Ofcom yesterday published its report on the trends and developments in the UK's communications market. Spending in the UK telecoms market fell during 2006. While this is a well-established trend worldwide in fixed voice, average spending also fell in mobile for the first time in the UK (though only by an average of 70p per person). Over 50% of households have broadband, while digital TV has overtaken satellite, with more than 80% penetration.
Full commentary below:
Comment: "Competition, falling prices, maturing markets, and intensifying regulatory action, which has again brought down wholesale termination and international roaming, has had an impact on MNOs business. In stagnating markets, cutting costs is a must, but how is this done? 3G 'moved into mainstream' according to Ofcom, with 7.8m lines now 3G, which is almost double the number in 2005. However, we believe that with penetration at around 12% this is rather poor when considering it is a technology that has been commercially available for more than five years now. Refarming (i.e. implementing 3G in the 900Mhz spectrum) will be an opportunity for both boosting revenues through the new mobile broadband services and reducing network-related costs."
"In fixed markets, BT's share of fixed voice traffic (minutes) is below 50% for the first time. The UK remains the most competitive market in Europe in fixed voice. Furthermore, following the creation of Openreach, the independent regulated division, LLU skyrocketed, which brought it quickly in line with European unbundled lines averages and broadband penetration to reach more than 50% of households. What's more important, in our view, is that different platforms offer competing services with digital TV, satellite, cable and IPTV/Telecoms operators eating into each other's space to the benefit of the end-users lured by increasingly attractive bundles."
"As a result, more than 40% of households now take a bundle of more than one communication service. This is more than double the EU average if we consider figures from the EU commission report last March, which showed take-up of any double-play bundle to be around 15%."
"The TV market is also showing signs of weakness in the advertising model, with subscription revenues rising by 3.5% and advertising falling by 2.2%. All traditional terrestrial platforms have now diversified their offer onto digital and/or Internet-based on-demand services. Digital terrestrial television now has more viewers than satellite, with a staggering 80% penetration."
"Finally, the social networking boom is here: Brits spend 29 hours per month on the Internet, women more than men; using broadband connections with average speeds of 4.6Mbit/s (nominal), they mostly spend, read news, and socialise, with eBay, the BBC, Facebook, Myspace and YouTube being amongst the ten most visited sites."
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