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13th July 2005: Ofcom
More broadband, more digital,
more mobile
More broadband, more digital, more mobile - a common
picture of accelerating take-up of new products and services
Ofcom
today publishes research revealing changes in the communications sector as
consumers and businesses adopt digital networks and formats with increasing
enthusiasm
In its second annual Communications Market report, Ofcom has
identified a range of new trends in broadband, digital broadcasting and other
communications services. These include:
More broadband
- For the first time, there are now more
households with broadband than dial-up internet connections. 2005 was the year
in which broadband became a genuinely mainstream consumer product, now present
in almost 30% of all UK households and businesses and actively considered by
many more.
- The number of new broadband connections per
week has increased almost fifteen-fold in three years - from 5,500 per week in
2001 to 73,800 per week in 2004. This rapid acceleration in take-up has led to
a (provisional) total of 8.1 million connections as of June 2005, more than
double the number of connections at the end of 2003. B y the end of 2005, 99.6%
of UK homes will be connected to a broadband-enabled exchange.
- A verage broadband connection speeds are also
increasing. At the end of 2002, a 512kps connection typically cost £27 a
month; as a result of greater competition between providers, a 1 Mbps
connection now costs £20 a month.
- The combination of mass-market appeal, rapid
growth, falling prices, increasing connection speeds and innovation in video
technology means that by 2010, the number of households able to view television
over broadband is likely to exceed the number of households dependent on
analogue terrestrial broadcasts for all their television viewing.
More digital
- More than 60% of UK households now receive
digital television; and every month more than 250,000 households - more than
the number of households of a city the size of Sheffield - switch on to digital
for the first time or add set-top boxes for additional televisions in the home.
70% of that growth in 2004 was driven by Freeview; by the end of 2004, almost
20% of households (4.6 million) received digital television via Freeview
alone.
- In radio, 36% of adults with access to
digital television have at some point listened to radio via their sets (up from
29% in 2003) and 19% of adults with internet connections have listened to radio
online (up from 15% in 2003). DAB digital radio continues to expand. By the
autumn of 2003, 250,000 DAB sets had been sold; by Q1 2005, that figure
increased five-fold to 1.5 million.
More mobile
- Total revenues for the mobile telecoms
industry now exceed those of fixed-line calls and access as consumer usage of
mobile increases, encouraged by price reductions and the emergence of new
services. Between 2000 and 2004, the total number of minutes spent making
mobile calls in the UK almost doubled (from 34 billion minutes to 62 billion).
During the same period, minutes spent making calls over traditional fixed-line
networks fell by 6% (from 174 billion minutes to 164 billion). As a
consequence, b etween 2003 and 2004, mobile telecoms revenues increased by 16%
to £12.3 billion. Revenues from traditional fixed-line voice services
fell by 6.2% to £10.5bn from £11.2bn in 2003.
Communications services
are growing in importance for consumers. As more consumers adopt broadband and
digital television for the first time and as mobile phone usage increases,
these services command a greater share of household expenditure.
Payments for television and radio services (including the BBC TV
Licence Fee) and payments for fixed and mobile telecommunications services now
account for 4% of all consumer spending. At an average of more than
£1,000 a year, this figure is a third higher (excluding inflation) than
average expenditure on communications services in 2000.
People are
spending more money to buy new and additional services, such as pay-TV,
broadband and enhanced mobile services. However, whilst taking advantage of
these new services, consumers have also benefited from a significant reduction
in traditional fixed-line telecoms charges as a result of increasing
competition. Price reductions in 2004 amount to the equivalent of a £20
saving per year for every household in the UK .
Ofcom Chief Executive
Stephen Carter said: “For consumers and businesses, these services are
becoming cheaper, faster, more capable and even more important.”
Industry trends
The communications sector is integral to
UK industrial effectiveness and an important contributor to the UK economy in
its own right.
In 2004 total revenues in the UK communications market
were £55.9 billion, accounting for 4.1% of UK GDP . The majority of this
was derived from telecommunications, although the television industry
experienced the fastest revenue growth (up 9% from £9.3 billion in 2003
to £10.1 billion in 2004), mainly driven by increased consumer spending
on subscriptions, teleshopping and interactive services.
Other key
industry trends include:
Telecommunications: Continuing price
reductions in broadband meant that whilst the total number of connections
doubled in 2004, revenues only increased by 6.8%. In the traditional fixed-line
voice market, intense competition between companies offering discounted call
packages over BT’s network has driven greater switching by consumers; more
than one-third of UK households now take services from a provider other than
BT.
Television: Subscriptions remained the largest single source
of revenue, rising by 10% in 2004 to £3.6bn (excluding the BBC TV Licence
Fee). Revenues earned by commercial multi-channel operators rose by around 28%
whilst television shopping remains the largest component of other revenue
streams at £178.7 million.
Radio: As digital radio grows
in popularity, 8% of commercial radio sector listening is now to digital-only
stations across DAB, digital television and the internet. Since the beginning
of 2003, both AM and FM listening has fallen by 4 percentage points. Digital
listeners also listen to radio for longer – 28 hours per week compared to
24 hours for all listeners . For the first time, revenues from radio
advertising were matched by internet advertising (£0.6 billion in early
2005). In 2004 the radio industry began to respond to changes in ownership
rules brought in by the Communications Act; during 2004, more than one in ten
analogue radio licences changed hands.
Ofcom Senior Partner, Strategy
and Market Developments Ed Richards said: “This report shows that UK
households are now accelerating into the digital age. In parallel, industries
formed over decades are being reshaped by digital broadcasting and broadband
with every month that passes.”
The Communications Market 2005
report is available online at
http://www.ofcom.org.uk/research/cm/cm05/.
The
Communications Market report is published annually, with quarterly updates. It
collates data from numerous sources, including Ofcom’s own research and
data provided by stakeholders, and provides an interpretation of emerging
trends within each sector as well as an analysis of new developments common to
the communications sector as a whole. |
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