The Communications Market Report: International

UK communications deals cheaper than in other major countries

The communications sector’s total global revenues in 2013 were £1,205bn, growing by 2.1% year on year (incorporating the telecoms, television, radio and postal sectors).

Telecoms industries had the largest absolute increase in revenue in 2013, up by £18bn to £842bn. Television revenues continued to grow at the fastest rate among the communications industries, rising by 3.1% in 2013 to £254bn.

Fixed voice connections per 100 people continue to fall across our comparator countries but remain most resilient in the UK, where the figure remained unchanged from five years previously, at 59. The number of fixed-line connections per 100 people was highest in France at 60, representing a fall of four connections per 100 since 2008.

Among the countries compared in this section, France had the highest fixed broadband take-up in 2013, at 38 connections per 100 people. In the UK there were 36 connections per 100 people, the second highest among the countries included in the analysis.

The UK has the second highest proportion of fixed broadband lines with a headline speed of 30Mbit/s or higher among the EU5 countries. At the end of 2013, a quarter of UK fixed broadband connections (25%) fell into this category, a higher proportion than in France (9%), Germany (16%) and Italy (18%), but lower than in Spain (33%).

At least half of all internet users had a smartphone in all the countries for which data were available in October 2014. In the UK, 63% of internet users said that they had a smartphone, the third-highest proportion among the EU5 countries after Spain and Italy.

Among the EU5 countries Germany had the highest proportion of mobile connections that were 4G at the end of 2013 followed jointly by the UK and France. Among all our comparator countries South Korea had the highest proportion of mobile connections that were 4G with 51% of connections. More generally the US and the Asia Pacific countries had the highest proportion of 4G connections, with more than 20% of mobile connections being 4G.

The UK continues to have the highest take-up of digital radio sets among our comparator countries. Among the reasons for high digital radio take-up in the UK may be the support that broadcasters have shown for DAB technology, launching ‘digital only’ stations. DAB coverage is also highest in the UK, reaching 95% of households.

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The European Broadband Scorecard

In general, UK communications service prices compare favourably to those in the other countries included in the analysis in 2014. Our analysis shows that, excluding the TV licence fee, the UK had the lowest ‘weighted average’ stand-alone prices for four of the five household usage profiles used in the analysis.

The UK compared less well in terms of the ‘lowest available’ prices for our five household usage profiles. None of the cheapest possible prices for our households were found in the UK, and the UK’s ranking for this this metric fell from second to third compared to our other comparator countries in the year to July 2014.

Overall, the UK ranked joint top with France among our comparator countries when combining ‘weighted average’ stand-alone and ‘lowest available’ prices. The UK benefited from low fixed broadband and mobile phone services, while France had comparatively cheap mobile phone service prices.

The UK’s average rank across all households and both pricing metrics was unchanged in the year to July 2014. In France, which had the lowest ‘weighted average’ stand-alone price for one household and the ‘lowest available’ prices for three households, the average rank improved during the year, largely as a result of falling ‘lowest available’ mobile phone prices.

In all comparator countries, it was cheaper to purchase bundled services where the household usage profile required a fixed broadband connection. However, the savings that were available when buying the cheapest combination of services, including a bundle, compared to the cheapest stand-alone services for these households, varied widely, ranging from 1% to 40%.

The service for which the UK did not compare favourably was HD premium pay TV. UK stand-alone retail prices for these services were the second most expensive among our comparator countries, after the US, although this was partly due to differences in the quality and amount of content provided with each service.

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Global TV revenues (including broadcast advertising, channel subscription and public licence fees only) increased by 3.1% in 2013 to reach £254bn.

The UK experienced the largest annual growth in television revenues among the European comparator countries, increasing by 3.4% or £0.4bn in 2013. Revenues fell year on year in Italy, Spain and Poland, with Spain having the largest proportional year-on-year decline, falling 6.2%, or £0.2bn.

The number of homes taking pay TV continues to rise, driven by growth in developing markets. On average, 67% of TV households among the comparator countries had pay TV in 2013, up from 65% in 2012. Growth among the BRIC countries (66% take-up in 2013 compared to 63% in 2012) was a key driver.

A third of the online population in the UK use the internet to watch TV programmes or films at least once a week. In terms of types of content ever watched online, TV programmes are more popular than films in the UK.

Among those who watch TV online, almost half (48%) watch catch-up TV services from free-to-air broadcasters on a weekly basis, the largest proportion among comparator countries. Thirty-eight per cent of respondents in the US had used a non-broadcaster subscription VoD service in the past week, a higher percentage than any comparator country other than China.

Among its European counterparts, the UK leads the way in smart TV use -almost a quarter of UK consumers claim to have a smart TV, with the vast majority (84%) having connected their TV and used the internet functionality.

TV owners in the UK are the most aware of the watershed. In the 50th year of the watershed in the UK, Ofcom research shows that 94% of TV owners are aware of the watershed in the UK, more than in any other comparator country which has similar provisions to protect children from harmful content.

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DJs

Worldwide radio revenues stood at £28.5bn in 2013. Worldwide radio revenue rose by 2.7% in 2013 to reach £28.5bn. This is the fourth consecutive year of growth.

Revenue growth is driven by increases in advertising and subscription revenues. The largest absolute increase in revenue was in the US, where advertising and subscription revenues contributed to a combined growth of £352m. In the UK, radio revenues decreased by 2.1% to £1.2bn, due to a fall in national advertising and sponsorship revenue as well as licence fee revenue.

The UK has one of the largest proportions of digital radio stations among the comparator countries. The 250 digital radio stations available in the UK in 2013 represent 31% of all radio stations, the same as Germany and higher than any other comparator country in 2013.

DAB radio set take-up in the UK was 41% in 2014, the highest among the countries that we surveyed. DAB coverage is also highest in the UK, reaching 95% of households.

FM radios are the most common type of set owned by radio listeners in all of our comparator countries. Take-up is highest in Italy (84%) and Spain (83%). The UK has the lowest take-up of FM-only radio sets, at 59%, although most radio sets with DAB or internet connectivity will also include an FM tuner.

The reach of radio is lowest in Nigeria (20.0%) and Japan (37.5%), and highest in China (97.9%), Sweden (94.0%) and Poland (93.0%). The lowest reach of radio in Europe is in Germany (69.6%).

Listeners in Germany tune in to radio for longer than those in any of our comparator countries. Despite having the lowest reach (among our European comparators), radio listeners in Germany spend the most time listening to radio - an average of 22 hours each week.

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using laptop

At almost £2000 per person, the UK had the most valuable e-commerce market among our comparator countries in 2013, significantly higher than the next highest valued markets Australia (£1,356 per head) and the US (£1,171 per head).

Two-fifths of all advertising spend in the UK was online in 2013. The UK continued to have the greatest share of all advertising spend on the internet (40%) followed by the Netherlands (35%), Sweden (32%) and Australia (30%).

In the US and the UK average time spent browsing on a laptop or desktop has fallen significantly since 2012: time spent browsing on these devices fell by nine hours per user in the US and seven hours per user in the UK. This may be due to users in these countries substituting mobile browsing for laptop/desktop browsing.

The laptop and desktop active audience is getting older in our comparator countries. People aged over 55 made up the largest proportion of laptop and desktop users in most of our comparator countries. In the UK, a quarter of users (25%) were over 55, up two percentage points since August 2013.

At least half of internet users had a smartphone in all of the countries for which data were available in October 2014. In the UK, 63% of internet users said they had a smartphone, the third-highest proportion among the EU5 countries, after Spain and Italy. Among internet users in our European comparator countries, personal use of tablets was highest in Spain and Italy. The UK had the third-highest claimed personal use of tablets among the European countries for which we have data (at over one in three).

While the number of weekly social networkers increased year on year in many comparator countries, in the UK, the US, China and Japan the proportion fell. In 2013, 65% of online adults in the UK reported using social networks at least once a week, this was down to 56% in October 2014. Facebook is the most popular social network in all countries analysed except Japan, where Twitter is more popular.

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woman on phone

Total comparator country retail telecoms revenues increased by 1.7% in 2013. Total retail telecoms revenues (comprising fixed voice, fixed broadband, mobile voice and mobile data services, but excluding narrowband internet revenues) increased by £10bn to £613bn across our comparator countries in 2013, as a result of increasing mobile internet and fixed broadband revenues.

The UK was one of two comparator countries where the number of fixed voice connections increased in 2013. The number of UK fixed voice connections (which includes fixed lines and managed VoIP connections) increased by 0.2 million to 38 million during the year; Brazil was the only other country which experienced a similar increase during the year.

The Netherlands had the highest fixed broadband take-up in 2013. Fixed broadband take-up ranged from less than one connection per 100 people in Nigeria to 41 in the Netherlands, among our comparator countries. The UK had 36 connections per 100 people, the fourth highest figure among our countries.

Less than half of internet users in Japan and the US are regular users of landline services. In the UK, 60% said that they regularly used a home phone, 18 percentage points less than had a landline. This is because some consumers have a landline solely in order to be able to access fixed broadband services.

The UK has the second highest proportion of fixed broadband lines with a headline speed of 30Mbit/s or higher, among the EU5 countries. At the end of 2013, a quarter of UK fixed broadband connections (25%) fell into this category, a higher proportion than in France (9%), Germany (16%) and Italy (18%), but lower than in Spain (33%).

Over three-quarters of UK fixed broadband users are satisfied with their service. The proportion of fixed broadband users who said that they were satisfied with their overall fixed broadband service ranged from 55% in Japan to 79% in the US (in the UK it was 76%).

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The European Broadband Scorecard

postbox closeup

The UK is still one of the cheapest countries in which to send a standard sized domestic letter. It costs 62p to send a First Class standard sized letter in the UK. Among our European comparators, only in Poland (48p) is it cheaper to send a letter with the same dimensions.

Almost two-thirds (64%) of the online population in the UK had sent an item of post in the past month. This compares to 76% in France and Germany. People online in Spain and Japan were the least likely to have sent an item in the past month, with over half (55%) of people in Spain claiming not to have sent anything.

People in the US receive the most items in a week. On average, a person in the US will receive 9.3 items of post in a week, compared to 8.0 in France and 6.3 in the UK. People in Spain receive the fewest number of items in a week, at just 3.4.

The growth of parcels, driven by the increased use of online shopping, is making up for some of the decline in letter mail, and parcels are making a bigger contribution to total mail volumes. In most of our European comparator countries, as well as the US and Japan, parcels are making up an increasing share of total mail volumes each year since 2008. In Japan, parcels contributed to over 50% of total mail volume in 2013, compared to 17% in Germany and 12% in the UK.

Parcel volume per head of population is highest in Japan. In 2013, there were 72.8 items per head in Japan, far higher than in any other country. The US had the next highest volume per head (36.5), followed by Germany (32.4) and the UK (27.7).

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