UK better connected as digital communications grow globally

Ofcom has published its second annual International Communications Market report. The publication analyses trends in the £873bn global television, radio and telecommunications sectors in 2006. It compares the UK with eleven other countries: France, Germany, Italy, the Republic of Ireland, the Netherlands, Poland, Spain, Sweden, Japan, Canada and the United States.

The report also contains an insight into four countries that are at different stages of development in their communications markets: Brazil, Russia, India and China.

Main findings

Digitally connected: UK ahead in many areas

The UK has the highest take-up of digital television of the twelve countries surveyed. At the end of 2006, 76 per cent of UK households were digital, driven mainly by growth in digital terrestrial television (Freeview). The US and Japan were next with 61 and 60 per cent respectively.

Digital radio is becoming increasingly popular in the UK with one in five adults owning a digital radio set. Digital radio coverage was highest in the UK and Germany at over 80 per cent for both countries.

Broadband take-up continues to increase in the UK with over half of all households connected at the end of 2006, putting the UK slightly ahead of the US for the first time.

UK adults spend more time on social networking sites than their European neighbours, with 4 in 10 UK adults saying that they regularly visit the sites. The UK adults who visit the sites spend an average of 5.3 hours each month on them and return to them an average 23 times in the month.

In the UK and the US, women use the internet more often than men. In the US, 52 per cent of internet users are women and in the UK the internet is used equally by men and women except in the18-34 age group where women spend more time online than men (57 per cent compared with 43 per cent).

Advertisers in the UK spend more money per person on internet advertising than any other country, at £33. This is twice as much as France, Germany and Italy combined. At 14 per cent of total revenues, spend in the UK on online advertising overtook magazine advertising for the first time and was more than the total spend on outdoor, cinema, and radio advertising combined.

The price of services: UK among the cheapest

The report also compares the prices of communications services for five typical household types in the UK, France, Germany, Italy and the US.

In all countries, buying more than one service from the same operator or ‘bundling’ generally provides much better value for money than buying a separate single service.

In the UK, around 40 per cent of households already take a bundled service. A typical family household in the UK with two parents and two children, who use a basket of communications services that includes a landline, basic pay-TV and the internet, will pay £25 a month on a triple-play deal. This compares with £27.22 in France and £39.77 in Germany. The same family in the US will pay £69.54.

The UK is also at the low end of pricing among the five countries analysed. The UK had the lowest average prices for a basket of communications services for two of the five households considered, and the second-lowest for two others.

Mobiles more popular than landlines

Mobile is driving most of the communications sector growth and now accounts for 53 per cent of total telecoms revenues.

By the end of 2006 there were 402 million landlines (39 per cent) and 634 million mobile connections (61per cent) across the twelve countries surveyed and in the majority of the countries surveyed the number of mobile subscriptions outnumbers the population. Italy has the highest number of active mobile connections with 139 subscriptions per hundred people followed by the UK with115. The number of mobile connections is also high in Russia at 106.

Russia , Brazil, India and China are driving much of the growth in mobile phone take-up. In the five years since 2001 over 660 million subscriptions have been added in these countries representing 40 per cent of the total number of new mobile subscriptions globally.

In India, the number of new mobile subscriptions doubled to 150 million during 2006. This increase is more than the entire number of mobile subscribers in the UK (70 million connections). However, mobile connections per person are still relatively low in India at 14per cent, demonstrating the large potential for growth that remains in this country.

After making calls, mobiles are mainly used to send text messages. People in China send more text messages than in any other country. In 2006, 429 billion texts were sent in China, an equivalent of 967 text messages per mobile user. This compares to 43 billion texts sent in the UK, an average of 621 per mobile user.

As the number of mobiles has increased the number of landlines has declined in most of the countries surveyed each year since 2001. Between 2001 and 2006 the number of landlines in the Netherlands fell by 17 per cent while the US and Japan both saw a drop of around 10 per cent. In the UK, the number of landlines fell by 5 per cent to 34 million homes. This smaller decrease in part reflects the fact that most households still require a landline in order to get a broadband service.

The number of mobile-only households has also risen. In Italy, 38 per cent of households are mobile only, compared to around 13 per cent in the UK and 10 per cent in Germany. By the end of 2006 there were, for the first time in the UK, more households with a mobile connection than a landline.

Convergence

Accessing the internet from a mobile phone is growing in popularity. In Japan, where over half of mobile phones use a 3G network, mobile users are three times more likely to send an email from their mobiles as they are a text message. However, Europeans send more text messages with 75 per cent of mobile phone users in the UK, France, Germany and Italy sending SMS messages regularly.

Mobile handsets are increasingly being used in other ways than for making calls. The report shows that over half of Europeans use their mobiles to take photos and, in the UK, a quarter of users record their own video clips and listen to music through their mobile. In the UK, 33 per cent of mobile users send picture messages on their mobile, 16 per cent use it to connect to the internet and 10 per cent use their mobile for email.

More people in France watch IPTV, than in the other countries surveyed. At the end of 2006 there were 1.5 million IPTV subscribers in France which helped to drive take-up of bundles of communications services in the country. This compares to 43,000 subscribers in the UK.

Television

Japanese and US consumers spend the most time watching TV – both averaging 4.5 hours a day in 2006. This compares to 3.5 hours a day for the UK, while people in Sweden watched the least amount of television at 2.5 hours a day.

The US leads the take-up of high-definition television with 10 per cent of homes capable of viewing HDTV in 2006. This compares to 6 per cent in Japan and 1 per cent in the UK. The US also has the greatest number of available HD television channels at 44, followed by Japan with 19 and then the UK with 12.

The growth of multichannel television was highest in the UK up from 20 per cent in 2005 to 33 per cent in 2006, rising faster than any of its European neighbours where viewing stood at 30 per cent in Germany, while in France, Italy and Spain it ranged from 10 to 14 per cent.

Television industry revenue per person was highest in the US at £236. The UK was ahead of all other European countries at £165.

Radio

People in the UK listen to more radio than in any other country surveyed, averaging over 21 hours per person each week. Radio is least popular in Japan with average weekly listening at 14.2 hours.

Listening over the internet – which offers a choice of dedicated online stations and also established terrestrial radio stations – is also growing, The research shows that a third of the total population of the seven main countries in the report have listened to radio online.

Total radio revenue per head was highest in the US at £35. In Europe, Germany generated the most revenue per head at £27 followed by Japan at £22 and the UK at £21.

Telecoms

High-speed broadband is becoming increasingly popular in many of the countries surveyed although the level of availability varies significantly from country to country. Japan, is the clear leader among the countries analysed with around 30 per cent of broadband connections being delivered via fibre. In the UK, Virgin Media has announced that it is to upgrade the majority of its cable network to deliver speeds of 50 Mbit/s.

Broadband is the fastest growing communications sector accounting for 9 per cent of total telecoms revenue across the 12 countries in 2006. The total number of broadband connections increased by more than 600 per cent between 2001 and 2006. This growth has been driven mainly by DSL broadband which is now the largest broadband platform in all the countries analysed except the US and Canada.

Consumer research commissioned for this report shows that in most countries, apart from Japan, the majority of consumers are satisfied with the speed of their broadband connection. Consumers are most satisfied in the US, at 85 per cent. 68 per cent of UK broadband were satisfied with their broadband speed, while satisfaction was lowest in Japan, at 41per cent.

The report also asked consumers for the ‘advertised’ or ‘headline’ speed of their home connection and what they thought the actual speed of their connection was. The biggest gaps in perceived headline and actual speeds were in the UK and Japan where a quarter of respondents claimed to receive a service that was less than the advertised speed of 8Mbit/s or higher.

3G mobile services are becoming more widespread. By the end of 2006, over 50 per cent of mobiles in Japan were 3G and over 10 per cent of mobiles in Italy, Sweden and the UK. In Canada and Poland the total was just one per cent of all mobiles.

Telecoms service revenues per head increased by 20 per cent from £288m in 2001 to £345m in 2006 across the countries surveyed.

Ed Richards, Ofcom Chief Executive said: “The report shows that convergence, bundling and the move to digital communications is a powerful global phenomenon. It’s important to understand international comparisons so Ofcom can develop better policies to serve the interests of consumers and citizens in the UK.”