New UK broadband subscribers plummet

The remaining pool of dial-up users is shrinking fast

The third quarter of 2007 was a "bad one" for the UK broadband industry as new subscribers plummeted, market experts reported today.

Point Topic estimates that UK ISPs added no more than 470,000 new subscribers from July to September to reach a total of 14.98 million.

This is down from 510,000 net additions in the second quarter, which itself showed a sharp slowdown in growth from previous quarters.

Results expected from Virgin Media on 7 November and BT on 8 November are likely to reveal the lowest broadband gains since early 2003 when the whole industry was much smaller, Point Topic noted.

"The reason for the sudden drop is largely the shrinking size of the remaining pool of dial-up users," said Tim Johnson, chief analyst at Point Topic.

"There fewer [dial-up users] and the ones that are left are more resistant to change. On top of that, the industry has been failing to bring enough new homes on line."

Johnson observed that dial-up users generally have low levels of internet usage, often for email only, and see no reason to pay extra for broadband.

Such 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.

These factors are having a negative impact on broadband subscriptions as ISPs have relied on shifting users from dial-up for almost all their subscriber growth in the past 12 months.

The decline is not only bad for business but shows a deeply entrenched social divide, according to Point Topic.

"We believe this sends a danger signal for broadband Britain with almost 40 per cent of British households on the wrong side of the digital divide," said Johnson.

"The social and economic progress of the UK will be stalled unless the great majority of these homes can be brought on to the internet."

Broadband in the UK should still be close to 15.5 million lines by the end of the year, showing at least 17 per cent overall growth for the year, Point Topic estimates.