Britain’s broadband boom is slowing, according to new research, which shows that the number of new subscribers to “always on” internet access has fallen below three million for the first time in three years.

Research from Enders Analysis, a telecoms and media consultancy, shows that rolling broadband net additions in the 12 months to March 2007 fell to 2,995,000.

It is the first time that uptake has been below three million since the third quarter of 2004, the group said.

Broadband was initially slow to take off in Britain, but rapidly falling prices and a spate of new entrants triggered a surge in uptake. Carphone Warehouse, the high street mobile distributor, further shook up the market last year with a “free” broadband product that was rapidly emulated by rivals.

The Enders research confirmed that fast internet access is now a mass-market product: about 50 per cent of households have a line installed – up from 15 per cent at the start of 2004. Furthermore, there are still about 4.8 million UK households with PCs that have yet to subscribe.

However, Ian Watt, of Enders, said that as the broadband market matures, the internet supply companies would be forced to seduce subscribers from rivals, rather than chasing fresh customers.

The slowdown in the growth rate could lead to further consolidation in the market, which, despite fierce competition, still has about 100 players – many of them smaller operators boasting between 10,000 and 20,000 customers.

New companies – including mobile phone operators – are still entering the market in an attempt to help to retain their customers.

Last year, Carphone Warehouse acquired the British unit of AOL in a £370 million deal. The mobile operator O2 snapped up Be, a niche super-fast internet operator, while Pipex, the country’s fifth-biggest internet service provider, is up for sale.

Mr Watt said: “Growth is still strong, but there is clear evidence that market growth is slowing. By the end of the year, those huge numbers of net additions we have seen previously will start to become a thing of the past.”

Mr Watt believes that in future the internet suppliers will increasingly need to sell to “churners” rather than to new adopters.

Fewer sign up to surf

Ripe for consolidation? The tie-ups so far:

October 2005: BSkyB swoops on Easynet in a £211m deal

October 2006: Carphone Warehouse buys AOL UK for £370m

June 2006: O2 acquires Be, a niche internet business, for £50m

April 2007: Pipex goes on the auction block

Top five broadband providers: subscribtions

BT 3.66m

tiscali 3.42m

The Carphone warehouse 2.27m

Virgin 1.48m

orange 1.14m

Source: USwitch

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