Fibre Cannibalises ADSL as UK Fixed Line Broadband ISP Lines Hit 23.4m

Ofcom’s latest ‘Telecoms Market Data Tables’ update for Q3-2014 has reported that the United Kingdom is now home to a total of 23,411,000 fixed line residential and small business broadband ISP connections (excluding corporate lines), which is up by 192,000 in the quarter (better than the 179,000 added in Q2 2014).

A couple of highlights stand out in this latest update. Firstly, the fixed line broadband market share of BT’s consumer / retail division has for the first time in several years started to shrink (going from 32% in Q2 2014 to 31.9% in Q3); this is most likely due to Sky Broadband and TalkTalk making a bigger impact, particularly with faster “fibre broadband” (FTTC) connections.

Secondly, the older and slower ADSL broadband lines (up to 20Mbps) have now shrunk to 15,557,000 and that’s roughly the same balance as they held a decade ago (i.e. accounting for two thirds of fixed broadband connections). Typically ADSL lines have suffered as rival fibre optic based broadband (FTTC/P/H/B etc.) connections have grown, with 3,370,000 choosing to upgrade to the faster services.

Meanwhile cable services (Virgin Media) have also shown some limited growth, although we anticipate that this will improve over the next few years as the operator expands out to reach 17 million premises in mostly urban areas by 2020. This may also put more pressure on BT and thus further impact their retail share.

Separately the report also reveals that the total number of fixed phone lines (PSTN and ISDN channels) has fallen again to 32.6 million (down from 32.9m in Q2 2014), although this mostly tends to reflect a decline in business lines. Total fixed telephony revenues were also £2.0bn in Q3 2014, a fall of £97m (4.7%) compared to Q3 2013 and £43m (2.1%) during the quarter.

On the slip side the estimated retail revenues from mobile telephony services increased by £80m (2.1%) to £3.9bn in the year to Q3 2014 and by £62m (1.6%) compared to the previous quarter. Similarly the number of active mobile subscribers increased by 897,000 (1.1%) to 84.3 million in the year to Q3 2014, and by 985,000 (1.2%) compared to the previous quarter.