How will the broadband market consolidate?

In the wake of the Cazenove analysis reported on earlier, I've done some playing around with the various ISP subscriber numbers based on the Top 10 listed at ISP Review.

Firstly, that's only really a top 8 as BT owns Plus Net and Carphone Warehouse owns AOL, so I've merged those two into their parent firms.

This leaves us with a list of:

1.    BT (inc PN)        3,398,000
2.    Virgin Media       3,319,300
3.    TalkTalk (inc AOL) 2,155,000
4.    Tiscali            1,400,000
5.    Orange             1,063,000
6.    Pipex                570,000
7.    Sky                  343,000
8.    Kingston             140,851

If you look at the bases of those supposed to be up for sale (Tiscali and Pipex), you can see why their customers are such strategic assets - with 1.97m broadband customers up for grabs.

For the purposes of the scenarios below, I've looked at how that base could change the market on the assumption that someone would buy both (and that Carphone Warehouse aren't interested) - which seems to be a likely from what the analysts have said.

Scenario One - BT buys

BT suddenly jumps to 5.36m broadband punters, and has some rather big integration issues on their hands! (And there seems to be no sign of them integrating Plus Net much).

1.    BT (inc PN, Pipex, Tiscali)     5,360,000
2.    Virgin Media                    3,319,300
3.    TalkTalk (inc AOL)              2,155,000
4.    Orange                          1,063,000
5.    Sky                               343,000
6.    Kingston                          140,851

Also gives BT a hugely strong position with regards to LLU - would the regulators allow this to happen?

Scenario Two - Virgin Media buys

Much the same implications as a BT purchase, although Virgin Media clearly are integrating the old NTL World, Virgin Net and blueyonder ISPs.

1.    Virgin Media (inc Pipex, Tiscali)    5,289,300
2.    BT (inc PN)                          3,398,000
3.    TalkTalk (inc AOL)                   2,155,000
4.    Orange                               1,063,000
5.    Sky                                    343,000
6.    Kingston                               140,851

This gives them a strong foothold into ADSL and LLU, adding much expertise to their business.

Scenario Three - Orange (France Telecom) buys

Suddenly Orange becomes a big player on the broadband scene and is in a position to challenge the big boys. With LLU and IPTV assets they are a real force:

1.    BT (inc PN)                 3,398,000
2.    Virgin Media                3,319,300
3.    Orange (inc Pipex, Tiscali) 3,033,000
4.    TalkTalk (inc AOL)          2,155,000
5.    Sky                           343,000
6.    Kingston                      140,851

Scenario Four - Sky buys

The dark horses here, as ever, are Murdoch's empire. If they were to pull these deals off, we suddenly have a relative oligopoly of media and telecoms companies in this country, much as Rupert Murdoch is familiar with looking at his past of dealing with Kerry Packer in Australia and Ted Turner in the US.

1.    BT (inc PN)              3,398,000
2.    Virgin Media             3,319,300
3.    Sky (inc Pipex, Tiscali) 2,313,000
4.    TalkTalk (inc AOL)       2,155,000
5.    Orange                   1,063,000
6.    Kingston                   140,851

All hypothetical? Of course it is - but it shows just how high the stakes are. The market consolidation could yet be swift and cut-throat.

Remind anyone of the dialup unmetered ISP days?