, making it the largest retail player in the UK broadband market.

 

 

 

Cable networks in the UK mainly cover urban areas, and as a result there is a significantly higher penetration of this technology in urban areas than in rural areas.

 

 

Ovum estimate that there are around 8,000 FWA subscribers in the UK and that most of those are business users. Ovum also estimates that the UK has approximately 50% of the 4,500+ hotspots in Europe.

 

There are more than 3,000 satellite broadband subscriptions in the UK with around two thirds of them accounted for by business users.

 

 

 

 

BT Wholesale holds a 71% share of the total UK broadband market which is fairly high compared to other Western European incumbents. This equates to a 97% share of the DSL wholesale market indicating that while LLU operators are making progress in the UK, BT is still very much the dominant force in the sector.

 

The incumbent share of the wholesale market is relatively high in the UK when compared to other major broadband markets in Western Europe. At 71% BT has a considerably higher share than the incumbent in The Netherlands, the lowest in Western Europe, which has a 42% share of the Dutch wholesale broadband market. The low share of the Dutch incumbent is the result of a highly competitive market propagated by high demand for broadband services, extensive cable networks and high levels of LLU.

 

 

 

 

The wholesale broadband market shares of the major players in the UK have remained fairly stable over the past year. This may change to a degree over the near future as LLU operators bring increased competition into the sector.

 

 

BT Retail holds a 24% share of the total retail market in the UK which is the lowest incumbent retail share of all the Western European countries. This equates to a 32% share of the total broadband market, falling from 36% at the end of 2004.

 

Despite having a relatively uncompetitive wholesale market, the UK retail market is one of the most competitive in Western Europe due to the high number of ISPs reselling BT's DSL lines. As competition from LLU operators increases in the UK it is likely that competition at a retail level will remain stable while competition at a wholesale level will increase.

Penetration of Broadband in the rest of the world

 

 

 

The worldwide total of broadband connections surpassed 200 million connections during 2005. According to analyst firm Point Topic there were 209 million broadband lines at the end of the year. This represented a growth of 37%, or 56 million lines, over the year.

 

 

There is a small difference in the statistics provided by the key analyst firms and the OECD, with the OECD continuing to place the UK behind the USA whilst Analysys figures place the UK ahead in terms of penetration as a percentage of population.  These variations are caused by differences in methodology for data collection and a comparison of figures released for the UK in Q4 shows a variation of approximately 0.4%, with Analysys Research indicating UK take up as 16.3% compared to the OECD 15.9%.  This small percentage difference indicates how close broadband take-up as a percentage of population is between certain OECD countries and their relative position in any league tables.

 

OECD Country	DSL	Cable	Other	Total
Iceland	25.9	0.1	0.6	26.7
Korea	13.6	8.3	3.4	25.4
Netherlands	15.7	9.6	0.0	25.3
Denmark	15.3	7.2	2.5	25.0
Switzerland	14.7	8.0	0.4	23.1
Finland	19.5	2.8	0.1	22.5
Norway	17.8	2.9	1.2	21.9
Canada	10.1	10.8	0.1	21.0
Sweden	13.3	3.4	3.6	20.3
Belgium	11.3	7.0	0.0	18.3
Japan	11.3	2.5	3.8	17.6
United States	6.5	9.0	1.3	16.8
United Kingdom	11.5	4.4	0.0	15.9
France	14.3	0.9	0.0	15.2
Luxembourg	13.3	1.6	0.0	14.9
Austria	8.1	5.8	0.2	14.1
Australia	10.8	2.6	0.4	13.8
Germany	12.6	0.3	0.1	13.0
Italy	11.3	0.0	0.6	11.9
Spain	9.2	2.5	0.1	11.7
Portugal	6.6	4.9	0.0	11.5
New Zealand	7.3	0.4	0.4	8.1
Ireland	5.0	0.6	1.1	6.7
Czech Republic	3.0	1.4	2.0	6.4
Hungary	4.1	2.1	0.1	6.3
Slovak Republic	2.0	0.4	0.2	2.5
Poland	1.6	0.7	0.1	2.4
Mexico	1.5	0.6	0.0	2.2
Turkey	2.1	0.0	0.0	2.1
Greece	1.4	0.0	0.0	1.4
OECD Average	8.4	4.2	1.0	13.6

 

 

The UK has made good progress in the growth of broadband after a slow start. At the end of 2001 the UK placed 21^st in the OECD but has since risen to 13^th by the end of 2005 with 16 broadband connections per 100 inhabitants.

 

Based on figures from the ORC survey, 39% of households in Wales had a broadband connection at the end of 2005. This equates to around 18 broadband connections per 100 inhabitants which suggests that broadband penetration is greater in Wales than in some of the most significant markets in the OECD such as Japan and the United States.

 

After several years as the leading nation for broadband penetration in the OECD, Korea has lost its leading position after being overtaken by Iceland. Other highly developed broadband nations, such as The Netherlands and Denmark, are also rapidly catching up. With small growth experienced over recent years, Korea is showing clear signs that its broadband market has reached saturation levels.

 

 

LLU accounted for only a very small share of the UK DSL market at the end of 2005. Figure 22 shows that the main competition to the incumbent (BT) comes from bitstream and reselling of the incumbents lines. In contrast, markets such as France, Germany and Sweden have considerable LLU shares.

 

The LLU share of the market in the UK is increasing. Point Topic suggest that the OTA target of 1 million unbundled lines by the end of 2006 will be easily achieved, although it suggests that a target of 2 million suggested by some analysts is overoptimistic and that a compromise figure of 1.5 million is expected to be achieved.

 

While increasing competition and product differentiation in the areas where it is deployed, there is evidence to suggest that LLU is creating a new 'digital divide' in broadband markets where it is widely used. In France, which has the highest LLU share of the DSL market in Europe, LLU coverage has now reached around 50% of the population but further growth of coverage has slowed as operators have concentrated on the more lucrative urban areas. According to the French regulator, ARCEP, the majority of sites unbundled recently were for public networks launched by local governments.

 

 

There is a general trend with both basic ICT penetration and broadband penetration. Countries with a high penetration of PCs and internet also have a high broadband penetration. Evidence of this is the fact that Iceland has the highest PC and broadband penetration in the OECD. The low basic ICT penetration in Ireland has led to the government recognising that PC and internet penetration need to be factored into any overall broadband strategy. Furthermore, it has acknowledged that the new generation of games consoles, such as the Xbox 360 and the Playstation 2, are now broadband enabled, and due to the high penetration of such consoles in Irish households, these devices should also be factored into any approach to enhancing further broadband penetration in the home[15].

 

According to Ofcom figures. penetration of basic ICT is slightly lower in Wales than in the UK as a whole. As a result, there is currently a smaller market for broadband in Wales.

 

The PC remains the dominant access device for internet access in Wales. However, mobile phones, TVs and games consoles are being used increasingly for internet access.

 

 

The most popular use of the internet in Wales is for researching and shopping.

 

More individuals in the UK purchase goods and services over the internet than in the EU-15 and EU-25. More than 44% of private individuals in the UK used the internet to purchase goods or services during 2005. The most popular online purchases in the UK are films, music and travel services.

 

Eurostat figures show that broadband penetration in UK businesses is in line with the EU-15 average. Some 65% of all enterprises had a broadband connection in 2005. Figure 29 shows that the Scandinavian countries of Sweden, Denmark, Finland and Norway lead the EU in business broadband penetration. Of the new member states that joined the EU in 2004, Slovenia and Estonia are making particularly impressive progress in the use of broadband in businesses, leading established nations such as the UK, Germany and Italy.

Applications and Drivers

 

Countries with a high penetration of services that are 'part way' towards broadband (i.e. flat rate narrowband, ISDN, digital TV, 3G) have a large number of subscribers, who may switch over to broadband given certain instances. Therefore, countries with high flat rate dial-up, ISDN, or digital TV penetration could expect high growth in broadband penetration if there were certain drivers in place: new and attractive applications (e.g. IPTV, VoD) for which broadband is essential become available; broadband prices are reduced and become comparable to flat rate dial-up or ISDN prices; digital TV becomes a competitive platform for broadband delivery.

 

 

Broadband provider Wanadoo has claimed that with 150,000 customers signed up to the "Wireless & talk" service it is Britain's number one leading VoIP provider. The service enables customers to make phone calls over their broadband connection using a normal telephone. Wanadoo is owned by France Telecom and is set to be re-launched under the Orange brand during 2006.

 

 

Video-on-demand (VoD) is now available to 72% of NTL's digital subscribers and NTL anticipates that it will be available to all of its digital TV subscribers by the end of September 2006.

 

MTV is to launch its Video on Demand service "MTV Overdrive" in the UK.  The service will feature music videos, movie trailers, programme highlights and extra scenes from 23 April 2006.

 

 

UK ISP Namesco has partnered set-top box manufacturer Netgem to deliver bundled broadband and digital TV packages, including on-demand content. The service will be launched under the name 'TV Max' offering various packages starting at £25.95 a month and will include an 8Mbps broadband connection. The TV Max portal channel will provide access to webmail, podcasts, VoD and other interactive content. The service is due to launch on 28 April 2006.

 

BT is aiming to launch its next generation TV service, 'BT Vision', by late summer 2006. The IPTV service combines digital terrestrial TV based on the existing Freeview platform with VoD, TV and music programming and interface services, provided via BT's DSL network. The content will be provided by Warner Music, Paramount Pictures, BBC Worldwide, National Geographic Channel, Hit Entertainment and Nelvana.

 

 

T-Mobile intends to take on UK broadband operators by using its mobile network to offer internet access over a new 3G system called HSDPA (high-speed downlink packet access) at speeds equivalent to fixed-line broadband, dispensing with the need for a fixed line in the home. Customers will pay £8.50 for unlimited data use. T-Mobile believes it can undercut broadband UK operators as customers will not need to pay a fixed phone line rental, but will still be able to retain a phone number. T-Mobile believes that this service will be particularly attractive to the mobile only households in the UK.

 

 

 

 

NTL reported that at the end of 2005 29.3% of their on-net customers had a triple-play service. At the same time, Telewest had a triple-play penetration of 37.4% of its customers.

 

While bundled services to date have included fixed-line telephony, it is possible to provide bundles that do not include fixed-line telephony through the use of NDSL (naked DSL). NDSL allows an end-user to access DSL broadband services without having to take a telephony service, therefore eliminating the requirement of paying the monthly line rental for a phone service. This could allow operators to introduce new and differentiating bundles to the market. For example, it would be possible to offer a mobile and broadband package or a mobile, broadband and digital TV triple-play.

 

This could have implications for the Welsh broadband market due to the fact that there are high levels of mobile only households in Wales compared to the UK as a whole. The report indicates that 13% of Welsh households are mobile only compared to 8% for the UK and because most broadband connections in Wales are delivered over a phoneline via DSL technology. The high level of households without a phoneline creates a barrier to broadband take-up in Wales.

 

European countries where NDSL services are already available include Sweden and The Netherlands.

 

It has been suggested that high levels of mobile only households in Wales are the result of high levels of low income families and that these families would be less likely to subscribe to broadband services. However, the significantly higher digital TV penetration in Wales compared to the UK as a whole shows that Welsh inhabitants have a large appetite for new technologies. The ability to receive NDSL broadband without the additional cost of monthly line rental could therefore provide a new driver for broadband growth within Wales, especially with new emerging applications such as IPTV (another form of digital TV) being introduced.

 

One of two holders of Wimax licences in the UK, Pipex, has announced plans to have several major cities covered by 2008.The new venture, Pipex Wireless, will be majority owned by Pipex but backed by Intel with a $25 million investment. The other Wimax licence is held by PCWW.

 

Telabria launched a WiMax-class wireless broadband service that delivers symmetric speeds to 10Mbps for customers in South East England in September 2005.

 

During January 2006 the City Council of Amsterdam unanimously backed the first stage of a city-wide municipal FTTH network. The initial phase, costing EUR30 million, will see 40,000 households in the City connected to the network, and should it prove successful the project could be expanded to the whole of the city, delivering 100Mbps connectivity to 420,000 homes and businesses.

 

Furthermore, the City of Rotterdam has also announced plans to deploy a municipal fibre network in the city. The network, expected to be ready in 2008, will be used to connect schools, health care and municipal offices as well as for connecting households. 

 

The Mayor of Paris announced in January 2006 that carriers are to be invited to take part in a bidding process to provide "all of Paris" with high bandwidth fibre connections. The statement from the Mayor also gives rise to the Mayor's support for the free provision of local telephony and basic internet access services, especially for Parisians with low incomes.

 

 

 

The latest survey figures presented in this report indicate that Wales has overtaken the rest of the UK in terms of broadband take-up with 39% of households having a broadband connection compared to 35% of households in the UK as a whole (comparative figures from December 2005). When considered in terms of population, Wales is also ahead with 18% of the population having a broadband connection in Wales compared to 16% in the UK as a whole. Availability of basic broadband services is on a par with the UK as a whole although availability of ADSL2+ and SDSL services are still significantly lower.

 

Furthermore, with the 35 remaining exchanges about to be enabled in Wales, and plans in place to provide broadband to any remaining not-spots, availability of 'first generation' broadband is nearing 100%. However, fewer households in Wales are able to achieve the higher-end speeds offered by BT's ADSL Max offering than in the UK as a whole, and coverage of LLU services, particularly higher speed ADSL2+ services, is very limited. It will therefore be important to monitor the coverage of 'second generation' services to ensure that Wales does not fall behind the rest of the UK in this area and that a new 'digital divide' does not arise.

 

With at least ten operators now actively involved in LLU in the UK, coverage of LLU is rapidly increasing throughout the country which should improve competition and, ultimately, affordability. The Carphone Warehouse's aggressive 'free' broadband offer will increase the competitive atmosphere of the UK broadband market which may lead to price cuts or similar 'free' broadband offers as part of bundled services.

 

In terms of future developments, Korea, generally regarded as the world's leading nation with regards to its broadband market development, is indicating how broadband markets may develop in the future. Having reached saturation point for basic broadband services, the latest trend in the market is towards a switch from platforms such as DSL and cable to fibre based services that can support higher bandwidths.

 

 

BBWO – Broadband Wales Observatory

OECD – Organisation for Economic Co-operation and Development

DSL – Digital Subscriber Line

ADSL – Asynchronous Digital Subscriber Line

Mbps – Megabits per second

ADSL2+ - Asynchronous Digital Subscriber Line 2+

LLU – Local Loop Unbundling

ISP – Internet Service Provider

SDSL – Synchronous Digital Subscriber Line

FWA – Fixed Wireless Access

Wi-Fi – Wireless Fidelity

3G – Third generation mobile communication

Ofcom – Office of Communications

SME – Small and Medium sized Enterprises

IEEE – Institute of Electrical and Electronics Engineers

G7 - Group of seven major industrialised countries

PPP – Purchasing Power Parity

WAG – Welsh Assembly Government

EU – European Union

ONS – Office of National Statistics

ECTA – European Competitive Telecommunications Association

OTA – Office of the Telecoms Adjudicator

ARCEP – Autorité des Régulation des Communications Electroniques et des Poste

ICT – Information Communication Technology

PC – Personal Computer

PDA – Personal Digital Assistant

GSM – Global System for Mobile communication

ISDN - Integrated Services Digital Network

TV - Television

IPTV – Internet Protocol Television

VoD – Video on Demand

VoIP – Voice over Internet Protocol

HSDPA – High-speed downlink packet access

NDSL – Naked Digital Subscriber Line

WiMax – Worldwide interoperability for microwave access

FTTH – Fibre to the home

FTTP – Fibre to the premises

---