Ofcom to undertake a Strategic Review of Digital Communications

Ofcom, the Super Regulator, is holding a Strategic Review of Digital Communications to promote competition and investment in converged digital communications services.

This is mainly concerned with infrastructure services such as broadband, but will also cover mobile 4G and future 5G services and "over-the-top" services (i.e. services deliver on top of Internet services such as VoIP, messaging systems such as WhatsApp which is replacing SMS, etc).

Ofcom last held a review 10 years ago after BT's infrastructure operation was separated into a distinct entity (BT Openreach, though still part of BT Group).

There have been many changes since the last review such as the merger of T-Mobile and Orange into EE (which has subsequently been purchased by BT) and consolidation in the ISP market (02, Tiscali, AOL, Be, Easynet).

Since 2005

• broadband adoption has increased from 31% to 78%
• take-up of bundled services has risen from 29% in 2005 to 63% today
• significant commercial and public sector investment in superfast broadband has resulted in 78% availability five years after deployment started. Adoption of this new service is now 27%
• mobile broadband availability has increased significantly, with 3G increasing from 82% to 99% of premises, and 4G services available to 73% of premises. Mobile broadband take-up is now 67%
• new entrants have shown strong growth in some areas (for example, local loop unbundling now accounts for 44% of broadband connections, up from 17% in 2005)

While Ofcom can not predict the overall output it will likely encompass

• Efficient investment: How can incentives for efficient private sector investment and innovation be maintained and strengthened, to ensure widespread availability and high quality of service?
• Competition: What should be the focus of competition policy in future networks (the 'enduring economic bottlenecks')?
• Deregulation: What is the scope for deregulating networks and services downstream of any 'enduring bottlenecks'?

Ofcom is planning to complete the review by Summer of 2015.

Ofcom fines TalkTalk and Tiscali £3m

Ofcom has fined TalkTalk and Tiscali £3m each for mis-billing customers after they had been previously warned to get their systems in order.

Between 1 January and 1 November 2010 the companies billed 62,000 customers for services they did not received. They were then warned to fix their systems by December but billed another 3,000 customer between December and March.

TalkTalk and Tiscali have already paid £2.5m in compensation to customers for refunds and good-will payments.

Ofcom showing biting - or just publicly showing they have some teeth?

Carphone Warehouse to acquire Tiscali UK

Carphone Warehouse (CPW) are acquiring the assets of Tiscali UK for £236m from Tiscali (Italy).

Tiscali have been up for sale for some time as broadband economics worsen and competition increases. Both BSkyB and CPW have been rumoured to be in the running as well as outsiders like BT.

It seems CPW have got to the finishing post and they'll gain Tiscali's infrastructure and customers. CPW's customer base will increase to 4.25m making them the largest UK (home) broadband provider. There's going to be considerable overlap in infrastructure and staff so CPW will likely make sweeping cuts in both. Tiscali's IPTV platform (previously HomeChoice) will give CPW an edge to compete with BT Vision and whatever Sky are planning. Tiscali only managed to achieve 100,000 IPTV customers (they wanted double that) and maybe CPW will be able to get that out to all their customers.

If CPW can utilise the extra infrastructure and minimise costs then they may be one of the larger players that survives the broadband commoditisation game.

Tiscali to buy Pipex

UK broadband consilidation continues with the acquisition of Pipex's fixed voice and broadband assets going to Tiscali (assuming it gains the approval of Pipex's shareholders and the UK OFT). This will add around 570,000 consumers and 100,000 business broadband customers. Tiscali will pay around £210m.

It looks like Pipex will maintain their hosting business (though it's a good guess they'll sell that off too) and Pipex Wireless who are starting to offer WiMAX based services (with a £21m injection from Intel).

Though Pipex Wireless are rolling out wireless services, they are ripe for a take-over and they may fetch as much as the fixed line assets of Pipex. Wireless is seen as the only real contender to fight BT's last mile hold. Pipex initially zero rated their wireless license on their books when they acquired Firstnet who also acquired the license from another operator. They must now be laughing all the way to the bank.

Sky and Tiscali in talks?

It's rumoured that Sky is persuing Tiscali and they are in talks.

Tiscali have "on the market" for a while and though they purchased Home Choice for their video delivery capability, competition in broadband is constantly increasing and margins are decreasing.

Sky have always wanted to deliver video over their infrastructure, so Sky buying Tiscali could be a good deal for them.

If the deal goes through it's likely Easynet will take-over Tiscali's infrastructure which may not be good news for Tiscali staff.

Unfortunately this trend is going to continue in the UK and there are only going to be a few big telco/broadband players left in the market.