Ofcom have today published their annual Communications Market Report which looks at changes within the industry to see how the relevant media and communications markets which it oversees are progressing. As well as the 379 page main report, they have also produced separate reports focusing on each of the nations of the UK.
One of the key trends they seem to be indicating this year is that people are spending more time consuming media and multi-tasking whilst doing this. On average, half of our waking hours are spent using media content and communication services, including watching TV, browsing the web or talking on the phone. Mobile phones are taking up a larger portion of this and around 63% of mobile usage by 16-24 year olds is for text messaging or using social media. Around 40% of our time on computers is spent communicating, whilst this is higher for 16-24 year olds (over 50%).
Consumers have also changed how they buy communication and media products. Around half of households buy two or more communication services from one supplier in a bundle, and the main reason given (in 52% of cases) for doing so is value for money. Triple play, the bundling of telephone, TV and broadband only makes up around 17% of this, but this is largely due to recent evolutions of the market. BT for example have only recently been allowed to start offering bundled products. One benefit seen for companies offering bundled products is that their customers are less likely to change to a new provider.
In the television market, advertising revenues fell in 2009 by 9.6% to £3.1 billion, leading TV industry revenue as a whole to be down by 0.4% at £11.1 billion. Pay-TV subscriptions continued growth however with revenues up by 7.5% to £319 million. 37% of homes had a digital video recorder (DVR) and time shifted television accounted for only 5.9% of all viewing (but around 15% of viewing for those with a DVR).
Catch-up TV services such as BBC iPlayer and ITV Player grew by a third to include 31% of Internet users in Q1 2010. The most prominent growth is unsurprisingly in the 15-24 age group and men consume 34% of catch-up TV in comparison to women at 29%. BBC iPlayer makes up the largest proportion of catch-up TV at around 17% of the market whilst Channel 4's 4oD followed with 3.6% leading ITV Player at 3.4%. iPlayer usage itself grew by 77% to 93 million streams in the year ending April 2010. 8% of these streams were for live TV.
Internet take-up in the UK has nearly made it to three-quarters of UK households. 76% of homes have a computer, and 73% of households now have an Internet connection. Broadband makes up the majority of these connections covering 71% of households. Take-up of fixed line broadband didn't increase from the 65% of 2009 but mobile broadband is on the rise with 15% (up from 12%) of consumers now having a mobile broadband connection (through a USB dongle).
Two-thirds of households with fixed connections use a WiFi network at home to connect to their broadband service and a quarter of adults user their mobile phone to access the Internet. Two-thirds of people, however, say they have no interest in using their mobile phone in this way whilst 12% say they are interested but not confident in doing it.
One focus of the government recently has been to encourage people to get online with Martha Lane Fox, UK Digital Champion, tasked with the role of encouraging this. Race Online 2012 was launched this year as a challenge to get everyone in the UK online and Ofcom stats show that progress has been made since 2009, particularly in the over 55 age groups.
2009 saw the mobile industry hit hard with retail revenues falling for the first time since Oftel (Ofcom's predecessor) began collecting data in the 1990's. Revenues fell 2.6%, down to £30.4 billion. Fixed voice, which accounted for 60% of total telecom revenue in 1998, has declined every year from 2000 and now contributes less than 30% of annual revenues. 2009 also saw the first ever decline in revenue from mobile services, falling by 3.5% to £14.9 billion. This decline in the mobile sector is put down to falling prices as there has been an increase in the number of connections, call minutes and SMS/MMS messages. Revenue from fixed Internet access also fell by 1.9% from its peak of £3.4 billion in 2008 which is due in part to an increase in bundled services which include broadband with TV and phone services.
Mobile data revenues have grown faster than fixed revenues largely due to the increased take up of mobile broadband (either by smartphone or mobile dongle). Data usage on mobile broadband has grown by an estimated 2200% in the two years up to the end of 2009 whilst data revenues only increased by 26% (although this revenue excludes revenue from bundled data in contracts).
Total UK data usage, as estimated by Cisco, saw around 600 petabytes a month with nearly 79% of this being generated by fixed-broadband Internet access. Voice over IP (VoIP) and IPTV accounted for around 20%. 78% of the total was consumer IP traffic with business traffic making up the rest. 15% of this Internet traffic was what Ofcom called 'web data', whilst 30% was file sharing through things like peer-to-peer networks (P2P) and another 30% was video (including cable and IPTV video on demand (such as BT Vision)).
Broadband speeds have increased with the average headline broadband speed increasing by 2.5Mbps to 9.4Mbps. This means that of products sold to consumers, this is the average fastest speed that consumers could possibly expect, although this wouldn't take in to account overheads (for example an 8meg broadband connection can only achieve around 7.1-7.2meg maximum, and a 24meg connection peaks at around 20-21meg). This increase comes about from operators increasing the roll-out of faster services such as Virgins cable broadband products now offering a minimum of 10meg broadband speeds, and BT Wholesale now offering faster products with speeds up to 24meg.
Whilst it is good to see an increase in headline speeds, it would be nice to see actual speeds increase in-line, but these have risen to only 5.2Mbps, widening the gap between headline speeds and actual speeds received. This is largely because ADSL2+ broadband services do not offer a huge improvement in speed unless you live close to the exchange. This gives an average actual speed of less than 40% of the headline speeds.
LLU (local loop unbundling) saw an increase in penetration of only 0.4% in 2009 increasing to 84.5% of premises being connected to an unbundled exchange compared to an increase of 4% in 2008 and 13.6% in 2007. The number of lines taking an LLU service rose by 0.9 million to total 6.4 million at the end of 2009.
Next-generation broadband services continue to see limited take up with BT's fibre-to-the-cabinet (FTTC) technology passing 1.5 million homes at the end of July 2010 but Point Topic estimated there were only 12,000 live connections using it at the end of June. One reason given for the slow take up by Ofcom is the price premium that these faster services attract. Many consumers will not be willing to pay the extra when they perceive their current service to be adequate for their needs, leaving current users as early-adopters.
Mobile broadband growth has levelled off somewhat, peaking at 15% of households in Q3 2009 and totalling 4.1 million active subscribers at the end of 2009. Mobile broadband as the sole technology for a household doubled from 3% to 6% in Q1 2010 compared with the same period in 2009, with broadband growth generally being boosted by users getting online for the first time via mobile broadband. Of surveyed households, 69% would not considering taking up a mobile broadband service and 45% responded to the survey by disagreeing with the statement "mobile broadband is for me." Many are not satisfied with mobile broadband services and a high proportion of respondents believed that mobile broadband coverage is poor (approximately 37%), and that in comparison to fixed line broadband it is more expensive (58%), slower (48%) and less reliable (43%).
In the two years up to March 2010, the number of people in the UK accessing the Internet on their mobile more than doubled with around 13.5 million adults (around 28%) reporting to visit at least one site on their mobile in March 2010. 73.5% of mobile phones sold on contracts in June 2010 were smartphones, around a 10% increase in users compared with 2009.