Broadband Benchmark Update Q2: April - June 2005

 

 

This update report is the second of a series of benchmark reports produced for the Welsh Assembly Government's Broadband Wales Unit. This edition of the report covers the broadband market in Wales, the UK and the rest of the World; with data based where available on the state-of-play in July 2005.

 

 

According to OECD figures released in July, there were 118 million broadband subscribers within the OECD at the end of 2004, an increase of 34.7 million subscribers during the year.  The overall OECD broadband penetration rate reached 10.3 subscribers per 100 inhabitants in 2004. These rankings place the UK 14^th of the OECD countries with a broadband penetration rate of 10.5 subscribers per 100 inhabitants.  DSL is the dominant broadband platform in 27 OECD countries, with the number of cable modem subscribers exceeding DSL subscribers in Canada, Portugal and the USA.  In Japan, fibre-optic is becoming increasingly dominant with nearly 2.5 million subscribers.

 

Recent Ofcom market survey results for Wales indicate a broadband penetration rate of 19% of adults in Wales for Q1 2005.  This compares to 21% of adults in the UK as a whole.  Whilst there is no market data currently available for Wales it appears that the growth in the UK market as a whole has been significant; increasing from 10 to 13.5 broadband connections per 100 inhabitants between December 2004 and June 2005.

 

In June the European Commission launched the new European Information Society i2010 initiative.  This initiative aims to enable Europe to meet a target of 50% of households to be broadband enabled at speeds of 10mbps or above.  Analysys estimate that ADSL2+ could deliver 15Mbps services to 50% of lines in the UK.  Using their methodology, the Observatory estimates that 65% of exchanges in Wales will be able to support delivery of services at 10Mbps.  However, Ovum take a more cautions approach in their Broadband in Wales 2010 report estimating that only 50% of lines will be able to support such speeds due to the line lengths exceeding 2km.  ADSL2+ trials are underway by BT and NTL and it is anticipated that this will impact on the marketplace.

 

ONS figures show that in June 2005 there were 8.1 million broadband connections in the UK, up from 7.5 million in May.  May was the first month to show broadband connection figures exceeding the number of dial-up internet subscribers, in Q1 2005, DSL connections accounted for over 15% of UK exchange lines.  The growth in broadband subscriptions is matched by a decline in dial-up subscriptions suggesting that the main broadband growth is attributable to transfer from narrowband to broadband.

 

During Q2 broadband speeds offered by ISPs have increased, with many ISPs offering download speeds of 1Mbps as their standard offer, with speeds of 2Mbps being a "premium" service and 512kbps a discounted option.  Many ISPs including BT, Tiscali, and NTL, have increased broadband speeds, automatically upgrading their existing customers to these higher download speeds at no extra charge.  Ofcom suggest this trend will continue due to advances in technology; competition in the market; availability and reduced cost of user equipment and the growth in both demand and supply.  This is reflected by the huge increase in legal music downloads; in Q1 2005 4.6 million tracks were downloaded.

 

In June 2005, BT announced that its new 8Mbps service will be available throughout the UK by November 2005.  Trials started in April 2005 in areas of London and Strathclyde and are to continue until August 2005.   The service will offer a maximum download speed of 8Mbps and upstream 450kbps.  From November 2005, ISPs (including BT Yahoo etc.) wishing to resell the BT Wholesale service will therefore be able to offer speeds of up to 8Mbps for those living close enough to the exchange.  On the same day Bulldog Communications announced the launch of its 8Mbps broadband service to almost a third of homes across the UK (including Cardiff and Wrexham).  

 

24Mbps download speeds are to be offered shortly by new ISP "Be" according to their press release in June.  This will be provided using ADSL2+ technology, and is planned to be available to 64% of the population within a year.  UKOnline (Easynet) have also announced their intention to offer an 18Mbps service to key targeted areas, but there are no confirmed plans for these companies to offer services in Wales.  It is worth noting that both Be and UKOnline (Easynet) are marketing their new services to residential customers due to the fact that Service Level Agreements (SLAs) are not sufficiently robust to allow use by businesses with time / mission-critical requirements.  Whilst BT has announced that it is currently testing ADSL2+, details regarding commercial launch dates have not yet been made available.

 

It would appear that the UK's broadband providers are on the brink of moving away from billing customers on the basis of connection speeds to a model built around the amount of data downloaded. If this happened, it would help to reinforce the existing broadband divide, as consumers and small businesses in metropolitan areas could end up getting a much faster connection than those in more remote areas, without having to pay more

 

A further announcement from BT in June concerned its intention to trial IP-TV services in early 2006 for commercial launch in mid-2006 using Microsoft's IP-TV software.  In the same month BSkyB announced the planned launch of an IP-TV service in late 2005 offering both video-on-demand (VOD) and sports content.  This service is to be available, for no additional cost, to premium service subscribers (approximately 3.9 million customers).  Also in June, Telewest started trials of Blueyonder TV, another IP-TV service with four available channels.

 

In July 2005, BT announced that the roll out of the "21^st Century Network" (21CN) will start in Cardiff with approximately 350,000 customers expected to be transferred to the new infrastructure during the second half of 2006.

 

Also in July NTL announced an expansion to its Video on Demand service "on Demand" increasing availability to 1.67million homes within the NTL network.  This "triple-play" service combining cable TV, direct access telephony and broadband was launched to customers in South Wales in January 2005.  In August, cable companies Telewest and NTL announced plans to offer 10Mbps services, with NTL offering this as their standard broadband connection speed and Telewest reserving this for premium customers.  NTL aims to upgrade connection speeds within 18 months. 

Following successful trials during June 2005, BT have announced their intention to launch BT Fusion in September 2005.  This product enables calls to be transferred from a mobile network (Vodafone GSM) to a DSL broadband network (BT) without interruption.  Calls made within range of the wireless hub in the user's home will be made over the DSL line, and calls made outside the home will be transmitted over the wireless network.  A business version of the product is expected to be launched after September and a Wi-Fi variant is to be launched once handsets become available in 2006, which will enable transfer from the GSM network to fixed-wireless network when users are within range of a BT hot-spot.  France Telecom had previously announced plans to launch a similar service combining the Orange (mobile) with Wanadoo (DSL broadband) platforms.

 

Point Topic's recent Broadband User Survey showed that 65% of the households surveyed had access to the internet from home by June 2005.  This is at least 4% higher than Ofcom figures predicted.  The survey also indicates that approximately 29% of UK households have broadband access (this equates to approximately 7.1million households).  A further 8.8 million UK households still access the internet using dial-up services.

 

Cable & Wireless announced the purchase of business telecoms provider Energis to make Cable & Wireless the biggest telecoms network provider in the UK after BT.  This move is likely to provide increased competitive pressure on incumbent operator BT with a potential of continued downward pressure on customer prices and increased bandwidth availability.

 

Ofcom estimates on the number of UK homes with access to "next generation" broadband with speeds in excess of 20Mbps stand at less than 2,000. At this stage this remains a niche market within the UK, but services such as NTL's current trial of high definition TV over copper lines (ADSL2+) which has achieved speeds over 18Mbps look increasingly likely to emerge in the near future.

 

VOIP products have been launched by Kingston Communications' solutions provider Affinity, and Viatel.  Telestra Europe is carrying out trials of a VOIP product with the intention to launch in the UK during Q3 2005.

 

In June, Broadband4Devon obtained funding to extend services throughout the country.  This scheme was previously only available to the Objective 2 area of Devon, and is now able to offer advice to eligible businesses on how to make the best possible use of broadband technologies and extending broadband provision.

 

The European Information Society i2010 initiative was launched in June by the European Commission, with the aim of enabling Europe to meet a target of 50% of households to be broadband enabled at speeds of 10Mbps or above. This will involve modernising the regulatory framework by steering greater convergence between internet, telephone and TV; strengthening ICT research and development by increasing funding by 80% from 2007; and removal of the digital divide through the use of ICT for health care, lifelong education and social inclusion.  The consultation period for this report is due to close in September 2005 with further discussion in the UK Presidency i2010 Conference in London in September.

 

 

 

The total number of UK broadband connections has continued to increase during Q2 2005, with 8.1 million homes connected to broadband in June 2005.  During this period, the market share taken by cable providers has decreased from 37% to 28% to the advantage of the non-incumbent ISPs. 

 

Ofcom anticipate accelerated growth by LLU companies following the recent proposed regulatory settlement (consultation period ended on 12^th August).

 

For reference, Ofcom's recent regulatory statement listed the following main provisions:

"...

1.       To drive down the price of calls, connections and services for consumers and businesses

2.       To support more innovation through the growth of competitive products and services, such as faster broadband, television, voice over IP (VoIP) and video-on-demand, from a range of credible companies

3.       To provide regulatory certainty for providers and investors so that they commit to developing, marketing and extending these products and services for UK consumers and businesses

4.       To re-focus regulation where it is truly needed, with swifter remedies to tackle anti-competitive behaviour and a structure which delivers equivalence to a timetable with real penalties and incentives

5.       To remove regulation wherever competition is effective and the consequence of open markets – rather than regulatory intervention – ensures the delivery of choice, value and quality for consumers

6.       To ensure the necessary level of consumer protection through a combination of codes, sanctions and effective consumer information..."

 

 

 

BT announced in July that the roll out of the "21^st Century Network" (21CN) will start in Cardiff with approximately 350,000 customers expected to be transferred to the new infrastructure during the second half of 2006.  The roll-out will cover an area extending from Kenfig Hill in the west to the Llanrumney area of Cardiff in the east.  It includes the Ogwr and Rhondda valleys and the Caerphilly and Bargoed areas and will require the replacement of equipment in more than 50 local exchanges combined with the implementation of new IT systems.  The main benefit will be one of operational efficiency for BT Wholesale and the telecoms industry / partners at the early stages, until services are developed to exploit the new IP-based infrastructure there will be no visible benefits to end-users (residential or business).  BT will deem the project a success if end-users don't notice i.e. the only difference to the end-user should be a different telephone dial tone.

 

The potential short-term benefit to the region is that it may help attract inward investment into the area, but obviously, this will decline as the technology is rolled-out throughout the UK.  In the longer term, it is anticipated that the increased operational efficiencies will be passed onto the consumer in the form of lower prices. The deadline for UK-wide roll out of 21CN is 2009.

 

Following European Commission approval as being compatible with State Aid in June 2005, the Regional Innovative Broadband Support (RIBS) procurement process had started to obtain a broadband telecommunications supplier to provide first-generation broadband to areas of Wales currently unable to access a broadband service.  The contract is due to be awarded to the successful supplier(s) before December 2005 after which first generation broadband should be made available to everyone in Wales who wants it.

 

IDC predict that by 2009, 46% of Western European households will have a broadband connection, compared to 20% at the end of 2004.  IDC attribute this growth to increasing availability, choice, and increasing competition, affordable pricing and raised awareness.  They predict that applications such as voice over broadband and IPTV will be key influences in the long term.  This is slightly below the European Union Commission i2020 target of 50% EU households with a broadband connection of 10Mbps or faster by 2010.

 

 

OECD figures published in June indicated that while the UK has overtaken Germany in terms of internet penetration, it is still some way behind the US and Japan, and within Europe the UK is still below the Netherlands and Scandinavia.  Korea comfortably remains the world leader.

 

Analysys have ranked the availability of 1, 2, 4 and 8Mbps services (both symmetric and asymmetric) across the G7 and Australia, Ireland, South Korea and Sweden.  According to their study the UK ranks third in terms of household coverage of asymmetric services (by % of households) for download speeds of 1Mbps, with 93% availability, just below South Korea and Japan and slightly above Germany.  Similarly, for 2Mbps service coverage, the UK ranks fourth with 84% coverage, behind South Korea, Japan and Sweden and above Canada.  However, when reviewing availability of 4Mbps and 8Mbps the UK falls to 7^th and 8^th place respectively.  Coverage of higher speed services in the UK is anticipated to increase within the next two years as a result of increased local loop unbundling activity.

 

The breakdown of broadband technologies in 2004 is as follows:

 

 

Coverage in Wales

 

The broadband service providers offering the greatest coverage in Wales are BT, NTL and Bulldog. 

According to BT Wholesale, in August 2005, ADSL broadband availability in Wales stands at 95.1%

 

 

 

 

At the end of July 2005 BT had upgraded all the remaining commercially "viable" exchanges in Wales to ADSL.  Only the 35 commercially "unviable" exchanges remain unable to provide an ADSL service, a situation which will be addressed as a result of approval from the European Commission for the Welsh Assembly Government to intervene in the marketplace. 

 

Enabled exchanges   Exchanges enabled during Q2 2005   Commercially unviable exchanges

 

 

 

35 exchanges in Waleshave been deemed commercially unviable by BT due to the fact that each exchange services the needs of less than 300 homes and businesses.  As stated in the Q1 report, the majority of these unviable exchanges are located in Powys, Gwynedd and Pembrokeshire.  The Welsh Assembly Government successfully achieved formal approval of the Prior Information Notice from the European Commission in June 2005, and is now undergoing an open procurement process to intervene in the marketplace via an ITT (invitation to tender).  The process will result in a service provider being selected to build the infrastructure and supply broadband services to the remaining unviable exchange areas in Wales. 

No new information available.

 

Following BT's announced plans to upgrade nineteen telephone exchanges in Wales to provide households and businesses with access to SDSL broadband, the number upgraded now stands at eighteen with the remaining one scheduled for completion before September 2005.

 

Checks with BT Wholesale confirm that the NPT exchange is still in line for upgrade despite announcements to pause the SDSL exchange upgrade programme in September.

 

 

 

 

 

 

Bulldog is now offering broadband services to customers within the nine upgraded exchange areas at 8Mbps.

 

 

Estimates for Cable-modem coverage remain at 25% accounting for approximately 100,000 connections within the South Wales cable franchise area.  Figure 7 (below) shows the estimated coverage of Cable-Modem throughout the UK regions.  In comparison, Ovum estimates that 48% of households in the UK are passed by the Cable network.

 

 

o new information available.

 

Wireless Broadband Coverage Over 400 wireless hotspots are listed in Wales on the BT Openzone website.  Ovum estimates that Wireless broadband covers less than 1% of Welsh households confirming the Observatory view that Wireless technology remains a niche product in Wales.

 

Coverage in UK Nations and Regions

 

BT Wholesale predict that by the end of 2005, 99.6% of UK homes will be connected to a broadband-enabled exchange.

 

Figures 7 and 8 illustrate the widespread availability of broadband technologies throughout the UK, with alternatives of cable modem and fixed wireless access available to a smaller geographical area.  Satellite is considered to be ubiquitous with availability at over 99% of the population.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The five key broadband infrastructure providers in the UK are BT, Easynet, Cable & Wireless (Bulldog), NTL and Telewest.  BT continues to retain the greatest market share, which is typical for incumbent operators throughout Europe, although BT holds a smaller share than average.

 

Enabled exchanges   Exchanges to be enabled   Commercially unviable exchanges (white)

 

 

 

 

 

At the end of August 2005 BT had upgraded 5257 of the 5591 exchanges in the UK to ADSL.  233 exchanges are still to be upgraded to ADSL, leaving a total of 101 exchanges commercially unviable.  BT have indicated that they are investigating alternative technologies such as satellite or wireless to provide broadband services to customers in areas covered by these exchanges.

 

	Total Exchanges	Enabled Exchanges	Exchanges   to be enabled	Unviable Exchanges
England	3891	3711	185	66
Northern Ireland	191	191	0	0
Scotland	1070	856	214	0
Wales	439	399	35	35
Total	5591	5157	434	101

 

 

 

 

In April 2005, BT announced that Scotland had achieved 388,000 of UK's five million BT wholesale broadband connections.  In May 2005, BT stated that by summer 2005, exchanges serving 97.8% of the country's households and businesses would be broadband enabled. 

 

The Scottish Executive has pledged that under the Executive's Broadband for Scotland's Rural and Remote Areas initiative, the remaining 2.2% (made up of small communities) will be broadband enabled by the end of 2005. Under the scheme, BT will enable 378 exchanges to deliver basic broadband to 51,000 households and 5,400 businesses across Scotland that would not have otherwise received the service.  The full range of ADSL products and speeds will be available to 230 of these exchanges (covering 71% of households and businesses in the area).  The remaining 148 exchanges will be served by BT Exchange Activate, a product developed for communities with exchanges unable to host standard ADSL, to provide a 512kbps service.  The remaining 21 exchanges, located in the Western Isles, will be connected using fibre and wireless broadband base stations, multipoint in-community links wireless technology funded by the Connected Communities project.  Hence, by December 2005, broadband availability should have achieved 100% coverage in Scotland.  In August 2005, 80% of exchanges in Scotland had been ADSL enabled.

 

Wales currently has the largest proportion of exchanges deemed to be commercially unviable.  The issue will be addressed by RIBS (see page 14 for further details).

 

 

Recent research by Analysys provides a UK regional breakdown of services available to households by the availability of asymmetric and symmetric services and by connection speed.  The graphs below show the variations of availability within the UK, indicating that availability of both symmetric and asymmetric services in Wales is currently below the UK average for all downstream speeds.

 

Throughout the UK an asymmetric service offering between 2Mbps and 4Mbps downstream is available to over 78% of households.  There is a clear drop in availability of bandwidth between 4Mbps and 8Mbps, and greater variation between the UK regions, with 64% of households in London covered by services offering downstream speeds over 4Mbps compared to 0% in Northern Ireland (8% of households in Wales).  Similarly download speeds in excess of 8Mbps were available to 25% of households in London but not to Wales and Northern Ireland.

 

 

	0.5Mbps	1Mbps	2Mbps	4Mbps	8Mbps	>16Mbps
Northern Ireland	100%	96%	85%	0%	0%	0%
Scotland	89%	86%	78%	37%	4%	0%
Wales	92%	89%	78%	8%	0%	0%
National	96%	93%	84%	33%	8%	0%

 

 

According to BT Wholesale, at the end of July 2005, 650 BT exchanges had been SDSL enabled.  They have taken the decision to "pause" the SDSL roll-out programme from September, when there will be 729 SDSL enabled exchanges in the UK.  This will leave 93 exchanges previously planned for upgrade not enabled.  A further announcement is to be made regarding SDSL in 2006.

 

	0.5Mbps	1Mbps	2Mbps	>4Mbps
Northern Ireland	0%	0%	0%	0%
Scotland	32%	31%	29%	0%
Wales	15%	14%	13%	0%
National	35%	34%	32%	0%

 

Wales falls below the UK national average for symmetric services, reflecting the below average availability of asymmetric services.   Availability of SDSL broadband in Wales will improve with the upgrade of 19 exchanges in Wales (18 of which had been upgraded at the end of August 2005).

 

According to the Office of the Telecoms Adjudicator (OTA) the number of Unbundled Lines is currently approximately90,000 (August 2005), with the current run rate of lines provisioned being in excess of 3500 per week.  This has increased from 59,000 in June 2005.  The increased interest in LLU shown by ISPs is highlighted by the deployment of unbundled lines being in excess of the OTA's original forecast of 1.5 million predicted by end 2006.  LLU companies have announced intentions to expand this business area, possibly due to price cuts, however Ofcom anticipates growth to be concentrated in metropolitan areas due to cost of implementation.

 

Ofcom forecast that their ruling to limit the cost that BT can charge LLU operators could cut costs for British businesses and consumers by up to £400 million over the next four years.

 

LLU Company	Number of unbundled exchanges
Bulldog	407
Easynet	232
HomeChoice	125
Node4	3
Trilogy Telecom	21

 

The figures suggest some overlap, but key players, including Cable & Wireless (Bulldog), Wanadoo, Tiscali and Easynet have announced intentions to continue investing in LLU.

 

Higher speed broadband is expected to be increasingly available in the UK through the implementation of ADSL2+ technology.  A key limitation to the widespread coverage of ADSL2+ is the line length.  Once distance from the exchange exceeds 3km, downstream speeds fall.  Figure 16 shows that ADSL and ADSL2+ offer similar speeds where the line length exceeds 3km but ADSL2+ is considerably faster for shorter distances.  Anaysys have carried out a study of relative line lengths for a selection of countries, and suggest that in the UK, 50% of lines are capable of receiving speeds of up to 15Mbps using ADSL2+, but a far smaller proportion of lines at the full speed of 26Mbps. 

 

NTL has announced plans to roll out ADSL2+ based services to its existing customer base plus targeted LLU exchange areas. 95% of homes within NTL's area of operation are understood to be within 1000m of its fibre network, consequently local loop length is not expected to be an issue for the cable-modem companies.

 

 

Ofcom figures show cable-modem broadband is available to 31% of the UK population.  Ovum estimates suggest that 48% of households are passed by broadband enabled cable networks.

 

 

No new information available.

 

 

BT Openzone provides a listing of Wi-Fi hotspots in the UK, covering services provided by BT Openzone, Ready to Surf, The Cloud and T-Mobile.  In August this included over 7600 hotspots in the UK overall.  Ofcom estimate that there are over 8000 hotspots in the UK provided by over twenty operators.  While the number of hotspots is high and increasing, coverage is still low when compared to mobile networks and so wireless broadband not generally viewed as a competitor.

 

WiMax trials were completed in Canterbury, Kent in May 2005, by service provider Telabria as a pilot to a commercial launch later in the year once IEEE certified equipment becomes available.  Coverage and price details of the new service have not yet been published.  Ofcom suggest that in future WiMax technology could provide competition to both wired broadband and 3G.

 

Ovum figures indicate that over 45% of the current residential population covered by wireless broadband is within the London and the South East of England.  A further 30% of the residential population covered is in the Midlands with 10% coverage for each of the South West and Yorkshire & Humberside.

 

 

 

 

Analysys have ranked the availability of 1, 2, 4 and 8Mbps services (both symmetric and asymmetric) across the G7 and Australia, Ireland, South Korea and Sweden.  According to their study the UK ranks third in terms of household coverage of asymmetric services (by % of households) for download speeds of 1Mbps, with 93% availability, just below South Korea and Japan and slightly above Germany.  Similarly, for 2Mbps service coverage, the UK ranks fourth with 84% coverage, behind South Korea, Japan and Sweden and above Canada.  However, when reviewing availability of 4Mbps and 8Mbps the UK falls to 7^th and 8^th place respectively.  Coverage of higher speed services in the UK is anticipated to increase within the next two years as a result of increased local loop unbundling activity.

 

 

	1Mbps	2Mbps	4Mbps	8Mbps
South Korea	97%	95%	92%	86%
Japan	94%	93%	90%	84%
UK	93%	84%	33%	8%
Germany	92%	78%	18%	0%
Sweden	90%	90%	71%	71%
Wales	89%	78%	8%	0%
France	85%	80%	74%	68%
Italy	82%	79%	71%	25%
USA	80%	79%	68%	2%
Ireland	65%	51%	10%	0%

 

 

 

According to Point Topic, China, Japan and the UK have the highest number of cable modem lines, with the US remaining the "China, Japan and the UK were found to have a substantial number of cable modem lines. In the UK cable operators NTL and Telewest added over 168,000 lines between them in the first quarter."

 

The US remains the largest global broadband market with over 36.5 million lines. China is in second place with 28.3 million, and Japan is in third place with 19.7 million.

 

 

According to the European i2010 report by PWC, one of the programme objectives will be to bridge the digital divide in European member states.  This would supply broadband services to an estimated 4.7 million potential broadband users unlikely to be able to obtain terrestrial broadband services by 2013.  The report suggests an increased focus on satellite services to address the digital divide issues in EU member states.

 

 

In terms of public wireless hotspots, Analysys estimates that South Korea has the greatest availability at over 250,000 hotspots per million people.  France and the UK are ahead of Germany Sweden, Ireland, and Japan at over 130,000 hotspots per million people.

 

During Q2 consumers have continued to experience increased download speeds, for no additional charge, often automatically being upgraded to the higher speeds by their ISP.  Ofcom note in their Telecommunications Report of July 2005 that the typical residential broadband customer is now paying 75% of the May 2004 price for double the connection speed.

 

During July Wanadoo announced an increase to their existing service speeds to 2Mbps for £17.99 per month with a 2GB download limit.  BT has also upgraded the BT Broadband Basic service from 1Mbps to 2Mbps for no extra charge (also at £17.99 per month) with a 1GB download limit.  Tiscali has reduced the price of its 2Mbps service to £17.99 (from £19.99) with a 15GB download limit.

 

 

 

Country	Monthly cost of 8Mbps broadband service (€)
France	14.90
UK	25.00
Sweden	30.00

 

A comparison of prices for 8Mbps broadband services for France, UK and Sweden shows that the cheapest service of the three is available in France; the aggressive pricing policy of broadband suppliers in France is reflected by France's lead of the three countries in terms of take-up.

 

 

 

 

In June 2005, BT announced that its new 8Mbps service will be available throughout the UK by November 2005.  Trials started in April 2005 in areas of London and Strathclyde and are anticipated to continue until August 2005.   The service will offer a maximum download speed of 8Mbps and upstream 450kbps.  On the same day, Bulldog Communications announced the launch of its 8Mbps broadband service to almost a third of homes across the UK (including Cardiff and Wrexham).

 

It is worth noting however, that whilst bandwidth has been increasing for existing broadband customers for little or no additional cost, availability of higher bandwidth services is not universal throughout the UK.  Over 78% of UK households are able to access an asymmetric service offering between 2Mbps and 4Mbps downstream.  There is greater regional variation for higher bandwidth services with 64% of households in London covered by services offering downstream speeds over 4Mbps compared to 0% in Northern Ireland and 8% of households in Wales.  Similarly, download speeds in excess of 8Mbps were available to 25% of households in London but not available at all in Wales and Northern Ireland.  For further detail, please refer to the Availability section of this report.

 

 

 

Market data is shared with the Welsh Assembly Government and Observatory under non-disclosure agreements signed with broadband providers.  As such, this report relies on market estimates and approximations calculated via analysis of residential and business surveys commissioned by the Broadband Wales Unit and interested third parties

 

 

 

Following on from this, Ofcom figures for Wales also show a lower level of broadband access with 19% of adults in Wales having a broadband connection compared to 22% of adults in the UK as a whole

 

Broadband take-up figures for Wales remain lower than those for the UK as a whole, a phenomenon which may be due to the enablement of rural exchanges lowering the overall percentage.  A further explanation may be that Wales has a higher proportion of population aged over 65 and a higher proportion of lower income households than the UK average, so the proportion of population not wanting or being unable to afford internet access is higher.  This may result in the maximum numbers willing and able to access the internet being lower than the UK average.

 

 

In June 2005, 19.9% of homes and businesses in Wales able to access an ADSL enabled exchange had a broadband connection (i.e. In June there were 250,000 ADSL broadband users in Wales).  This compares to a UK average of 21.1% homes and businesses (i.e. 21.1% of those able to access an ADSL enabled exchange had a broadband connection in June).

 

This represents 18% of all homes and businesses in Wales, showing growth of 85,000 connections since December 2004.  ADSL broadband connections in Wales are increasing at a rate if 14,000 connections per month – increasing from a rate of just 6,000 per month at the end of 2004.

 

 

No new information available.

 

 

 

 

No new information available.

 

Take-up of Broadband in UK Nations and Regions

 

Point Topic has calculated that Britain has the fastest growth in broadband penetration within the G7, experiencing growth at 16.5% since 2004, with its closest competitor being France with a growth rate of 13.5%.

 

In May 2005, broadband internet connections exceeded dial-up for the first time.  ONS statistics based on their survey of Internet Service Providers (ISPs) indicates broadband connections reaching 50.7% of all internet connections.  Figures for June show this has increased to 52.4% of all internet connections.

 

The difference between these results is likely to be due to the process of collecting the data via market survey as opposed to active subscriptions.

 

Ofcom have found that whilst PC ownership is lowest in Scotland and Northern Ireland, internet take-up is lowest in Wales.   

 

Point Topic claim that according to their Broadband User Survey, by June 2005 65% of UK households surveyed had internet access from home.   Their survey results differ to the ONS figures to indicate that the number of households with dial-up internet access exceeds the number of households with broadband, with 8.8 million households continuing to use a dial-up internet service.

 

The survey results show that for those without internet access, 43% said it was "very" or "fairly" important for them to have access to the internet, with 30% saying they were "very" or "fairly" likely to get access to it from home in the next six months. Only 14% of respondents said they had never used a PC.  Of those users that are likely to get internet access, 81% said they would go straight for broadband, with only 4% stating they would opt for dial-up internet access.

 

Whilst Point Topic accept a degree of bias is likely to have occurred, with sectors such as older people being under-represented, they consider their findings to clearly show the number of dial-up users to be greater than industry / Ofcom estimates.

 

 

The share of the UK retail market held by BT (the incumbent operator) continues to decline, falling from 36% in Q4 2004 to 34% in Q1 2005.  In comparison to other incumbent operators BT retains a lower market share to its European counterparts.

 

 

 

According to BT Wholesale over 5million people are now using DSL broadband in the UK.  The rate of LLU has increased to over 3500 lines being unbundled per month.  This should result in the number of unbundled lines exceeding the OTA's 2006 target of 1.5 million.

 

 

Ofcom figures from August show the cable broadband companies have a 28% share of the UK broadband market with over 2000 connections.   Whilst the number of connections has increased since Q1 2005, market share has declined from 29% in Q1.

 

 

Estimates from Ovum indicate that there are currently approximately 6,000 2-way broadband satellite subscribers.  According to their recent report a major provider, Aramiska, claims that 30% of its subscriber base is from areas where alternative broadband infrastructure is available.  Key customers include businesses using VPNs between sites and for back-up services.

 

 

Ovum estimate that there are approximately 5,000 fixed wireless access subscribers for licensed bands.  Taking unlicensed WLAN schemes into account increases this figure to over 7,000 FWA subscribers.

 

 

OECD figures published in July 2004 indicate that the number of broadband subscribers reached 118 million by the end of 2004 representing an increase of 34.7 million during 2004.  The OECD broadband penetration rate reached 10.3 subscribers per 100 inhabitants in 2004, the fastest growth being experienced during the final quarter of the year. 

 

The technology breakdown for 2004 within the OECD was 60% DSL; 33.5% cable modem; and 6.5% other technologies (e.g. fibre optics, LAN, satellite and fixed wireless)

 

South Korea remains the OECD leader in terms of broadband penetration at 24.9 subscribers per 100 inhabitants with the Netherlands in second place at 19 subscribers per 100 inhabitants closely followed by Denmark, Iceland and Canada.  The OECD suggests that the Netherlands could reach South Korea's penetration rate by the end of 2005 which is reflected by the recent slow down in growth.

 

 

 

 

The number of DSL connections in Germany has been overtaken by France in Q1 2005.  This is likely to be as a result of a transfer of DSL market to the Netherlands for technical reasons.

 

 

The Netherlands maintains is lead position in terms of broadband penetration, the UK being overtaken by Austria to fall to 10^th place in the EU ranking.

 

 

 

 

Q1 shows a significant increase in the growth of DSL in Greece.  The UK shows a continued growth in both DSL and cable-modem technologies possibly reflecting the reduced prices and increased bandwidth available.  The adoption of the triple-play offering by the Cable-modem companies in Q1 2005, combined with lower prices for increased bandwidth may explain the UK market growth.

 

 

 

Results from the Broadband Omnibus survey reflect the dominance of DSL as a broadband platform for most countries in the G7, with the USA and Canada showing greater use of cable-modem technology.  This is supported by the OECD figures showing a split of 60% DSL connections and 33.5% cable connections among OECD countries.

 

 

While France is ahead of the UK in terms of broadband subscriptions per head of population, consumers in France also benefit from greater bandwidth.

 

 

 

These survey results confirm the OECD findings for broadband penetration among OECD countries.

Broadband Usage

 

 

Rank	Downloading TV, Video, and movie clips	Use of online gaming	Use of VOIP	eCommerce Spend	Teleworking
1	France	South Korea	Japan	UK	US
2	Australia	Sweden	Italy	Germany	Australia
3	USA	Japan	France	France	Sweden
4	UK	Australia	Sweden	Italy	Japan
5	Germany	US	South Korea	US	Canada
6	Italy	Canada	US	Canada	Germany
7	South Korea	Italy	Ireland	Japan	UK
8	Sweden	France	Germany	Ireland	Ireland
9	Japan	Germany	UK		Italy
10		UK	Australia		France
11		Ireland	Canada

 

According to recent research carried out by Analysys, the UK ranked 1^st in terms of eCommerce spend among the countries included in the study. According to industry analysts Verdict, online shopping was the quickest growing UK retail sector in 2004. 

 

Analysys residential internet usage findings are based on meta-research, and include both narrowband and broadband users due to the low availability of broadband specific data.  As a result these rankings should be treated with caution.  However, using this estimate, the UK ranks highest of the group for eCommerce spend per internet user, within the second quartile for TV, video and movie clip downloads, the third quartile for teleworking, and in the bottom quartile for internet gaming and use of VOIP.

 

Point Topic's Broadband User Survey was completed by Recom Research during June and July 2005 and comprised 2017 face-to-face interviews based on a UK wide quota sample. 

 

From the survey findings, Point Topic claim that by June 2005 65% of UK households surveyed had internet access from home.   Their results also show that the number of households with dial-up internet access exceeds the number of households with broadband, with 8.8 million households continuing to use a dial-up internet service.

 

The survey results show that for those without internet access, 43% said it was "very" or "fairly" important for them to have access to the internet, with 30% saying they were "very" or "fairly" likely to get access to it from home in the next six months. Only 14% of respondents said they had never used a PC.  Of those users that are likely to get internet access, 81% said they would go straight for broadband, with only 4% stating they would opt for dial-up internet access.

 

Whilst Point Topic accept a degree of bias is likely to have occurred, with sectors such as older people being under-represented, they consider their findings to clearly show the number of dial-up users to be greater than industry / Ofcom estimates.

 

Ofcom show there is a noticeable drop in understanding of the term broadband for over 45s throughout UK, whilst most of those with broadband understand the term.

 

 

According to eBusiness W@tch findings, over 90% of firms in all size-bands and industry sectors (except food and beverages) have an internet connection. Specific data on broadband take-up is difficult to measure due to many companies not knowing the bandwidth of their internet connection; however, eBusiness W@tch note the decline in dial-up connectivity in all business sizes, e.g. 28% small firms and 15% medium-sized firms had dial-up internet connections in 2002, in 2005 this has declined to 18% and 6% respectively.

 

 

Rank	Ordering online	WLAN	VOIP	Paying Government	eCommerce Revenue
1	Sweden	UK	Ireland	Sweden	South Korea
2	Australia	Sweden	South Korea	France	Canada
3	Canada	Germany	Japan	Ireland	Ireland
4	US	Ireland	UK	South Korea	UK
5	UK	Italy	Sweden	Australia	US
6	Germany	Australia	France	Canada	Sweden
7	Ireland	US	Australia	UK	Italy
8	Italy	Canada	US	Italy	Japan
9	France	Japan	Canada	US	Australia
10	Japan	France	Italy	Germany	Germany
11	South Korea	South Korea	Germany	Japan	France

 

Analysys produced the league table shown in Table 11 for business broadband use.  Data for business findings was taken from the International Benchmarking Study, and defines a broadband business as on having at least one internet connection faster than 256 kbps which includes those with leased lines, fibre, xDSL, cable modem and ethernet connections. 

 

Analysys suggest that a combination of increased broadband availability and stimulation of ICT usage by Government have had an impact on broadband use.

 

Ofcom findings on UK micro–businesses (those with fewer than 10 staff) indicate that 47% micro businesses have internet access, and of these 19% have broadband access and 28% have dial-up access.

 

There were some concerns regarding the awareness and understanding of technology terms among micro-businesses, with broadband being the only communications service term with a "reasonable" level of understanding among micro-sized businesses.  The majority of respondents had not heard of 3G (16% aware and understand), Wi-Fi (8% aware and understand) or VOIP (3% aware and understand).  The lack of understanding of these technologies is reflected in the low take-up at this stage.

 

 

 

Figures from the European i2010 initiative indicate that in Japan and Korea, people now spend more time on-line than watching television, a phenomenon that is expected to spread to Europe shortly.

 

 

Ofcom have highlighted the rapid increase in music downloads since 2004 4.6 million tracks were legally downloaded in Q1 2005 which is nearly as many as in the whole of 2004.

 

 

Whilst it is apparent that broadband and narrowband users are both using the same applications, such as eMail and general internet browsing, broadband subscribers are more likely to use applications requiring greater bandwidth. 

 

A survey of peer-to-peer file sharing by CacheLogic over a 48 hour period showed that nearly two-thirds of digital files swapped on file-sharing networks is video (61.4%).  Of the audio files transferred, 68.9% were in MP3 format.  Other typical files transferred using peer-to-peer file sharing include software, software updates and games.

 

The BBC will start a three month content trial of its iMP (Integrated Media Player) in September 2005 which will enable people to download BBC programmes for up to seven days after they are first broadcast.  A technical trial was completed in September 2004 using peer-to-peer distribution technology.  On average a 30 minute programme will take just over that time to download it using a broadband connection.  One week after download, the programme will automatically be deleted from the user's computer.

 

 

During 2004 the use of VOIP increased significantly particularly among larger corporate users taking advantage of the availability of free voice calls (within an IP platform).  As large corporates generally have high-bandwidth, permanent IP connections the transfer to VOIP is generally straightforward. 

 

A key requirement of VOIP is an always-on internet connection, preferably with broadband bandwidth and suitable software for both caller and recipient.  Ofcom suggest that the growth in residential broadband adoption could accelerate the growth in domestic use of VOIP.

 

In their comparative study of countries Ireland and South Korea lead the Analysys table for use of broadband VOIP with over 20% broadband users using VOIP.  Suggested reasons for this is that Ireland has a combination of low broadband penetration and high cost, resulting in users being technically literate and keen to use new technology.  South Korea has a culture of technology adoption.

 

 

 

3G provides subscribers mobile internet access at speeds of up to 2Mbps, although the typical speed is currently 400kbps.  The unique offering of 3G over 2G is the use of video calling and video streaming using the higher data rates the product offers, but it is anticipated that existing 2G services will also be more appealing once the service becomes mainstream.  The population coverage of the new 3G networks is limited at between 30% and 70%, which is expected to increase over 2005.  Existing 2G coverage stands at 99% of the population for most networks.  Ofcom suggest three reasons for the slow take-up of 3G in the UK:  the slow introduction of technology by the mobile operators; the poor choice/availability and pricing of 3G consumer devices; and low consumer demand for broadband mobile devices.

 

 

 

Countries that would be expected to be leaders in the number of TV movie and video downloads such as Sweden Japan and South Korea due to high broadband penetration have much lower download levels as a percentage of broadband users, compared to countries with lower overall broadband take-up.  Analysys suggest that later broadband adopters are more likely to use the more basic internet functions, such as eMail and surfing the web resulting in countries with higher take-up having lower propensity to download large files.   Hence Analysys find that France, Australia and the USA lead in the level of TV, movie and video downloading compared to Sweden, Japan and South Korea.

 

 

Following the ratification of the new WiMax standard 802.16d by Europe, the current market view appears to be that cost is preventing a business case for full WiMax roll-out being developed.  It is thought that WiMax will be used for the backbone and back-haul sections of any network using Wi-Fi to provide the "last mile" and customer premises equipment.  It is anticipated that prices will drop, but this is unlikely to reach the market until 2007.

 

 

 

The commercially unviable exchange areas within Wales are thought to further compound the issue, with potential broadband users currently unable to access terrestrial broadband services in all areas of Wales.

 

It will be interesting to monitor the speed at which the RIBS successful award winner is able to address the availability issues in 2006 coupled with the proposed demand stimulation to be actively undertaken by the Welsh Assembly Government.  Meanwhile, progress is largely dependent on the degree to which competition enters the market (via LLU) and the promotion of benefits from applications supported by increasingly higher bandwidths.  The relative size of exchanges in Wales is likely to inhibit investment in the short to medium term.  Longer term, this could lead to the emergence of a new digital divide. 

 

 

The Welsh Assembly Government has asked the Broadband Wales Observatory to benchmark the broadband market using the findings of the NOP and ORC research commissioned by the Welsh Assembly Government's Broadband Wales Unit.

 

 

Readers should be aware that the surveys sourced have, in the main, used different sampling methodologies and posed different questions. Equally fieldwork has been undertaken during different time frames and a significant time period has often elapsed before the survey data has been analysed and the findings published. This leads to the creation of inconsistent data sets that provide less than complete comparisons between countries, regions or users.

Similarly, as there is no agreed definition of broadband agreed within the UK or elsewhere in the World – the data sourced from differing surveys is often based on conflicting definitions of what is regarded as 'broadband'.

 

For example, survey findings may be based on a definition of broadband as any connection over 128kbps (Ofcom[1]); as an 'always-on connection' (ONS); as defined by the broadband user (subjective); and / or as defined by the broadband provider (e.g. BT definition is 512kbps or above).

To make the benchmark exercise more relevant to Wales, the Observatory has, where possible, drawn comparisons based on the clear definition of broadband as defined by the Welsh Assembly Government in the Broadband Wales Programme Strategy Document 2005 to 2007:

 

Asymmetric speeds of 512kbps to 2Mbps downstream (i.e. to the customer) and 256kbps to 512kbps upstream (i.e. from the customer) are considered as first generation or mass market broadband.

Bandwidth between 2Mbps and 10Mbps is deemed to be second generation broadband. This includes asymmetrical speeds between 2Mbps and 10Mbps downstream and 512kbps and 1Mbps upstream as well as symmetrical speeds (where upstream and downstream speeds are equal).

Very high speed broadband (10Mbps and over symmetrical) is defined as fibre speed.

 

Equally, readers should be aware that whilst the Observatory has examined market data (connections sold in Wales), as supplied to the Welsh Assembly Government by broadband providers under non-disclosure agreements (NDA), such data is commercially sensitive and has therefore been omitted from this report.

 

Supplier-based data that is already in the public domain has been included where relevant. However, such data tends to be made available on an ad hoc basis for publicity (PR) purposes and, as a result, there is no commitment from any broadband provider to provide the Observatory with such details on a regular basis.

 

There is also a degree of difficulty in comparing competitive data, as suppliers package products, services and solutions in different ways to offer unique selling propositions (USP) targeted at specific groups of potential broadband users.

 

Similarly, market data sourced will be based on the 'fixed' broadband market such as xDSL, Cable-modem, Fixed Wireless Access (FWA), Wi-Fi Hot-spots and Satellite. The Observatory is therefore unable to provide market data to help track or benchmark progress achieved in the emerging nomadic broadband market where 3G and WiMax technologies are forecast to gain significant market share from 2008 onwards.

 

In the same way, market data sourced will not reflect the infrastructure issues faced by the various geographical markets observed – although such issues are known to differ by technology, country and application. For example, the data benchmarked will not address any perceived or real issues that may be related to contention, compression, line length, quality of copper etc or the potential impact of inclement weather or regional topology on service provision.  

Finally, the data sourced from other 'non-commercial' third parties – in the UK, Europe, G7 or rest of the World - is often made available on a 'one-off' basis.

Where there is a commitment to survey the market on a regular basis, there is rarely an assurance as to when future survey findings may be made freely available.  

Whilst the Observatory aims to identify good data sets (reliable, valid and repeatable), initial analysis has confirmed the paucity of such data. This means that future benchmark reports produced by the Observatory may not include an update on all of the data that is referenced in this document.

 

In summary, due to the methodology used to prepare this report, readers are asked to note that comparisons made by the Observatory are, at best, indicative of what is happening in the marketplace. As such any conclusions drawn will, by necessity, be based on third party approximations and extrapolations and should therefore be treated with a degree of caution.

 

As such, this benchmarking exercise should be used as a helpful guide to the market as opposed to a definitive report on the status of broadband per se.

 

This broadband benchmarking report highlights on-going issues in terms of identifying research where the data for Wales is comparable with data available for other countries and regions.

Whilst some of the issues identified may be overcome via primary research commissioned by the Welsh Assembly Government during the life of the Broadband Wales Programme (BBW), the Observatory acknowledges that comparable data sets are unlikely to be sourced via secondary research or supplied by broadband providers, regulators, or other third parties.

 

Consequently, the Observatory notes that a key requirement of any primary research commissioned by BBW is that the survey findings should provide a measure of the progress made against the targets stated in the BBW Strategy for 2005-07. In particular, the research findings should enable the Observatory to benchmark Wales against the UK nations and regions as well as other countries on a range of key indicators.

 

As a minimum, to facilitate effective benchmarking, the Observatory concludes that any primary research undertaken by BBW should use 'anchor questions' for comparison with pre-identified questions used in third party surveys. In addition, fieldwork should be undertaken during comparable time periods to the fieldwork being undertaken by the third parties and comparable sampling methodologies should be utilised.

 

Note:

 

BT figures are based on the number of households and businesses that are able to access ADSL broadband at that point of time; with the calculations based on the number of customers rather than connections.

 

This methodology recognises that not all customers have historically had access to DSL broadband. It also recognises that a customer may require more than 1 ADSL connection per location or site which, if counted separately, could lead to confusion as penetration moves closer to 100% of the customer-base.

 

However, market figures reported by the regulator and other suppliers are based on the 'number of actual broadband connections' rather than customers – which makes it impossible for true comparisons to be made.

 

Note:

 

According to the DTI Small Business Service (SBS) statistic for December 2004, there are estimated to be 4 million enterprises in the UK and, through re-weighting of previous statistics, there are 190,000 in Wales, 280,000 in Scotland and 100,000 in Northern Ireland. The remaining 3.5 million are located in England.

 

For each country and region, no more than 0.2 per cent of businesses are classified as large (employ over 250 people) and at least 98.9 per cent are small (employ between 0 and 49 people). Nevertheless, besides Northern Ireland, Wales has the highest proportion of small businesses and the lowest proportion of large businesses. 

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Wales

WAG NOP & ORC Surveys

Welsh Consumer Council Surveys

Broadband Resource – Sam Knows

DTI International Benchmarking Studies

 

UK

Ofcom Surveys and Market Updates

ONS Internet Connectivity Index

BT – DSL Coverage and Penetration

Other suppliers – Coverage and Penetration

 

Europe / Rest of World

Eurostat Yearbook

Eurobarometer

eBusiness Watch Surveys

Analysys Consulting Country Reports and Market Estimates

Point Topic World – Market Statistics

Yankee Group Reports

Forrester Reports

ITU Country Case Studies

OECD Communication Market Reports

IDC – European Quarterly Broadband Barometer, April 2005

 

Note:

Where possible, additional information has been identified from desk-based research and the aggregate data collated and analysed to form the basis of Observatory estimates. Examples of such data sources include governments, national regulators, broadband providers, national polls, professional & trade bodies, industry watch websites plus reports from the media / press.

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