Technology | Media | Telecommunications

Monday, May 31, 2010

UK Planning for Superfast Broadband Adoption

According to the latest market study by Point Topic, the total number of broadband lines in the UK is now expected to be 25.1 million by the end of 2014 -- almost a million more than before.

The increase is not huge but it will help to improve the business case for broadband, and particularly for investment in superfast broadband using next generation access.

The short-term forecasts have also been increased. The actual total for the end of 2009 was 80,000 higher than forecast at 18,370,000 lines. The forecast for the end of 2010 has been increased to 19,790,000, up from 19,580,000 previously.

Looking back, projections such as these made by Point Topic are also proving highly accurate. The forecast for end-2009 made in October 2007 was within 1 percent of the actual result. The current forecast for end-2010 is just 1.2 percent higher than the forecast published in 2007.

A major feature of the longer-term forecasts is the dramatic growth projected for superfast broadband, mainly based on fiber to the cabinet or premises (FTTx). Contrary to much opinion, Point Topic is projecting a boom in FTTx similar to what happened with BT's DSL broadband services in mid-2000 time frame.

"We believe that FTTx will echo the development of DSL in the UK," says Tim Johnson, Chief Analyst at Point Topic. "People with dial-up internet access converted to broadband in their millions in the boom years. We forecast that superfast broadband will do the same around the middle of this coming decade."

The number of DSL lines grew from 550,000 to 12.3 million between 2003 and 2007. Point Topic now expects that next-generation FTTx broadband will do something similar, with 12 million lines by the end of 2016. Most of these users will have migrated from DSL. Cable TV service providers will also play a significant role in providing superfast broadband, but is expected to show a lower growth-rate overall.

"The difference is that we think there will be a quicker run-up this time," says Johnson. "While it took DSL three years to get from almost nothing to half a million, we expect that FTTx will cover similar ground in only two years."

The difference reflects a whole combination of factors; much greater commitment by BT, a much more competitive market, much more experience of broadband rollout and a relatively mature technology.

Key factors on the other side of the balance are that FTTx demands much more new investment than DSL and superfast broadband is not yet fully proven as a must-have service for ordinary homes.