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Ofcom report backs up reality that line rental is increasing in price
Thursday 06 August 2015 12:33:13 by Andrew Ferguson

The cessation of dial-up Internet (a few 1,000 remain) has meant that since annual minutes of dial-up in 2004 of 137 million minutes (dwarfing voice calls at 120 million) has dropped to nothing and the rise of e-mail, text messaging, social media and VoIP has also resulted in lower voice call volumes - just 54 million minutes in 2014.

Call volume changes 2009 to 2014

The annual Communication Market Report from Ofcom also reveals what many have believed to be the case for some time, that operators are protecting their ARPU for fixed line by raising the line rental element to compensate for lost call revenue. The number of fixed voice lines in the UK has dropped by 300,000 in the last five years to 33.2 million, mobile subscriptions rising from 80.6 million to 83.7 million (23.6 million are 4G in Q4/2014).

How line rental has gone up to compensate for lower call revenue

While there are plenty of cries that the fixed line copper world is dead and 30% of 16 to 24 year olds are using VoIP regularly (4% voice only, 6% voice and video, 20% video) with Skype being the most popular, this has not lead to a downturn in fixed line telecoms yet, as you get older you are less likely to use VoIP with 21% of the 40 to 54 bracket being regular users. Issues such as the lack of unlimited 4G data plans mean many people rely on Wi-Fi to their fixed line broadband connection but this explosion of VoIP use is tempered when you find the figures that 13% use VoIP daily, 51% at least once a week and 22% less than once a month.

So overall summary, we are doing a lot more with our smartphones, which is no surprise given they are much more capable than five years ago and amongst younger people who are most likely to be living in short term rented accommodation the use of mobile only is the highest. Interestingly while mobile-only connectivity is highest for younger people, so is take-up of fixed line broadband at 83% (16-24 age group) compared to 72% of the 65-74 age group, and while take-up is increasing in the various groups this will in part be driven by the fact we all age as much as any policy decisions and demand exercises. In short younger people see an overriding need to have constant Internet connectivity, and this will affect business more each year as young people mature and spend more - or put another way any builder who builds a development that does not have good mobile and fixed broadband speeds available may find the age demographic skewing more than expected to those who have retired.

The question that investors will be seeking the answer to is whether 4G can deliver unlimited packages and support the same quality of service in terms of jitter and latency and not just headline speeds as fixed line broadband. If 4G can meet those needs that appear to be holding back video and some other activity then it might negate the need for continued investment in fixed line broadband. This equation does not just affect BT and its copper assets with G.Fast, but Virgin Media with DOCSIS expansion but the growing FTTH industry in the UK. The follow on question is how much will 5G live up to its promises of multi gigabit speeds and extremely low and stable latency ideal for the future Internet of Things.


Posted by Bob_s2 about 1 year ago
Mobile is never going to replace fixed line Broadband. There is simply not the RF spectrum to do so
Posted by csimon about 1 year ago
Mobile is never going to replace fixe-dline telephony. form my point of view that is. No mobile reception at the house and I can't see that there'll ever be, so while alot of people can choose to use their mobiles instead of a fixed-line and can therefore ditch the increasing line-rental fees, some of us have no choice. Again, a market failure to lower prices and provide customer choice.
Posted by kijoma about 1 year ago
no mention of fixed wireless Broadband providers then? A large and growing % of Kijoma customers for example use VoIP for their home and business landline(s) . No line rental, low call costs to most countries (under 2p/min) and free voip to voip are among the plethora of benefits available to those who are not dependent on Openreach infrastructure.
Posted by ahockings about 1 year ago
Slight correction needed Andrew
"2004 of 137 million minutes (dwarfing voice calls at 120 million)"
I think you'll find that's Billions not Millions.
Posted by AndrueC about 1 year ago
@Bob_s2: I agree. There are still some efficiencies that could be made (rearranging use of what we already have) but the laws of physics and atmospheric absorption means there is a finite range of RF that we can use for anything.

Sooner or later the only solution will be spot beam technology with the end-point being everyone having their own spot.

It'll be interesting to see how RF usage evolves over the coming decades.
Posted by AndrueC about 1 year ago
In any case my experience of mobile web browsing is that it's pants. It's always felt like returning to the age of analogue modems. The burst speeds are pretty good but it just never seems able to sustain them resulting in delays waiting for pages to load.

It's nice to be able to browse when out and about if it's really necessary but for everyday web access it has to be a fixed line connection.
Posted by andrew (Favicon staff member) about 1 year ago

One of my better 4G tests (better as in consistent speeds), though do find you can get odd upload behaviour that magically goes away after a couple of minutes.
Posted by WWWombat about 1 year ago
My understanding is that the bits/Hz that LTE can provide is pretty much grabbing everything available. The only way to get more bits (to share amongst all users) is to get more Hz.

The obvious way, as used in pre-5G tests, is to use very high frequency bands - which don't have much range.

Another way, much more controversial, would be to merge all the mobile companies - or at least the radio network portion - then provide access on a wholesale basis back to retail mobile providers.

That would merge all the spectrum from all operators, to become available to every device.
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