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• Summary
• Statistics: stable shares and clues to Tesco
• Comment: LLU isn’t hard; just ask Be
• News

In summary

Welcome to issue 14 of UKBBMM.

Over the past fortnight there has been no unifying news theme in the universe that is the UK broadband market. Many folk, quite reasonably, had at least half an eye on the final day of the final Ashes test match last Monday and then spent Tuesday reading “Ashes Victory Specials” in the national press, though judging by the absence of broadband providers in the burgeoning list of Team England’s commercial partners, few if any of you were installed in corporate boxes at the ground. Wanadoo had a hoarding or two at the Oval and a big banner ad on the ECB website, but apart from that, broadband’s involvement was a little understated – it enabled those of us unlucky enough to have been sitting at a desk to keep tabs on the score which was a less than visible benefit, but hugely important nonetheless.

We are, however, a small step closer to understanding whether and how our UK broadband universe is expanding or contracting, with the publication of the September edition of our ISP market share numbers. In terms of subscriber numbers it is expanding, albeit at a slower rate than in previous quarters and the total market didn’t quite top 8 million. We have taken a stab at understanding the residential and business sectors too, assisted by data we have been able to extract from BBUS, and we conclude that there are a shade under 7 million broadband households and under 1 million broadband (DSL, cable modem, fixed wireless) enabled places of business. We were pleased too, that a report, published by Telewest Business corroborated the suggestion which emerged from BBUS, that the South West (alongside the rest of the South of England) is leading the take-up of homeworking in the UK.

In terms of the number of ISPs, the universe is neither expanding nor contracting: Leeds ISP 186k bought Mailbox Internet for an undisclosed sum but the equilibrium is maintained by the imminent launch of Be, next Monday. We visited Be, in pre-launch mode, at its Lancaster Mews headquarters just yesterday (Wednesday) and interviewed Boris Ivanovic; some hasty thoughts on the Be hurricane which is approaching London, appear in this issue and a more fullsome write up, including launch coverage will appear in issue 15.

In terms of coverage, the universe is expanding very slightly, as BT finds ways to bring the good news to the 0.2% of the population who cannot currently have it , even if they want it. Trials in Yorkshire and Northern Ireland which will see DSLAMs installed in street level junction boxes will cut copper loops to a technically acceptable length and a similar approach being undertaken in Dorset and Scotland will bring DSL to those unfortunate enough to have TPON voice services. Lest we forget that BT has gone cool on SDSL (reported in UKBBMM 12), little Gravity Internet is doing its bit for the symmetric cause by offering specials on SDSL orders placed before 31st December.

There was a little boost for BT and BT Yahoo! customers who were stung back in February by the news that despite a doubling of bandwidth in most cases, download caps would be halved; BT has pledged to these customers not to penalise customers if they exceed the cap from time to time and to increase the cap. They must be worried about mass migration to the competition and PlusNet for one has thrown down the gauntlet, offering migrators to its Premier package (8Mb, no download cap) free connection and the first 3 months for under a tenner. Pipex appears to be cranking up the ante to promote the voice component of its portfolio. It attempts to sustain ARPU by adding voice minutes, by introducing a tiered offering of three packages (Pipex Start, Pipex 1000 and Pipex 2000), each comprising 2Mb broadband and 500, 1,000 and 2,000 voice minutes respectively.

One ISP which has hitherto gone about its business quietly is Zen Internet. So far in September it has issued two press releases, outlining how it has provided free ADSL to two causes, one charitable, the other commercial. Zen’s munificence provides Hospital Radio Perth with a free ADSL line for a year, so patients can hear live feeds from the Perth Concert Hall, and it also provides show-goers at the Southampton Boat Show with wireless coverage of the marina.

Statistics: stable shares and clues to Tesco

The table below shows Point Topic’s best estimate at 20th September, of the subscriber bases of known UK ISPs. The figures quoted are best estimates, based on incomplete data. The spreadsheet from which this document is generated and to which all UK Plus subscribers have access, has been and will continue to be updated on a rolling basis as new information becomes available. We have made substantial changes to the spreadsheets to reflect improved collation and sourcing methodologies: we have added confidence levels against each data point and a code which cross-refers to a source document. We are trying to include business and consumer splits, by ISP and more detail on the composition of the LLU numbers. In future updates will be published every month, though the spot data will continue to be quarterly. The first version of the new format will be published by the end of the week commencing 26th September.

There are over 200 ISPs which buy lines on a wholesale basis from BT Wholesale and a further 100 to 200 Virtual ISPs (VISPs) which buy through wholesale ISPs. Some higher profile ISPs (Virgin, UK Online) are wholly owned brands operated by companies in the list below (NTL and EasyNet, in these two cases respectively), so they are not separately itemised.

Market shares overall were very stable. Slight apparent declines or increases may be accounted for by estimates and by marginal error in the construction of the market total. This said, known subscriber bases of the larger ISPs (BT Retail, ntl, Telewest and Wanadoo) were remarkably steady. This possibly reflects better than average growth for the higher profile brands, in a quarter which grew by 250,000 fewer subscribers than the first quarter of the year. The BT Retail figure excludes PlusNet and Brightview figures and so is some 130,000 lower than the figure reported in BT’s interim results.

Interestingly, the list of ISPs included in the top six is corroborated by BBUS, though the weighted shares are different. The ranking of only one ISP, AOL, differs between the BBUS results – where AOL’s share of the residential market place is 19% - and the estimates given below. In fact, BBUS results invert both the rankings and the shares shown in Table 1 for ntl and AOL . It is quite possible that higher or lower broadband shares illustrated by the survey indicate a respondent’s uncertainty as to whether or not the household has dial-up or broadband.

The one significant result from BBUS, which is not included below, is Tesco Broadband. According to BBUS, Tesco ranks 6th in the UK broadband market, with a share of 0.8% of the residential market, equating to some 56,000 broadband lines. Tesco’s share of the dial-up market is 1.9%, equating to 150,000 accounts. Tesco’s total share of all internet (broadband + dial-up) households is 1.4%, according to BBUS. Tesco’s interim results for the quarter ending 13th August (released on 20th September), reveal that Tesco Telecom has a customer account base of over one million, so it is not unreasonable to assume that one fifth of this account base takes internet access products in addition to or separate from mobile phone and CPS telephony products. After factoring a proportion of ‘don’t knows’ from the respondent base, the Tesco broadband figure could be as high as 65,000.

Table 1: UK broadband subscribers by ISP

Table 2: UK broadband market totals

Figure 1: share of total UK broadband market by ISP

Comment: LLU isn’t hard; just ask Be

A couple of hours before deadline, we visited the West End offices of BeUn Ltd (to give it the correct company name), also known as Be Unlimited, or BeThere.co.uk, or simply Be, or be*, or be. Be, to give it its official handle, launches in London on Monday, though a pilot phase has been running since the end of July. This will be the culmination of effort which began with the founding of Avatar Broadband in October last year, by Boris Ivanovic (whom we interviewed) and Dana Pressman, former colleagues at MIT. Ivanovic bought and managed to profitability Bostream, Sweden’s second largest broadband ISP, until it was bought by one of its competitors in 2004. Pressman has experience in systems integration with Oracle and Sapient. Be Unlimited proper, started the build up to launch in February this year after securing the recruitment of a large part of the original management team from Bostream.

A full report on the launch and prospects for Be will appear in issue 15. For now, here are some of the salient points from the conversation and the overall impression which it left.

Firstly, there is the size of the outfit. Be, three working days before launch, has just 15 employees. It occupies a small, uncomplicated and ungilded office in Lancaster Mews, just opposite Hyde Park. Clearly the 15 employees have not been solely responsible for the unbundling of exchanges and the creation of an all IP national network; physical installation of equipment in exchanges has been done by Alcatel and the integration of network systems by Sapient (whose UK CEO Pressman once was). This rigorous approach to cost management will, according to Ivanovic, continue to characterise Be’s approach: customer services will – initially at any rate – be outsourced, alongside systems integration and roll-out.

Secondly, there is the simplicity of the message. The asterisk in the branding (be*) is an ironic allusion to small-print, which Ivanovic avowedly detests. “Even our business cards are transparent”, he said as handed over a business card printed on clear plastic. Customers will get the best, unthrottled line speed available to them – up to 24Mb – for something over £20 a month (the pilot was £20 a month). There will probably be an activation fee, which will include the delivery of a ‘BeBox’ (Integrated Access Device). There will be no usage cap and no peak or off-peak constraints. It is not clear yet what contract terms, if any, will be applied. In short, Be offers one monthly price, one maximum line speed, one physical product (the BeBox), one service (broadband, though VoIP and VoD will follow) and probably (though it is not yet clear) one point of sale presence (namely www.BeThere.co.uk). Not fogging the message with a TV or Telephony offer is a good idea.

Thirdly, there is the scale of Be’s ambition. Be is going to have unbundled 1,000 exchanges covering two thirds of the UK population by mid next year, with a roll out programme, after London, including Birmingham, Manchester and Liverpool. Bostream in Sweden grew more than 30 fold in terms of customer numbers in just over 3 years, from a few thousand to over 100,000, by positioning itself as an ‘upstart challenger’ to the incumbent, Telia. Be clearly wants to achieve the same in the UK market, which it perceives as ripe for growth. “The UK is today where Sweden was in 2002” claims Ivanovic, citing the reliance of the market on ISPs reselling the incumbent’s wholesale capacity. This creates a number of conditions: a confused market, price sensitivity and technology lag. Add to this the favourable regulatory attitude to LLU and Be’s immediate opportunity, providing it does deliver a clear message, good customer service and technological innovation at a good price, is evident. Be has now to convert this opportunity into customer numbers and could certainly aim to match fellow Londoners, Homechoice for customer numbers, over the next few months.

Lastly, there is the dismissive attitude to conventional wisdom. This would suggest that LLU has been a less than raging success in the UK to date and that this is to do with BT’s obfuscation. Not so, says Ivanovic and he refuses to recognise Bulldog’s experience of BT as an unhelpful and malign organisation. This may or may not have something to do with Be’s pursuit of a shared unbundling strategy, whilst Bulldog has gone for full unbundling, but in Ivanovic’s words “BT has behaved far better than Telia did in Sweden and provisioning times are down to less than two weeks”. The proof of the pudding will be in the eating, but for the time being, Be’s optimism is refreshing. It has an all IP, all LLU technical strategy, so it will need BT’s compliance.

Incidentally, do not attempt to find ‘Be’ using a Google search; the term returns a mere 317,000,000 (UK) results. The official web ident is ‘BeThere’; a mere 869 (UK) results and the broadband ISP comes top of that list!

News

Zen provides free ADSL to Hospital Radio Perth

5th Sep 2005: Zen Internet is providing a free ADSL line to Hospital Radio Perth (HRP) for a year. In an interesting use of broadband for a very specific application, HRP is using the broadband line as a live feed from the Perth Concert Hall for two large regional hospitals. The use of an ADSL line was necessitated because the seamless roof of the new concert hall could not accommodate an antenna.

The original release is not posted on Zen’s website.

PlusNet offers Premier package to migrators for under £10 a month

8th Sep 2005: PlusNet is offering customers who migrate from another ISP on to its Broadband Premier package, the first three months at £9.99. Premier offers unthrottled bandwidth of up to 8Mb and no download cap. After the first three months, the monthly fee moves to the standard price of £21.99. Customers not already on an 8Mb capable line need to pay a £14.99 regrade fee. The full details can be found at:

http://www.plus.net/products/offer.html?link=res_bb_index

Pipex launches new portfolio and trials ADSL2+

8th Sep 2005: Pipex has announced the launch of three new broadband packages, which include telephony. They are called Pipex Start at £14.99 (2Mb capped at 1Gb/month and 500 minutes of calls to 01 and 02 numbers), Pipex 1000 at £19.99 rising to £23.99 after 6 months (1Mb peak and 2Mb off-peak, no download cap and 1,000 minutes of calls) and Pipex 2000 at £27.99 rising to £33.99 after 6 months (2Mb, no download cap and 2,000 free minutes). Pipex has also announced the successful completion of an 8Mb trial for commercial launch in 2006 and a proposed start date of ‘early 2006’ for LLU. The full release can be found at:

http://www.pipex.net/investors/pressreleases/pr/press_release_page.php?id=228

BT trials FTTC to bring broadband to uncovered 0.2%

12th Sep 2005: BT has announced a series of trials to bring broadband within reach of the 0.2% of the population who live too far from a local exchange, or whose local loop uses TPON cable technology. The first series of trials (four in Yorkshire and five in Northern Ireland) involve installing DSLAMs in street cabinets and connecting them to the exchange with fibre (Fibre to the Cabinet or FTTC). The second series which begins in December, in Aberdeen and Charlton Down in Dorset, is for voice telephony customers whose service is based on TPON, which does not support ADSL. This trial will also use equipment installed in the local cabinet, rather than the exchange. The full release can be found at:

http://btplc.com/News/Articles/Showarticle.cfm?ArticleID=32fead56-9799-4ce3-8fa9-a274f1f22b0c

and a bit more discussion can be found on the ADSLGuide at:

http://adslguide.org/newsarchive.asp?item=2379

186k on acquisition trail with purchase of Mailbox Internet

13th Sep 2005: 186k has acquired Mailbox Internet, a London-based independent ISP. Since being acquired from NG Transco’s subsidiary Lattice in 2004 by internet entrepreneur Dominic Marrocco, 186k has been very acquisitive, buying Elite (Feb 2005) and Onyx Internet (Dec 2004), and taking over the management of 200 dial-up VISPs from Tiscali in March of this year.

For the full story see: http://www.mailbox.net.uk/page.php?cid=251

BT Retail pledges not to charge for ‘occasionally’ exceeding cap

15th Sep 2005: BT announced that as of 15th October, new usage guidelines will come into effect. In a customer services notice to BT Broadband and BT Yahoo! Broadband customers, BT has increased guideline usage and pledged not to penalise customers if they occasionally exceed the download cap. Even when the usage cap is exceeded more than once, customers will be encouraged to migrate to a package with a higher cap.

http://www.bt.com/broadband/bb_info.jsp?targetSection=better_value

Gravity Internet looks to lift SDSL

16th Sep 2005: even though BT has halted further roll out of SDSL, Gravity Internet is offering free connection and modem (worth £694) on its Pro and Advanced, 1Mb and 2Mb SDSL packages, for orders placed before 31st Dec 2005. Full details are at:

http://www.gravityinternet.net/index.html

Telewest reveals South West makes increasing use of advanced comms

19th Sep 2005: research undertaken by Telewest Business reveals that the South West region of England has seen increases in the use of advanced communication services since 2004. Data from the Telewest Business customer base in the region reveals increases in the volume of data carried over the Telewest Network on behalf of business customers. Whilst the report makes no specific mention of increases in broadband take-up by households or business premises, it has one important finding which corroborates a finding from BBUS: that there is increased uptake of IPVPN services to enable homeworking in the region and a 30% increase in data traffic due to ‘advanced internet services’ in general. The full Management Report can be read at:

http://www.telewest.co.uk/business/resourcecentre/research/wiredwest.pdf

Zen provides free broadband and WiFi to Southampton Boat Show

19th Sep 2005: for the second time in less than a month Zen makes some PR capital out of providing free ADSL lines. Zen is providing six ADSL Home1000 lines and six ADSL Home2000 lines at the Boat Show, which will provide wireless coverage of the whole show and fixed access in the ‘Internet Surf Shack’.

The original release is not posted on Zen’s website.

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