Broadband Growth Slowing In Biggest EU Regions

A review of growth of the broadband DSL market on a country by country basis revealed disparities between the markets, with the UK having the highest growth which, at over 7%, was more than double that of the French market.

The slowdown significantly affected a number of the incumbent telcos in the Big 5 European territories, several of which suffered from market saturation. Additionally, increased competition from smaller ISPs has had a detrimental effect on the number of new customers gained by some of the incumbents. Notable exceptions were Deutsche Telekom and Telefónica, which managed to increase their respective domestic market shares.

In the UK, both BT’s wholesale and consumer DSL businesses reported fewer new lines in 3Q than in the previous quarter. The company’s share of the retail DSL market dropped to 32%, equating to 2.98 million subscribers.

Offers of “free” broadband from several operators launched in the second quarter, making the UK market increasingly competitive. Despite the slowing growth, BT is closing in on cable operator NTL:Telewest’s customer base of 2.984 million.

Continental Research’s Autumn 2006 Convergence Report suggests that the race is on to sign up consumers to “bundled entertainment and communications services”, with brands such as BT, Sky, MSN and Carphone Warehouse encroaching on each other’s traditional territories whilst vying for customers to stay loyal (see Communications Companies Vie For Bundled Services).

Screen Digest’s study suggests that France Telecom added 275,000 new customers, down on the previous quarter and on last year’s figures. In contrast, Free Telecom and Telecom Italia’s Alice ISP reported an increase in growth, which now stands at over 8.5% for both operators.

In Italy, Telecom Italia added 187,000 retail DSL customers, increasing its subscriber base to 5.4 million by the end of September. The company’s total number of broadband customers grew by 3%, a decrease from the 13% seen in the same period last year.

Contrasting with these results, Deutsche Telekom increased its number of new domestic retail DSL customers to 354,000 – an improvement on Q2 and on the company’s third quarter results in the past two years. Unlike the situation in France, smaller ISPs such as Arcor and Hansenet saw a decrease in quarterly growth.

Telefónica’s broadband business also showed improvement with the company increasing its market share to 71.2% of retail DSL connections, adding 242,000 customers in the third quarter.

Recent figures from the Office of National Statistics suggest that in September this year, broadband connections in the UK accounted for 75.2% of all internet connections, up from 72.6% in June 2006.

The ONS report added that dial-up connections continued to decline and accounted for 24.8% of all internet connections in September 2006 (see Three Out Of Four Internet Connections Now Via Broadband) whilst research from Eurostat, the Statistical Office of the European Communities suggested that nearly half of all individuals in the EU used the internet at least once a week in 2006, whilst 32% had a broadband connection in Q1 2006, compared to 23% in Q1 2005 (see 52% Of EU Households Have Internet Access).