Prepared by: Nicholas Beale
Concert  - International Carrier Services
Middle East & Africa
United Kingdom
nick.beale@bt.com

Internet subscribers and users (1)

The UK Internet market has exploded over the last 3-years with the advent of subscription-free access (or unmetered), and flat-rate-fee offers. The current, estimated, subscriber base in the UK is 7.5 million, with double this amount, 15 million, thought to be utilising the subscriptions. It is a firmly established rule that the measurement of subscriptions in use in the UK should be treated with caution since many free subscriptions remain in place but without users. The full set of key indicators follow;

Main lines 32 million
ISDN lines 1.8 million
Cable TV Subscribers 3.2 million
Cable TV penetration 5.4% (no. of subscribers / total population)
Internet hosts 1.7 million
Number of PCs 19 million
PC penetration 32% (no. of PCs / total population)
Internet suscribers 7.5 million
Internet users 15 million

Note: Data unavailable for categorisation of internet user base.

5-year forecasts suggest that the Internet user base (individuals who use the internet at least once a month) will increase to 31 Million in 2005.(2)

Number of ISP's

The growth of the access market in the UK has been considerable and the country now has c. 500-550 ISPs. This is largely due to the larger carrier players (i.e. BT, Energis etc) offering "virtual points of presence" (VPOP) which allows for the establishment of Internet services very quickly, and easily. In the future it is forecast that the number of ISPs will decline, as companies merge with either UK and/or European ISPs, or simply sink as declining margins force some out of business. Almost none of the larger ISPs operating in the UK have retained any form of independence.

International Bandwidth (3)

In terms of City capability, London is now estimated to be the largest hub of Internet capacity in the world. The current total of international internet bandwidth hubbed via London is c. 18,000Mbit/s, the equivalent of just over 7 x OC48 (2.5Gbit/s) circuits. Of this the top-5 routes comprise 85% of the total. As follows:

London New York 5,200Mbit/s
London Paris 4,100Mbit/s
London Brussels 2,700Mbit/s
London Amsterdam 1,900Mbit/s
London Washington DC 1,4500Mbit/s

The USA remains the largest country hub of international internet bandwidth with c. 28,000Mbit/s.

Regulatory

The following extract from a recent report compiled by the consultancy group, Analysys, captures the key regulatory issues surrounding the Internet in the UK.

 (4)“Growth in the UK's Internet market has been greatly facilitated by the Number Translation Services (NTS) interconnect system for toll-free, local-rate and national-rate numbers. This has been in use in the UK since 1996. It was initially not intended for Internet use, but has since become the most widely used model for dial-up services. Under the NTS scheme, the end user dials a non-geographical number that is owned by an alternative licensed Telecom Operator (TO). The TO compensates the local exchange carrier with an origination charge and pays for the interconnect links. This charge covers the network elements used for the conveyance of the call to the POI, and also, in some cases, the cost of the IN database look-up and IN processing. The alternative TO retains the remaining proportion of the call charge.

The system has encouraged long-distance carriers such as Energis to build and offer nationwide VPOP services to ISPs in order to build traffic volumes on their networks. As a result, ISPs are able to offer national coverage at local call rates using 0845 or 0345 numbers without having to own national infrastructure. Because ISPs normally do not possess interconnect and numbering resources rights, they were traditionally not able to benefit from the interconnect payments themselves. Over the past two years or so, however, it has become increasingly standard for ISPs to bargain with alternative network operators to receive a percentage of the interconnect revenue generated by their subscribers. 

 In November 1999, OFTEL announced that it was ordering local loop unbundling, and would require BT to provide a leased circuit connecting the  user to a local exchange. Alternative TOs wishing to lease circuits must  attach their own broadband upgrade equipment which will be collocated at the switching site. This will enable alternative operators to supply services such as DSL connectivity without building their own local loop infrastructure. Draft licensing conditions and prices for local loop access are due to be released in April 2000, with operators able to finally launch services in July 2001.”