COMMUNICATIONS MARKET 2004 REPORT
PUBLICATION REVEALS NEW TRENDS IN
TELEVISION, RADIO AND TELECOMS
Ofcom has just published The Communications Market 2004, its report on
key trends within the radio, television and telecommunications sectors
in 2003-4.
The Communications Market report will be published annually. It collates
data from numerous sources including Ofcom's own research and provides
an interpretation of emerging trends within each sector as well as an
analysis of new developments common to the communications market as a
whole.
Key trends identified include:
1) MORE TIME
Consumers are dedicating more of their time to electronic media and communications
services. Between 1999 and 2003:
* Time spent online increased eight-fold (average of 2 hours a week on
dial-up in 1999 to a reported 16 hours a week in
broadband households in mid 2004).
* Time spent on mobile phone calls almost tripled (average of 10 minutes
a week to 27 minutes).
* Text messages increased fifteen-fold (average of 1 a week to 15 a week).
* Radio listening increased by 6 per cent (41.2 hours per
household per week to 43.5 hours).
* Television viewing increased by 2 per cent (25.6 hours per
household per week to 26.1 hours).
2) MORE SPENDING
As usage rises, encouraged in part by falling prices, UK consumers are
also committing more of their household spending to communications services:
* Residential customer spending on fixed, mobile and internet services
increased by ?1.3 billion in 2003.
* In real terms consumers now allocate 4 per cent of household spending
to media and communications services, up from 2.9 per cent in 1999.
* Average spending per household on television has risen from ?2.68 per
week in 1999 to ?4.36 per week in 2003.
3) MORE DIGITAL
The UK is going digital, with greater adoption of digital services and
formats (such as MP3s and DVDs), increased digital network coverage and
cheaper digital devices:
* Digital television is available to almost the entire UK via
satellite, cable or terrestrial means - 53 per cent of households already
have at least one digitally enabled set in their home.
* DAB digital radio covers over 85 per cent of the UK population, with
local services available in 47 areas. Digital radio via other platforms
such as digital television or the internet is available across the whole
UK.
* Broadband services are currently available to 88.7 per cent of households
and take-up is growing rapidly.
4) MORE CHOICE
Lower barriers to entry for new competitors, increasing innovation and
the emergence of new technologies are broadening choice for consumers:
* Digital satellite, cable and terrestrial have dramatically
expanded the range of services available. In the last
decade:
The number of television channels has risen from 56 to 271.
The number of analogue radio services has risen from 218 to 325.
In addition there are 130 commercial DAB digital radio stations, of which
32 are digital only; 14 stations previously only available in one region
on analogue are now also available on digital in additional regions.
* In 2002 there were no digital terrestrial television receivers available
for less than £60; in 2003 consumers could choose from 18 different
models below £60. The cheapest now costs £21.
* Greater competition in the residential fixed-line voice market has brought
in new entrants and helped drive down prices by an average of 7.1 per
cent in real terms in 2002-3.
5) SHIFTS IN REVENUE
Traditional sources of revenue are changing:
* For the first time ever in the UK, the total amount of revenue raised
by the television industry through subscription has exceeded the total
amount of revenue raised from advertising.
* In the telecoms industry, total consumer spending on mobile services
(voice and text) has exceeded total consumer spending on fixed-line phone
calls for the first time.
6) RADIO SECTOR LEADS CONVERGENCE
Traditional radio services are now distributed across different networks
and received by consumers using a variety of different devices:
* 54 per cent of people listen to radio every day
* An increasing number are listening via DAB receivers, digital television,
the internet and mobile phones as well as traditional analogue receivers;
29 per cent of adults have listened to radio via digital television and
15 per cent of adults have listened to radio stations online.
* This has helped commercial radio increase its share of total advertising
spending by 60 per cent in ten years (2.8 per cent in 1993 to 4.5 per
cent in 2003).
The report also identified a number of other significant trends, particularly
in the further development of broadband and the mobile telecoms sector:
BROADBAND
* There are now almost 50,000 new broadband subscribers every week (DSL
and cable), up from around 40,000 additions a week in late 2003.
* The total number of UK broadband subscribers is now similar to the number
in France and Germany.
* Ofcom estimates that the 5 million broadband subscriber
milestone will be passed in mid-September 2004.
* More than one-third of internet households now have a broadband connection.
* Dial-up numbers are declining more slowly than the increase in broadband
connections; more consumers with no prior internet connection are going
straight to broadband for their first experience of being online at home.
MOBILE
* 86 per cent of UK households now contain at least one mobile phone.
* 21 per cent of consumers now regard their mobile phone as their main
device for making and receiving calls (up from 17 per cent in 2002).
* 20 million mobile consumers use their mobile phone at least once a week
instead of making a call from a fixed-line phone.
* Mobile call costs fell by an average of 1.4 per cent in real
terms in 2002-3.
FIXED-LINE VOICE
* Including cable networks and alternative operators, more than a quarter
of all business and residential fixed-line customers take call services
from a provider other than BT.
* BT's fixed-line business now accounts for just over 40% of all voice
calls made in the UK once mobile phones and other fixed-line providers
are taken into account.
Ed Richards, Ofcom's Senior Partner, Strategy and Market Developments,
said:
"Parliament asked Ofcom to be an evidence-based regulator; it is
an objective we take seriously. Radio, television and the wide range of
services available over telecoms networks play an increasingly important
role in people's lives.
Our analysis shows that consumers are setting aside more of both their
time and their money for media and communications services. As a result,
the market is growing, with new services and innovation at the heart of
its development."
"There are also fundamental economic shifts in the landscape with
long-term significance. For the first time ever, subscription revenue
is greater than advertising revenue in the television industry; in telecoms,
revenues from mobile have outstripped those from residential
fixed-line telephony."
Mr Richards added: "The report also reveals the extent to which the
UK is becoming a digital nation, with widespread availability of digital
networks of all kinds. This is to be welcomed; the advance of digital
technology brings increased consumer choice and greater innovation, through
broadband access, digital television, music downloads, digital radio and
more."
Ofcom is the independent regulator and competition authority for
the UK communications industries, with responsibilities across television,radio,
telecommunications and wireless communications services.
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