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UK has over 10 mn broadband connections: Ofcom

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MUMBAI: British media regulatory body Ofcom has released its latest Communications Market report, showing that there are now more than 10 million broadband connections in the U.K., and that television reach has declined, particularly among younger viewers.

On the television front the reach of multichannel TV grew to 60.1 per cent in December 2005 (with audience share growing to 30.8 per cent). In contrast, year-on-year reach of the terrestrial channels continued to fall, with ITV1 experiencing the greatest single-channel decline (from 78.7 to 74.8 per cent) during 2005

The BBC continued to take the biggest broadcaster share in multichannel homes, with a 30.8 per cent share for all BBC channels in December 2005, compared with 22.6 per cent for the ITV channels and 9.8% for all Sky channels.

By the end of Q2 2005, satellite channels exceeded Channel 4 in revenues from advertising ? satellite net advertising revenues for Q3 2005, at ?177 million, stood second behind only ITV (?373 million).

In the last two years, total television reach fell by 2.5 percentage points for 25-34 year-olds and by 2.9 percentage points for 16-24 year-olds. Among the 16-24 age group, 2.2 percentage points were lost in the last year alone.

The trend in convergence continued across the broadcasting sector. British Telecom (BT) announced that its broadband-delivered IPTV service will be launched in late 2006; AOL has gone live with its video service, Hi-Q; and the terrestrial broadcasters have launched broadband TV services. Most notably, the BBC has stated that it intends to make ?Catch Up? programming (recently-aired shows) and its archives available online, and ITV launched its broadband ?ITV Local? service in two south coast cities.

By the end of Q3 2005, digital television penetration reached 66 per cent of households (16.5 million) across the UK, according to Ofcom estimates. Over the six months to 30 September 2005, over one million new households gained access to digital TV programming, of which the Freeview platform accounted for 716,000 (equating to 14% growth in the total number of Freeview-only households to a new total of 5.8 million).

Over the same period, pay-TV digital satellite households increased by 123,000 (two per cent growth, to a total of 7.5 million), free-to-view satellite households grew by 100,000 to 545,000, and digital cable households grew by 101,000 to 2.6 million.

The radio industry underwent a period of internal consolidation over the second half of 2005, following a period of widespread merger and acquisition (M&A) activity. A number of the larger radio groups including GCap and Chrysalis announced strategic changes. Some of these, for example GCap?s decision to divest a number of stations, are likely to lead to further M&A activity.

However, a number of new initiatives will alter the way that the companies do business (for example the Virgin radio station launches and GCap?s change in advertising policy). The effect of these internal changes on the industry as a whole will become clearer over time.

New ways of consuming radio ? particularly digital radio ? continue to become more popular. A survey by Rajar showed that the share of radio listening via digital platforms increased to 10.5 per cent in August and September 2005, up from 5.9% a year earlier. Organisations are responding to this change in listening habits: recent months have seen both radio operators and other companies (usually print media) launch podcasts (radio programmes for downloading either to a PC or a portable music player), while new products such as the Sky Gnome are being introduced to make digital radio listening easier over multiple platforms.

The second half of 2005 saw a number of major mergers and acquisitions in the telecom industry. In January 2006 Spain?s Telefonica acquired mobile network operator O2, in a deal worth around ?17.7 billion; in October 2005, cable operators Ntl and Telewest announced an agreed merger; also in October 2005, BSkyB announced a recommended bid for LLU (local loop unbundling) operator Easynet for ?211 million; and in August 2005, Cable & Wireless issued an agreed bid of ?780 million for corporate telecoms operator Energis. The Ntl/Telewest and BSkyB/Easynet transactions are particularly noteworthy, since both are seen as important precursors of widescale deployment of TV over broadband.

In a further piece of potential corporate activity, in January 2006 Ntl announced a revised bid for mobile operator Virgin Mobile. If the deal goes through, the combined group, which would probably operate under the Virgin brand name, would be the UK's first company to offer quadruple-play services spanning cable TV, fixed-line telephones, mobile and internet.

The second half of 2005 also saw the introduction of live streaming TV over 3G by most of the UK?s network operators, and a number of trials of TV to mobile devices using technologies other than 3G. In September 2005, mobile operator O2 began a trial of mobile TV in the Oxford area using DVB-H technology, in conjunction with TV broadcaster Arqiva, and in mid 2005, BT and Virgin Mobile teamed up to trial the BT Movio mobile TV service, using existing DAB technology and network.

The next 12 months are likely to see some important industry decisions being made over standards adoption, with a key consideration being the availability of appropriate electromagnetic spectrum.

BT?s new local access business unit, Openreach, came into being on 11 January 2006; its creation was a key outcome of BT?s acceptance of undertakings in lieu of a reference under the Enterprise Act.

In addition, Ofcom confirmed in December that after two years of development the Wholesale Line Rental (WLR) product offered by BT now meets a series of agreed criteria, subject to certain further improvements committed to by BT. Ofcom has therefore relaxed price controls on BT?s retail services, and has also set charge ceilings which result in a cut in certain WLR charges.

Retail revenues from telecom services in the 12 months to September 2005 were ?37.2 billion ? ?2.2bn more than September 2004. Mobile revenues accounted for ?13.6 billion of this total, a 16 per cent rise year-on-year, while revenues from fixed telecoms fell by 9% over the same period. By December 2005 there were almost 9.8 million broadband connections to UK homes and businesses, with the number of broadband connections comprising 57 per cent of all internet connections in September 2005.

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