Demand for speed helps UK broadband grow

British consumers are gaining an appetite for superfast broadband services, says analyst firm, Point Topic. Research reveals that the UK broadband market has shrugged off talk of a double-dip recession, to deliver its best third quarter since 2008.

The UK market added a net 289,000 broadband lines during the third quarter of 2011, markedly better performance than in the previous quarter with 240,100 lines, bringing total broadband lines in the country to over 20.4 million by the end of September 2011. This is up 6.4 per cent on 19.2 million a year ago.

“There’s good evidence that a growing demand for speed and a more reliable service is helping to drive the growth,” says Annelise Berendt, Senior Analyst at Point Topic.

Superfast broadband is defined as having at least 25Mbps download speed. “At the current rate the UK will have well over a million superfast broadband lines by the end of this year. This will mean that over 5 per cent of British broadband users will be on superfast speeds.

“Currently Virgin Media appears to be getting the most benefit,” explains Berendt. “The appeal of superfast seems to have played a major part in turning a fall of 13,000 broadband customers in quarter two into a gain of 24,000 in quarter three.” According to the cable operator, 54 per cent of its new subscribers in quarter three took superfast broadband at 30Mbps or more. Point Topic estimates that allowing for churn this means at least 50,000 new customers paying extra for premium speeds.

“The cable operator’s 30Mbps service, launched in February, is really starting to take effect,” adds Berendt. The new service went from 0 to 377,000 customers in barely six months and it appears that a significant number of customers are willing to pay an extra £5 a month to step-up from 10Mbps to 30Mbps.

Evidence from BT tells a similar story. “Assuming the trend set in the second quarter of 2011, when about one third of signings for the BT Infinity service were new to BT Retail, superfast appeal probably brought in about 30,000 new customers for BT in quarter three.

“Of course, it is not a simple matter of superfast bringing in non-user households. Although new to BT or Virgin Media, most of these customers will have had broadband before. But it provides a measure of the increasing attractiveness of broadband as a service in the face of hard economic times,” adds Berendt.

With the availability of fibre-based services on the rise with around 50 ISPs now trialling or selling fibre-based products using the Openreach network, Point Topic expects superfast take up to accelerate quite significantly in the coming year.

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