Foreword

Foreword

This is the fifth of Ofcom’s annual reports to focus on trends and developments in the UK’s communications market, with the aim of providing a context for decision-making by Ofcom, as well as by commercial and public service organisations.

In the first Communications Market Report which we published in 2004 we highlighted a market which was going through rapid change. The television and radio sectors were moving from analogue to digital (43% of homes had digital television in 2003 and 2% of homes had DAB digital radio). Mobile was growing at a rapid rate, accounting for just over a quarter of voice minutes in 2003, with around one text message sent per person per day and the first 3G service launched promising richer data services. Broadband Britain was beginning to emerge with nearly 3 million broadband connections by the end of 2003.

Five years on and many of these developments have gained pace. This year’s report highlights that 87% of households had digital television on their main sets by the end of March 2008, and 27% of UK adults owned a DAB digital radio. In 2007, mobile accounted for 40% of voice minutes and 3G connections accounted for 17% of total mobile connections. Around 60% of households (15 million) have a broadband connection and the UK’s first next-generation broadband networks are beginning to emerge, offering a step-change in the speeds available.

New technologies are converging to transform industry structures and user behaviour. For example, 40% of UK households now buy communications in ‘bundled’ packages – paying one fee for multiple services from a single provider. Television consumption is changing as 23% of individuals claim to have access to a digital video recorder (and 88% of them claim to use it to fast forward through advertisements). In the first half of 2008, mobile broadband is beginning to take off, representing a potential alternative to fixed-line broadband as users plug in USB dongles to their laptops to access the internet via high-speed mobile networks.

However, the story of the communications sector is not simply the unstoppable march of new technology and the replacement of the old with the new. This year’s report highlights that television is the medium which most people would miss if it was taken away, and that most TV viewing remains on the public service broadcaster (PSB) channels. In the radio section we report that in 2007 analogue channels accounted for 82% of all listening, and that the BBC’s share of total radio listening was over 55%. The telecoms section details that the number of mobile minutes has risen by over 90% in the last five years – but that fixed-line call volumes have fallen by just 10% in the same period, and still account for 60% of all voice volumes. And while the internet has transformed the world we live in, the 160-character SMS is the most widely used data application in the UK, with 44% of UK adults using text messaging on a daily basis compared to 36% who use the internet.

We hope that this report will contribute to a greater understanding of the changing ways in which communications services are delivered and consumed in the UK. As such, it is intended to support Ofcom’s regulatory goal to research markets constantly and to remain at the forefront of technological understanding. It also fulfils the requirements of section 358 of the Communications Act to publish an annual statistical review.

This publication forms the second of Ofcom’s three major 2008 Communications Markets Reports (CMRs). The Nations and Regions CMR, published in May, looked at regional variations in the availability, take-up, usage and attitudes to communications services, and the International CMR, to be published later in the year, aims to place the UK in a wider perspective, reflecting the globalisation of the sector and the growing importance of the European Union on regulatory issues.

We welcome feedback on all Communications Market Reports. Please email Ofcom’s Market Intelligence team on market.intelligence@ofcom.org.uk. In addition, for the first time this year you can submit comments next to all of the Key Points on the online version of the report, which can be found at: www.ofcom.org.uk/research/cm/cmr08 .

 

Ed Richards
Chief Executive