The end of 2016 saw superfast broadband subscribers total over 12 million, representing 47 per cent of the UK’s overall broadband market. At nearly half of the broadband base, superfast has basically become the standard broadband product.
Point Topic estimates there were just over 12,059,000 lines in service at speeds of 30Mbps or above in the country. This includes those supplied by providers using the Openreach fibre-based network, infrastructure owned by alternative network operators, Kingston upon Hull’s incumbent KCOM as well as Virgin Media lines. It excludes any fixed wireless access or satellite subscribers who may be receiving superfast speeds.
Point Topic estimates that BT Consumer is very close to overtaking Virgin Media in the supply of superfast broadband services and by the end of March 2017 it will surely become the largest supplier of superfast lines.
Currently 51 per cent of BT Consumer’s customers are on fibre-based broadband packages. Virgin Media does not provide a full breakdown of its superfast line numbers but Point Topic estimates that 96.5 per cent of the cable operator’s total customer base is on 30Mbps or above packages.
The UK’s total broadband market stood at just over 25,664,000 at the end of 2016, almost one million lines higher than the previous year and an increase of four per cent.
The UK finished 2016 with household broadband penetration having risen to 82.9 per cent from 80.8 in 2015. Openreach’s physical line base, however, increased by 50,000.
DSL technology saw a sharper quarterly decline than usual during the last three months of 2016 whereas FTTx lines steadily increased.
Figure 1: Superfast broadband lines added in the UK 2012-2016 by BT Consumer and Virgin Media
Virgin Media saw its net additions go down year-on-year by nearly 30 per cent. Across its portfolio the cable operator experienced higher churn due to the effect of a price increase in November 2016, which it says was anticipated. However, Virgin Media has experienced a strong year. It says that customer additions have been driven by attractive propositions and over 70,000 additions from new build activity, reflecting the phasing of Lightning build.
Virgin Media also attributes its marketing for broadband and video services based on product superiority to making gains over the past year. The average speed taken by its UK broadband base has increased 22 per cent year-on-year to over 100Mbps and monthly consumption has risen to 160GB per month.
In terms of mobile, Virgin Media says it has transformed its mobile offering with the launch of 4G services in November 2016. It says that 4G subscriptions had been taken by over five per cent of its UK mobile base by the end of 2016.
The operator has renewed its MVNO agreement with BT for five years and expects this to enable a stable transition to full-MVNO. The integration of Arqiva WiFi is also underway following its acquisition in Q4 2016, with a relaunch under the Virgin Media brand in February 2017 expected to present strategic benefits to both business and consumer operations.
BT Consumer added 83,000 net broadband subscribers during the three months to end-December 2016, up on the previous quarter’s additions of 76,000, bringing its total broadband base to 9,276,000.
In terms of TV, BT added 52,000 TV customers, growing its total TV base to 1.7 million. It announced plans to transform its TV service over the coming months, introducing a new user experience with easy access to channels and on demand content, and a new BT TV App.
In terms of mobile, at the end of Q4 2016 the total BT mobile base was 30.2 million. The 4G customer base reached 18.2 million up from 17.6 million at the end of September 2016.
Once again TalkTalk’s retail customer base declined, although the operator did not provide a detailed breakdown in its Q4 2016 results. However, TalkTalk did say in its Q4 2016 results briefing that the assumption it was adding 20-30,000 wholesale subscribers per quarter is correct. Point Topic therefore estimates TalkTalk’s retail broadband base to be 3,006,000 lines, down by 62,000 on the previous quarter.
The operator launched its Fixed Low Price Plans in early October 2016, which fix prices for the duration of customers’ contracts, allow existing customers to re-contract onto the new plans, and give customers control of their bundles. TalkTalk said it had seen stronger than expected re-contracting rates during the quarter and through January 2017. It says this is proving transformative for its brand reputation and business.
TalkTalk’s FTTx base continued to grow during the quarter. Commenting during its results briefing, the company said that simplification of the sales process had brought fibre to the front of the sales journey, and that the use of more data is driving customers to want faster connectivity.
TalkTalk went live with the new next-generation YouView platform just before Christmas 2016, and said that customers were upgrading from Freeview. However TV subscriber number fell during the quarter whereas mobile fared better.
The company said that on a 12-month rolling basis churn was up year-on-year to 11.6 per cent (presumably overall customer churn and a rise from 10.5 per cent a year ago). It said this reflects an increased proportion of broadband customers now making up its total customer base – who have a greater propensity to switch providers – and the highly promotional environment it is operating in. The company notes that this trend has continued for longer than expected, but that it is confident in the plans it has been developing to address this.
On mobile, Sky began sales in mid-December 2016 to existing Sky customers and those who had pre-registered, ahead of its full market launch in early January 2017. Similar to its entry into the broadband market in 2006, Sky hopes to be able to leverage the strength of its brand and customer service to create another revenue and future profit stream. It believes that through a range of distinctive features, its mobile service offers customers greater choice and flexibility than current mobile providers.
On the TV front, Sky experienced strong usage of its new Sky Cinema service, with a record seven million movie downloads in one week over Christmas 2016, up over 50 per cent versus the average week in the period.
On the TV front, Sky experienced strong usage of its new Sky Cinema service, with a record seven million movie downloads in one week over Christmas 2016, up over 50 per cent versus the average week in the period. It also saw an 18 per cent increase in revenue from transactional business driven by the launch of box sets within Sky Store Buy & Keep. Sky noted record weekly revenue generated by Sky Store over Christmas, totalling £4 million, with Sky Store regularly taking more than 50 per cent share of digital sales for new movie release titles. However, the company saw a decline in advertising revenues down two per cent against a broader market decline of five per cent.
The full version of this report is included in Point Topic’s UK Plus service. More information can also be found in our Superfast for nearly half of UK subscribers report and our Superfast broadband projects directory also published this month. Please contact Simona Pranulyte on +44 (0)20 3301 3303 or e-mail firstname.lastname@example.org for more details.