UK to reach 21 million broadband lines by 2013

But the rate of growth in subscriptions is slowing rapidly

Robert Jaques, vnunet.com 21 Nov 2007

The overall number of broadband users in the UK continues to rise, but market watchers revealed today that the rate of growth of new subscriptions is falling rapidly.

Point Topic said that total UK broadband subscriptions will reach about 21 million by the end of 2012, comprising 19 million consumer lines and two million business lines.

The current downward trend in the growth rate of net additions is not just a blip but shows the pattern for the future, the analyst company forecasts.

About 330,000 and 550,000 consumer broadband lines were added in the middle two quarters of 2007 respectively, the lowest numbers since 2003. This is barely half the growth achieved in the previous two quarters, according to Point Topic.

The third quarter saw a slight improvement. Almost 600,000 business and consumer broadband lines were added which was better than projected.

The increase was due to good performance by the main broadband operators - Sky, BT Retail, Orange, Carphone Warehouse and Virgin Media - which added 660,000 lines while smaller competitors shared net losses of over 60,000 lines.

"A primary reason for the current slowdown in the market is the shrinking size of the remaining pool of dial-up users ready to be converted to broadband, " Point Topic stated.

"Potential users are also put off by the widely reported problems in getting a broadband connection up and running, and controversy over the gap between promised and actual speeds."

One driver of steady growth in the consumer sector will be demographic advance. As people grow older, they will carry their internet habits with them into older age groups.

This trend will contribute to about a one per cent reduction of the number of non-user households each year. Another factor spreading appeal of new applications will be social networking.

One key factor in Point Topic's forecast is how quickly homes and businesses which are still without the internet will get online.

"We forecast that about four per cent of the remaining households without internet access will convert each year," said Point Topic chief analyst Tim Johnson.

"That is roughly the average for the past two years as a whole, but much better than in the past few quarters, so it implies improved performance by the industry."

Point Topic estimates that about 73 per cent of homes and 85 per cent of business premises will have a broadband connection by the end of 2012.

In the business market, which is expected to have lower barriers to take-up than the consumer sector, about 6.5 per cent of the remaining business premises without broadband will get connected each year.

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