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Point Topic Paints Cautionary UK Broadband Picture

Posted: 05th Aug, 2008 By: MarkJ
Point Topic's Chief Analyst, Tim Johnson, has said that the UK broadband market is holding up well in the face of a slowdown, but warned that the current economic climate is only part of the problem.

The group estimates total UK broadband subscribers to now stand at approximately 16,735,000, which is actually 1.3% ahead of Point Topic's own forecast made in November last year; that took no special account of changing economic conditions:

"The reasons for the drop are simple," says Tim Johnson, Chief Analyst at Point Topic, "the number of dial-up homes ripe for migration to broadband is rapidly dwindling, there are barely a million of them left now and they are an increasingly resistant minority.

It is understandable that an ISP CEO should blame his shrinking broadband numbers on the economy rather than lack of foresight or declining market share. It’s his job to put the best face on things. But it gives a misleading impression of how well the broadband business is doing,
" continues Johnson.

"The pattern of declining quarterly adds has been clear for several years, it has been fairly consistent year-on-year with Q2 usually being the worst quarter, but expenditure on broadband is clearly a vulnerable part of the household budget. The next test in 2008 will be how well Q3 bounces back from the Q2 trough."

Naturally a significant part of the problem has also been the difficulty in winning over the 9.6 million households that are still without Internet access at all. Many such users are either elderly, happy to stick with dialup, extremely poor, happy to access the Internet only from work and or lack the knowledge to investigate such services.

There have been various government initiatives aimed at turning this situation around and some have had success, albeit not on the scale hoped for. Sadly this problem is not going to be resolved over a short period of time and as a result there will be less new blood in the market for ISPs to compete over, with existing competition and churn now becoming the real battlefield.
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