Credit crunch biting down on broadband

The number of new broadband lines added in the past quarter were 20 per cent below expectations in a sign that broadband providers are starting to feel the economic downturn, according to Point Topic.

The broadband analyst firm forecast in April that another 800,000 lines would be added across Britain during the second half of 2008.

Initially the forecast looked about right, with June's figures actually slightly ahead, but only 313,000 lines were added between July and September, roughly 20 per cent below the 390,000 target.

"We are now forecasting that only 620,000 broadband lines will be added in the second half of 2008," said Tim Johnson, chief analyst at Point Topic.

Johnson reckons that the continued growth of local loop unbundling, where ISPs install their own equipment in BT exchanges, is the main driver of continuing growth in broadband, adding 323,000 lines in the quarter.

The research estimates that Virgin Media may have added another 60,000 cable modem customers, while BT appears to be the hardest hit, losing around 70,000 lines. Other smaller providers appear to have remained fairly stable.

The main effects will be that fewer people will switch from dial-up to broadband, and about 240,000 more homes will be without any kind of internet access at the end of 2009.

Point Topic also believes that many businesses that do not currently have broadband access will continue to do without it for the time being.

Johnson warned that this reluctance to move to broadband could be a blow to the government's digital inclusion programmes, such as recently announced plans to ensure that all children have a computer and internet access at home.

"The forecast for 2009 as a whole is 1.1 million, 200,000 down on the earlier forecast. By the end of 2009 there should be about 18.4 million broadband lines in Britain, 300,000 short of what was expected six months ago," concluded Johnson.