UK broadband growth slows down

Market faces continuing upheaval

The broadband market is waning for the first time in 4 years

The UK broadband market faces upheaval as take-up slows and a high proportion of new customers are being won by media giants offering bundled services.

The number of new highspeed connections for the 12 months to March 2007 fell below three million for the first time since 2004, according to figures from telecoms expert Enders Analysis.

And more than 30 per cent of all new customers in the first quarter of the year went to satellite TV giant BSkyB.

The first wave of the broadband boom is over, says Enders analyst Adam Rumley.

‘This is the last big year for additions; adoption will tail off rapidly after that,’ he said.

Slowing growth will mean price wars and smaller suppliers focusing on customer niches. But there is still a significant customer base that is untapped, says Anthony Walker, chief executive of government advisory body the Broadband Stakeholder Group.

‘There will be more churn as operators try to steal customers away from another,’ said Walker.

‘But there is still a way to go before this becomes vital for their survival because the adoption rate in the UK is still the highest of the G8 nations.

‘Countries such as South Korea reached 70 per cent adoption before flattening off, mainly by targeting new markets such as the elderly, as well as tailoring luxury products,’ he said.

Broadband Britain’s initial slow start was offset by a sharp upturn in subscribers in 2004 as market competition pushed down prices.

Growth has slowed significantly over the past 12 months, but there are about 4.8 million UK households with PCs without broadband. A further two million have low-speed connections.