1 - The Market Context

1.1 The market context

1.1.1 Introduction

In this section we begin with a high-level overview of the key trends in the UK’s communications market in 2007 and into the first quarter of 2008. We show how changes in availability, take-up, and use of key services translate into household spend and from there into industry revenue. Broadly, the key stories are:

1.1.2 Key market trends

• Availability extends - key services move further into rural areas…
• as take-up rises - digital TV now as prevalent as fixed telecoms…
• and use goes up - consumers spend a cumulative 7 hours 9 minutes per day using communications services.
• However, real household spend falls for third year running…
• …but communications industry revenue grows 4.2% to £51.2bn.
• Satisfaction levels are at least 86% across all key services.

The section then moves on to examine in more depth three issues of topical interest which cut across the communications sector.

1.1.3 Key market themes

• Communications services and the environment
  With rising take-up and use of household electronic and communication devices comes growing energy consumption. In the context of growing societal interest in the environment, we commissioned research to help gain insight into the understanding and attitude of UK consumers towards the energy consumption of the communications devices they use.
• Use of communications services among older people
  Take-up and use of key communications services is increasing among older consumers in the UK, and the rate of growth is higher than average for all services, except for broadband internet. However, although the gap is narrowing, there are significant differences between the usage profiles of older and younger people. We examine how the over-65s differ from the UK average in their take-up of key services and also in terms of the sorts of content and applications they consume.
• The changing advertising market
  Advertising has long been the mainstay of the UK’s broadcasting industry. However, recent pressure from the internet, the growing take-up of pay-television platforms, and the emergence of technologies such as digital video recorders which facilitate fast-forwarding, are challenging traditional advertising business models. In this section we seek to understand the scale of change in the advertising market.