international communications market report 2011 · international communications market report 2011...

Ofcom analyst briefing

International CommunicationsMarket Report 2011

15 December 2011

1

AgendaWelcome and overviewJames Thickett, Director of Research and Market Intelligence

Trends in telecoms Ian Macrae, Head of Telecoms Market Intelligence

Trends in Internet and web-based consumptionJonathan Fenn, Senior Media Analyst, Market Intelligence

Trends in the audio-visual industriesSteve Gettings, Head of Media Market Intelligence

Trends in consumer pricingIan Macrae, Head of Telecoms Market Intelligence

2

Welcome and overview of key trends

James Thickett, Director of Research and Market Intelligence

International Communications Market Report 2011, Analyst briefing, 15 December 2011

3

One of three Communications Markets Reports

Presenter

Presentation Notes

Nations versions also published today International version Part of Ofcom’s regulatory principle to research markets constantly and to make public our consumer research Also fulfils Ofcom’s duty under Section 358 of the same Act to publish anannual factual and statistical report

4

Methodology• Combination of desk and bespoke research

- IDATE- Teligen- PricewaterhouseCoopers- The European Commission- WARC- Mediametrie- Analysis Mason- Nielsen

• Online consumer research for supplementary take-up and usage data across six countries

• We have used the latest data where possible and figures are nominal unless otherwise stated

£762bn £807bn £836bn £846bn £864bn

£194bn£211bn £221bn £222bn £239bn£30bn£31bn

£31bn £28bn £29bn£986bn

£1,049bn£1,088bn £1,095bn £1,132bn

£0bn

£200bn

£400bn

£600bn

£800bn

£1000bn

£1200bn

2006 2007 2008 2009 2010

Radio

Television

Telecoms

Growth

4yr % 1yr%

14.9% 3.4%

-4.0% 5.0%

23.2% 7.7%

13.5% 2.2%

Source: Ofcom analysis based on data taken from PricewaterhouseCoopers Global Entertainment and Media Outlook 2011-2015

Global communications revenues

Global communications revenuesincreased by 3.4% in 2010

Figure 1.2

£845bn £904bn £941bn £959bn £986bn

£115bn £120bn £119bn £109bn £119bn£25bn £25bn £25bn £26bn £26bn

0%

20%

40%

60%

80%

100%

2006 2007 2008 2009 2010

Public licence fee

Advertising

Subscription

£984bn £1,049bn £1,086bn £1,094bn £1,131bn

Source: Ofcom analysis based on data taken from PricewaterhouseCoopers Global Entertainment and Media Outlook 2011-2015

Source of global revenues for telecoms, radio and TV services

Growth

4yr % 1yr%

14.9% 3.4%

6.4% 1.0%

3.4% 9.1%

16.7% 2.8%

Advertising revenues returnedto 2008 levels

7

Communications sector revenues in 2010 (£bn)

66

79

188

10

29

94

9

3

12

£85bn

£110bn

£294bn

£0bn £50bn £100bn £150bn £200bn £250bn £300bn

CHN

JPN

USA

12

19

34

20

16

24

35

32

27

7

4

11

5

4

8

11

10

11

£19bn£23bn

£45bn£26bn

£20bn£33bn

£49bn£44bn

£39bn

£0bn £10bn £20bn £30bn £40bn £50bn

INDRUSBRAESPAUS

ITAGERFRA

UKTelecoms Television Radio 10

Source: Ofcom analysis based on Ofcom / IDATE data for telecommunications/TV and Ofcom analysis based on data taken from PricewaterhouseCoopers

Growth in global revenues drivenby BRIC countries...

Growth 1yr%

21.3

10.36.5

34.319.518.4

-1.918.2-7.1-5.8

-0.7

1.0

8

49

10

137

168

429

739

624

607

393

429

489

432

7

6

20

52

107

162

226

304

133

135

159

181

7

0

1

2

11

28

21

38

7

37

20

18

£64ph

£16ph

£158ph

£222ph

£547ph

£929ph

£871ph

£949ph

£533ph

£601ph

£668ph

£630ph

£0 £200 £400 £600 £800 £1,000

CHN

IND

RUS

BRA

ESP

AUS

JPN

USA

ITA

GER

FRA

UK

Telecoms Television Radio

Source: Ofcom analysis based on Ofcom / IDATE data for telecommunications/TV and Ofcom analysis based on data taken from PriceWaterhouseCoopers

Communications sector revenue, per head: 2010 (£)

...although revenue per capita remainsbelow other countries

9

Key trends in telecoms

Ian Macrae, Head of Telecoms Market Intelligence


Revenues in most European countries fell in 2010

99117

577

20552111

156211

151819

13103

1149

912

4214

1913

1055

35

54

274

1023

2101

273235

24188

2179

1620

84

26

3419

1266

UKFRAGER

ITAUSACANJPNAUSESPNEDSWE

IRLPOLBRARUSIND

CHN

Fixed

Mobile

Fixed broadband

Revenue (£bn)Annual change

Telecoms service retail revenue, 2010

-1.6%+1.2%-1.2%-2.3%

-0.1%+3.4%-3.7%+1.2%

-4.5%-5.1%

+7.4%

+3.2%+3.0%

+3.7%

+9.4%

+0.4%

+5.6%

Source: IDATE / industry data / Ofcom

Presenter

Presentation Notes

Begin with a quick snapshot of telecoms retail revenues across the 17 countries we include in our report . In total across the 17 countries

Data accounts for a third of telecoms revenues in many countries

11

29%28%32%

39%

29%

36%

43%

33%33%32%29%31%

27%

12%15%

19%22%

17%12%

22%17%

12%

18%16%14%

18%

POLIRLSWENEDESPAUSJPNCANUSAITAGERFRAUK

2010 2005


Data revenue as a proportion of total telecoms revenues, 2005 and 2010

12

14 17 20 23 24 2521 26

3342

5265

35 3343 43

53 5064

56

7661

89

67

0

20

40

60

80

100Revenue (£bn)

Fixed broadband

Non-SMS mobile data

SMS

5 year CAGR

+14.7%

+25.7%

+11.4%

Source: IDATE / industry data / OfcomNote: Revenues in the following countries: UK, France, Germany, Italy, USA, Canada, Japan, Australia, Spain, Netherlands, Sweden, Ireland Poland

2005 20082006 201020092007

Non-SMS mobile data now delivers almost as much revenue as fixed broadband Fixed broadband and mobile data revenues in 12 comparator countries

1 year change

+8.4%

+24.3%

+4.0%

51%52%

51%52%

46%39%

61%48%

55%49%

38%52%

56%

55%56%

54%54%55%

51%61%

56%60%

52%52%

49%69%

0% 20% 40% 60%

UKFRAGER

ITAUSACANJPNAUSESPNEDSWE

IRLPOL

20052010

Mobile now accounts for more than 50% of revenues in all comparator countries except Ireland

13

Source: IDATE / industry data / OfcomNote: Analysis excludes the BRIC countries

5 year percentage point change

+4+4+3+2+9

+12+1+9+5+3

+14-3

+13

Mobile as a proportion of total telecoms revenues

Decline in UK fixed connections lower than in other countries

14

5333

5229

48 50

13199

133 148

98130

UK FRA GER ITA USA AUS UK FRA GER ITA USA AUS

Fixed -line Mobile

Change -1 -4 -5 -2 -2 -1 +1 +4 +1 +3 +5 +10 since 2009

Fixed-line (PSTN) voice and mobile connections per 100 population, 2010


Change -3 -19 -15 -12 -11 -5 +18 +23 +37 +27 +28 +34 since 2005

-2.4%

2.1%

-0.2%

-4.9%

-10.4%

-1.2%

1.1%

4.6% 2.3%

7.9% 9.1%

-1.5%

7.0%

15.1%UK FRA GER ITA USA JPN AUS

FixedMobile

15

Levels of fixed-mobile call substitution vary between countries

Change in fixed and mobile voice call volumes, 2010


Wide variations in mobile’s share of call volumes… and little sign of convergence between countries

16

Proportion of voice calls originating on mobile networks, 2005 to 2010

0

20

40

60

80

100

2005 2006 2007 2008 2009 2010

Per cent

JPN

ITA

AUS

UK

FRA

GER

5 year pp change

+16.9

+19.3

+29.7

+17.9

+4.1

+15.4

2010 pp change

+1.9

+3.4

+3.2

+1.7

+0.0

+1.7


In Germany fixed voice minutes are over twice the cost of mobile minutes

17

0

100

200

300

400

500

2005 2006 2007 2008 2009 2010

Per cent

GERFRAESPUKSWEITAAUSNEDJPN

5-yr pp change

2010 value

238

11696888282

172167

-192

-93-138

-70-131N/A

+28-19

Average cost of a mobile voice minute as a proportion of the cost of a fixed voice minute, 2005 to 2010


72 -90

Different drivers for fixed-mobile substitution of broadband services

18

82%

84%

69%

69%

87%

64%

11%

13%

13%

15%

4%

14%

5%

2%

9%

14%

6%

19%

2%

1%

9%

2%

3%

3%

0% 20% 40% 60% 80% 100%

UK

FRA

GER

ITA

USA

AUS

Proportion of respondents (per cent)

Fixed only Fixed and mobile Mobile only No broadband

Source: Ofcom consumer research, October 2011Base sizes: UK=1015, France=1014, Germany=1014, Italy=1045, USA=1002, Japan=1015, Australia=1012.

Household penetration of fixed and mobile broadband, 2011

After a slow start, super-fast availability in UKcompares well with that in other European countries

19

15%

48%3%1%2%

16%

25%1%8%2%2%

13%23%

39%6%6%4%

16%17%

92%29%

3%12%

2011

2011

2011

20112011

2011

2012

2012

2012

2012

20152015

2015

2015

2018

2020

2020

56% by 201511% by 2015

50% by 201254% by 2020

14% by 201136% by 2015

10% by 2012

18% by 2011

50% by 201815% by 2013

25% by 201143% by 2011

39% by 2012

93% by 2020

BTBT

Virgin MediaFrance Telecom

IliadSFR-NEUF

NumericableDeutsche TelekomDeutsche TelekomKabel Deutschland

FastwebTelecom ItaliaTelecom Italia

NGN CommitteeVerizon

AT&TComcast

Time WarnerCharter Comms

CablevisionTelus

BellNTT

KDDINBN

Telstra

} 67% by 2015

} 35% by 2012

} 3%

UK BTBTVirgin Media

FRA France TelecomIliadSFR-NEUFNumericable

GER Deutsche TelekomDeutsche TelekomKabel Deutschland

ITA FastwebTelecom ItaliaTelecom ItaliaNGN Committee

USA VerizonAT&TComcastTime WarnerCharter CommsCablevision

CAN TelusBell

JPN NTTKDDI

AUS NBNTelstra

FTTCFTTH/PDOCSIS3.0/FTTLA

Proportion of households with NGA deployment, and planned NGA deployment, end 2010

Source: Ofcom, based on operator announcements and third-party data including IDATENotes: Includes announcements from the largest operators only; estimates have been used where there is lack of clarity on timelines; deployments are typically gradual and incremental – the year given marks the end of a planned deployment phase

Household take-up of superfast broadband, June 2011

Source: Ofcom, based on operator announcements and third-party data including Cullen International and IDATE

Take-up of super-fast broadband less than 4% in large European countries

0.8%0.0% (FTTH/B

3.5%2.0%

1.1%0.3%

1.6%0.1%

1.4%3.5%

6.2%7.7%

0.2%39.0

0.4%0.6%

1.6%

0% 5% 10% 15% 20%

UK

FRAGER

ITA

USA

CAN

JPNAUSESP

Proportion of households (%)

Use of mobile phones to access the internet more than doubled between 2008 and 2011

21

21%14% 14%

18% 15%

37% 37%

27%31%

36%

46%39% 38% 40% 41% 43%

0%

10%

20%

30%

40%

50%

UK FRA GER ITA US AUS

2008 2010 2011

Source: Ofcom research, October 2008, 2010 and 2011.Base: All adults aged 18+ who use the internet (UK=929, France=914, Germany=945, Italy=989, USA=902, Australia=957).Which, if any, of the following activities do you use your smartphone / mobile phone for?

Mobile subscribers (%)

N/A

Use of mobile phone to access the internet among fixed-line internet users

3%

13%

25%

29%

29%

6%

16%

23%

26%

33%

4%

13%

19%

26%

29%

4%

13%

18%

23%

29%

11%

18%

17%

25%

31%

5%

15%

23%

29%

32%

0% 10% 20% 30%

Watching TV programmes

Watching video clips

Downloading Apps

Social Networks

Emails (not SMS)

UK

FRA

GER

ITA

USA

AUS

Growth in use of mobile internet primarily for ‘low bandwidth’ services

22

Use of selected internet/data services on mobile phones

Source: Ofcom research, October 2011; Base: All adults aged 18+ who use the internet.

+8pp+8pp+9pp+9pp+6pp

N/A


N/A


N/A

-1pp+2pp+5pp-1pp-4ppN/A

No change+1pp+1pp

No changeNo change

N/A

Growth in internet on mobile driven by smartphone take-up

23

Proportion of mobile subscribers with smartphones

24

16 18

3330

24

46

3532

4045

39

0

10

20

30

40

50

UK FRA GER ITA ESP EU5Feb-10 Aug-11

Source: comScore MobiLens , 3 month averages ending February 2010 and August 2011, mobile subscribers ages 13+, .

Mobile subscribers (%)

Mobile data traffic more than doubled in many countries in 2010

24

Mobile data traffic per mobile connection: 2009, 2010 and 2015

Source: Cisco Systems’ Visual Networking IndexFigures given are for December in each year stated. Precise figures are not available: the 2009 and 2010 figures are Cisco estimated actuals, and the 2015 figure is a Cisco forecast.

.

129

39

59

86

65

92

156

98

268

106

139

199

162

212

349

228

0 50 100 150 200 250 300 350

UK

FRA

GER

ITA

US

CAN

JPN

AUS

MB per mobile connection per month

20092010

Presenter

Presentation Notes

What this use means of course is rapid increases in the data transferred over mobile networks. The data shown in the charts represente estiamtes from Cisco. Indicates that among these eight countries the UK and the US were second behind Japoan in average data sue

25

Key trends in Internet and web-based consumption

Jonathan Fenn, Senior Media Analyst,Market Intelligence


32

89

63

66

66

70

51

67

77

74

10

58

34

29

45

41

29

27

36

40

0 20 40 60 80 100

CHN

NED

ESP

AUS

JPN

USA

ITA

GER

FRA

UK

2005

2010

Broadband penetration reaches three quarters of UK households

26

Source: IDATE / Industry Data / Ofcom.

Connections per 100 households

27

Source: Ofcom Consumer Research October 2011.

70% 71%65%

80% 78% 75%

79% 78% 75%

91%83% 82%

0

10

20

30

40

50

60

70

80

90

100

UK FRA GER ITA USA AUS

Visited a social networking site

Set up a page or profile on a social networking site

The majority of internet users have a profile on a Social Networking SiteFrequency of visiting SNS / Set-up SNS profile page (%)

92% of 18-24s ever visited a SNS

20% 19% 17%24% 20% 18%

28%24% 28%

30%29%

26%

23%27% 28%

29%

23%25%

16% 19% 17%10%

18% 19%

4% 4% 4% 3% 4% 5%9% 8% 7% 4% 6% 8%

0%

20%

40%

60%

80%

100%


Don’t know

Once a month or less

Once every two weeks

Weekly

Once a day

2-4 times a day

5 or more times a day

With almost three quarters (71%) visiting it on a daily basis

Source: Ofcom Consumer Research October 2011. Base: All those who have ever visited a social networking site.

Frequency of visiting social networking sites (%)

83% of 18-24s visit on a daily basis

29

UK consumers more likely to access Social Networking Sites via their mobile

68%

48% 43%

5%3% 2% 2%

62%56%

34%

6% 4% 4% 2%

65%

58%

30%

5%2% 1% 3%

72%

55%

30%

5% 3%1% 2%

66%

56%

33%

8%4% 2% 2%

66%

51%

41%

6%2% 2% 3%

0

20

40

60

80

100

Laptop Desktop Mobile phone Tablet Games console Connected or Smart TV

Other


Devices used to access social networking profile (%)

Source: Ofcom Consumer Research October 2011.

30

35%

51%

37%

23%

45%

61%

44%

33%

22%

30%

23%

13%

47%

61%

47%

36%38%

53%

42%

22%

33%

51%

34%

20%

0%

20%

40%

60%

80%

All 18-24s 25-44s 45-64s


Source: Ofcom Consumer Research October 2011. Statement: I often find out about new breaking stories first via social networking sites”.

Consumers using Social Networking Sites for breaking news stories...

All those who agreed with statement (scoring 4 or 5 from a scale of 1-5)

31

...and increasingly on their mobile phones

15

10 911

711

25

17 15 16 1518

0

10

20

30

UK FRA GER ITA ESP EU5Feb-10 Aug-11

Source: comScore MobiLens , 3 month averages ending February 2010 and August 2011, mobile subscribers ages 13+

Proportion of Mobile subscribers that have accessed news on their mobile (%)

32

More UK consumers use their home internet connection for shopping

8272

7968

7867

0

20

40

60

80

100


Source: Ofcom Consumer Research

Proportion using home internet connection for shopping (%)

33

11%

4%

7%6%

4%

6%

9%

3%

7%6%

3%

6%

0%

2%

4%

6%

8%

10%

12%

UK FRA GER ITA ESP EU5Accessed Auction Sites Accessed Online Retail Sites

Source: comScore MobiLens , 3 month average ending May 2011, mobile subscribers ages 13+

Mobile retail activity among total mobile subscribers, May 2011 (%)

UK consumers also more likely to shop online via their mobile phones

34

28%

29%

20%

29%

16%

16%

17%

34%

19%

23%

21%

2%

14%

7%

7%

7%

11%

11%

14%

15%

8%

9%

42%

22%

42%

32%

43%

40%

52%

24%

32%

30%

41%

7%

6%

9%

8%

3%

10%

5%

4%

7%

4%

7%

7%

4%

7%

4%

15%

4%

3%

5%

11%

6%

6%

13%

25%

14%

19%

16%

18%

11%

20%

16%

29%

15%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

CHN

NED

ESP

AUS

JPN

USA

ITA

GER

FRA

UK

Global

Newspapers Magazines TV Radio Cinema Outdoor Internet

UK internet advertising twice that of global figure and at parity with TV advertising

Proportion of total advertising expenditure

Source: Warc Data

289

14

10

16

8

93

28

8

5

3

15

£bn

35

Key trends in the audio-visual industries

Steve Gettings, Head of Media Market Intelligence


Global TV industry revenues bounced back in 2010

36

£83bn £96bn £105bn £113bn £121bn

£18bn £18bn £18bn£19bn £19bn

£93bn £97bn £97bn £90bn £99bn

0%

20%

40%

60%

80%

100%

2006 2007 2008 2009 2010

Advertising

Public funds

Subscriptions

£194bn £211bn

1.6%

2.2%

9.8%

CAGR (4yr)£239bn£222bn£221bn

YOY

9.9%

1.3%

7.1%

5.4%7.7%

Prop

ortio

n of

reve

nues

Broad-based recovery among comparator countries

37

£68 £73£79

£86 £89 £89 £94

£45 £48 £50 £52 £54 £54 £57

£31 £32 £32 £33 £32 £31 £33

£14 £16 £18 £21£25 £27 £31

£0bn

£10bn

£20bn

£30bn

£40bn

£50bn

£60bn

£70bn

£80bn

£90bn

£100bn

2004 2005 2006 2007 2008 2009 2010

USA

Europe / Canada

Japan / Australia

BRIC

6.7%

6.2%

6.3%

0.9%

3.5%

5.3%

16.2% 14.3%

CAGR (5 yr)YOY

Growth (%)Total revenues (£bn)

£158bn £168bn £179bn £192bn £200bn £200bn 7.7% 6.4%£215bn

For many, all three funding sources rose year on year...

38

0.600.15

2.685.36

0.66-5.73

7.87-0.86-3.46

12.475.86

-0.4510.14

3.252.73

8.208.18

0.250.481.00

1.215.34

10.191.13

0.41-0.65

2.856.08

3.296.21

3.562.09

4.233.69

0.16

0.79-0.44

0.930.12

0.4014.15

1.931.81

-2.75-0.16

0.55-1.94

-0.291.37

-£6.00 -£4.00 -£2.00 £0.00 £2.00 £4.00 £6.00 £8.00 £10.00 £12.00 £14.00 £16.00 £18.00

CHNIND

RUSBRAPOLIRL

SWENEDESPAUSJPNCANUSA

ITAGERFRA

UK

Advertising Subscription Public fundingChange (£)

Changes in components of TV revenues per head: 2009 to 2010

...with revenue mix varying substantially by country

39

£59 £46 £41

£65£116

£63£105 £109

£40£39 £51 £52

£21

£32

£20

£1

£4

£78 £82£46

£44£187 £42

£81£78

£25 £63£84 £99

£36

£19

£5

£4

£3

£44 £31

£48

£24

£1£15 £39 £31

£41£37

£35 £38

£1 £1

0%

20%

40%

60%

80%

100%

UK FRA GER ITA USA CAN JPN AUS ESP NED SWE IRL POL BRA RUS IND CHN

Public funding

Subscription

Advertising

6

90.4

Revs per cap (£)Change YOY (%)

25

25.9

7

6.4

181

7.2

160

-0.2

135

-1.8

133

-1.7

119

14.6

57

8.4

226

15.1

304

14.8

139

2.1

106

23.6

53

31.6

218

29.8

189

-0.5

170

13.4

Digital television take-up rising across the board

40

97% 93%

62%78%

87%78%

66% 75%

98%

68% 63%83%

56% 59%

34% 29% 33%

3%7%

38%22%

13%22%

34%25%

2%

32% 37%

17%

44% 41%

66% 71% 67%

0%

20%

40%

60%

80%

100%

UK FRA GER ITA US CAN JPN AUS ESP NED SWE IRE POL BRA RUS IND CHI

Analogue

Digital

Proportion of TV homes (%)

Year-on-year change (pp) +3 +13 +12 +7 +4 +9 +2 +14 +14 +10 +6 +18 +8 +20 +9 +6 +8

Take-up of digital and analogue television, 2010

For many, two platforms account for over 80% of homes…

41

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0%

20%

40%

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80%

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Second largest platform

Largest platform

Proportion of TV households (%)

50%

The two most popular DTV platforms, by country, 2010

..though the appetite for pay television varies substantially…

42

48% 43% 37%

74%

12% 9%

40%

69% 72%

7%23% 24%

82%

45%

18%

48%

52% 57% 63%

26%

88% 91%

60%

31% 28%

98% 93%77% 76%

18%

55%

82%

52%

0%

20%

40%

60%

80%

100%


Pay

Free

Proportion of households (%)

Take-up of pay and free-to-air television, end 2010

...but across many countries, take up is rising

43

2.2

0.80.1

1.8

0.2

1.3

2.5

1.3

-0.6

-1.5 -1.4 -1.6

5.1

2.0

4.0

5.5

4.2

0.5

4.6

-2.2

1.1

-0.6

1.5

3.8

0.8

1.8

0.5

-0.6

5.0

1.8

3.4

6.4

3.94.4

-3-2-101234567


Per

cent

age

poin

t cha

nge

2009 2010

2 year change 2.6 5.4 -2.1 2.9 -0.4 2.8 6.3 2.1 1.2 -1.1 -1.9 3.3 6.9 5.4 10.4 9.4 8.6

Percentage point increases in pay television take-up, 2009 - 2010

Among value-added services, HD take-up is rising....

44

Growth in the number of HD television homes

7%

42%

60%

20%

29%

45%

54%

39%40%

40%

13%

28%

3% 5%

14%21%

7%

14%

0%

10%

20%

30%

40%

50%

60%

2007 2008 2009 2010

FRA

US

JPN

ITA

UK

GER

1 yr 3 CAGR

44% 326%

21% 39%

-2% 0%

122% 358%

52% 95%

94% 264%

GrowthTake-up (% of TV homes)

...while DVRs are available in a significant proportion of homes

45

Take-up of digital video recorders, connected TVs and 3D-ready TVs

36%

21% 22% 22%

41%

28%

7%

13%

6% 6% 7% 9%6% 7% 8% 10%

4% 6%

0%

10%

20%

30%

40%

50%


DVR Connected or smart TV 3D-ready TVTake-up (%)

Widening broadband access is influencing how AV content is viewed...

46

44%

33%

24%

31%36%

29%27%

17%

11%

17%

23%

17%

0%

10%

20%

30%

40%

50%

60%


Ever Weekly

Proportion of respondents that access online TV (%)

Accessing TV content over the internet

+3

-1

-4

+2

+1

-1

-2

+1

+2

+2

...but linear TV viewing remains robust

47

Daily TV viewing per head, 2009 - 2010

242212 223

246

283

230

188

234

191166

196

245222 226

119

158

0

50

100

150

200

250

300

UK FRA GER ITA USA CAN AUS ESP NED SWE IRL POL BRA RUS IND CHN

Change in minutes of viewing per person per day, 2009 - 20107.6% 3.4% 5.2% 3.4% 1.1% 6.0% 2.7% 3.5% 3.8% 0.6% 5.9% 2.1% -2.2% -0.9% -13.8% 0%

Min

utes

per

per

son

per d

ay

2010 average211 mins

48

Trends in consumer pricing

Ian Macrae, Head of Telecoms Market Intelligence


49

Our international report focuses on comparative pricing and we have also recently published analysis of UK prices

Consumer Experience Report

• Trends in UK pricing in fixed, mobile and television

• Wide range of sources including Teligen pricing model, tariff analysis and revenues and take-up data provided by Ofcom,

Published 7 December 2011http://stakeholders.ofcom.org.uk/binaries/research/consumer-experience/tce-11/ce-research-2011.pdf

International Communications Market Report

• Comparison of prices of communications services in UK, France, Germany, Italy, Spain and the USA

• Based on a pricing model provided by Teligen and data collected in July 2011

50

Despite increase in take-up and quality of telecoms services, average spend has been broadly stable…


0

200

400

600

800

2005 2006 2007 2008 2009 2010

£ per capitaAUS

JPN

CAN

USA

FRA

GER

UK

ITA

Total telecoms service retail revenue per capita, 2005 to 20105 year CAGR

1 year change

+£16

+£1

+£13

+£15

+£3

-£4

-£9

-£12

+4.0%

-1.6%

+4.0%

+2.4%

+1.6%

-1.8%

+0.6 %

-1.4%

51

… and in the UK average spend on communications services has fallen in real terms year-on-year

Source: Ofcom / operatorsNote: RPI adjusted

Average household spend on communications services

27.97 26.13 24.76 23.48 22.52 22.27

37.20 36.63 36.26 34.87 33.02 31.34

10.39 11.01 9.91 10.22 10.38 9.48

28.24 27.75 27.85 27.28 27.95 27.97

2.69 2.70 2.72 2.57 2.54 2.54

£106.50 £104.22 £101.49 £98.41 £96.42 £93.61

4.78% 4.77% 4.74% 4.66% 4.63% 4.66%

0%

2%

4%

6%

0

50

100

150

2005 2006 2007 2008 2009 2010

As

% o

f tot

al s

pend

£ pe

r mon

th (2

010

pric

es) Radio

Television

Fixed internet

Mobile services

Fixed voice

As a %age of total household spend

52

Source: ONS

-15

-10

-5

0

5

10

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Telephone and Telefax equipment and services CPI

Overall CPI

Annu

al p

erce

ntag

e ch

ange

(%)

But after more than a decade of deflation, some signs that telecoms prices are increasing

Year-on-year changes in CPI

6.9 7.1 7.8 8.0 7.7 8.0

16.9 15.213.1

11.710.2 9.9

0

5

10

15

20

2005 2006 2007 2008 2009 2010

Fixed

Mobile

Pence per minute

Source: Ofcom / operatorsNote: Includes estimates where Ofcom does not receive data from operators; fixed calculation excludes non-geographic voice calls; mobile calculation includes business calls; adjusted for RPI

Cost per minute for mobile has fallen rapidly – fixed has been steady despite falling call volumes

Comparison of average residential fixed and mobile voice call charges

£19.29 £18.29 £19.30 £18.27 £20.57

£23.05 £21.11 £21.97 £20.94 £23.23

£25.10£19.17 £23.25 £22.12

£24.42

£22.10£20.34

£22.61 £21.67£23.96

£0

£20

£40

£60

£80

2008 2009 2010 2011 2011*

Pric

e pe

r mon

th

Basket 4Basket 3Basket 2Basket 1

* Excluding Line Saver 12-month pre-payment tariffSource: Ofcom / Teligen

Note: Tariff data collected in July each year; nominal prices; full details of methodology, basket composition and in-depth analysis will be provided in Ofcom’s International Communications Market Report (14 December 2011)

Fixed voice tariffs have risen – although lower prices are available for payment of line rental in advance

Comparison of average residential fixed and mobile voice call charges -‘Weighted average’ of best prices available from three largest operators

Avg annual % change (nominal)

Avg annual % change (RPI adjusted)

-10.6 +5.4 -9.2 +0.8-11.9 +10.4 -4.7 +5.8

Basket 1 Basket 2 Basket 3 Basket 4

‘Typical’ household

type

A retired low-income couple

A couple of late adopters A ‘networked’

family

Affluent couple with

sophisticated comms use

Outbound calls 225mins 430mins 600mins 250mins

Type of calls97% UK geog

3% to UK mobile94% UK geog

3% to UK mobile3% international

91% UK geog2% to UK

mobile7% international

80% UK geog12% to UK

mobile8% international

Time of day58% daytime25% evening17% weekend

58% daytime25% evening17% weekend



£19.58£23.16 £24.05 £24.86

£0£5

£10£15£20£25

2008 2009 2010 2011

Price per month

Best price available for a basket of voice calls and a basic broadband service

Source: Ofcom / TeligenNotes: Based on tariffs available in July of each year. Basket includes 430 voice minutes (95% UK geog, 3% to UK mobile, 3% international), 58% of calls in daytime, 25% in evening, 16% at weekend. Basket of services includes special offers available such as discounted line rental for an introductory period; Tarifprices from BT, Virgin Media, TalkTalk do not include any special offers.

Broadband only

Broadband plus line

rental BT2008 £15.99 £27.742009 £15.65 £28.152010 £15.99 £27.282011 £16.40 £25.60

Virgin Media 2008 £18.00 £21.002009 £21.25 £26.252010 £21.25 £25.742011 £21.00 £27.40

TalkTalk 2008 £14.99 £17.002009 £14.99 £18.992010 £14.99 £21.242011 £15.31 £19.10

Best price available for a basic voice and broadband bundle from the UK’s three largest providers

Broadband tariffs fairly steady – both for standalone broadband and in a bundle with voice…

Annual % change (nominal)

Annual % change (RPI adjusted)+18.1 +0.1 -1.6

+18.3 +3.9 +3.4

21.8418.77 18.10 16.13 14.24 14.02

0

5

10

15

20

25

2005 2006 2007 2008 2009 2010

Source: Ofcom / operatorsNotes: Nominal prices; Includes VAT; Includes estimates where Ofcom does not receive data from operators

£ per month

Average headline speed (Mbit/s)

3.6 5.3 6.9 9.3 15.51.6

… However the average cost of broadband hasfallen as consumers take LLU and bundled services

Average monthly cost of a residential broadband connection (excluding line rental)

£10.22 £10.15 £8.94 £8.81£11.48 £10.48 £9.32 £10.25£13.45 £11.63 £10.39 £10.56£20.95 £19.41 £16.23 £14.90

£19.94 £17.17 £13.81 £14.43

£36.94 £34.42£29.73 £24.27

£43.43£34.40

£35.65 £28.35

£41.99£36.01

£35.36£33.23

2008 2009 2010 2011

Pric

e pe

r mon

th

Connection 8

Connection 7

Connection 6

Connection 5

Connection 4

Connection 3

Connection 2

Connection 1

Source: Ofcom / TeligenNote: Calculated from lowest tariff available from each of the three largest mobile operators by retail market share in July of each year; nominal prices; full details of methodology, basket composition and in-depth analysis will be provided in Ofcom’s International Communications Market Report (scheduled for publication on 14 December 2011)

Mobile prices have fallen significantly – but somelow use (pre-pay) tariffs have increased since 2010Prices for typical baskets of mobile phone services, 2008-2011Weighted average’ of best prices available from three largest operators

Avg annual % change (nominal)Avg annual % change (RPI adjusted)-11.2 -12.4 -13.5

-12.5 -8.2 -9.2

58

Source: Ofcom / TeligenNote: Based on tariffs available from the three largest operators for each service in each country in July 2011; PPP adjusted; TV excludes license fee, but includes price of set-top box/decoder and installation

Comparative ‘weighted average’ pricing of ‘single services’ for baskets of communications services typical of five household types

Prices in UK compare favourably to othercountries for single services…

Monthly cost (£)

36 45 56 52 56 71 58 7310095107115

82117

177

117151165

125166

258236242264

170204

269233

306350

0

100

200

300

400

UK

FRA

GER IT

AES

PU

SA UK

FRA

GER IT

AES

PU

SA UK

FRA

GER IT

AES

PU

SA UK

FRA

GER IT

AES

PU

SA UK

FRA

GER IT

AES

PU

SA

TV Mobile broadband Fixed broadband Mobile Fixed voice

Basket 1 Basket 2 Basket 3 Basket 4 Basket 5

59

Source: Ofcom / TeligenNote: Based on tariffs available from the three largest operators for each service in each country in July 2011; PPP adjusted; TV excludes license fee, but includes price of set-top box/decoder and installation.

Comparative ‘weighted average’ pricing of ‘single services’ for baskets of communications services typical of five household types

… and also compare favourably when includingbundled services

Monthly cost (£)

27 42 45 37 39 57 42 55 58 59 6693

68104

152

96132136

10270

170135

175219

143182

219

170

244

294

0

100

200

300

UK

FRA

GER IT

AES

PU

SA UK

FRA

GER IT

AES

PU

SA UK

FRA

GER IT

AES

PU

SA UK

FRA

GER IT

AES

PU

SA UK

FRA

GER IT

AES

PU

SA

TV Mobile Broadband Fixed broadbandMobile Fixed voice Fixed voice & broadbandTriple-pay

Basket 1 Basket 2 Basket 3 Basket 4 Basket 5

Lower comparative costs in the UK are primarily driven by lower mobile prices

60

Source: Ofcom, using data supplied by TeligenNote: Weighted average of best-value tariff from each of the three largest operators by market share in each country; July 2010 and July 2011; PPP adjusted

Comparative single service ‘weighted average’ mobile pricingMonthly cost (£)

99

1112

1011

913

1615

2924

910

1214

1416

1216

2017

3428

910

1214

1424

1222

2019

3420

1011

1215

1926

1423

2514

3817

1517

2321

5050

3437

2437

4443

2119

3224

4445

2838

3935

5649

3531

5548

7171

5956

7879

9584

4434

8168

105101

7673

124109

125106

5548

10374

132129

9281

171114

10592

0 200 400 600

20102011

20102011

20102011

20102011

20102011

20102011

Connection 1

Connection 2

Connection 3

Connection 4

Connection 5

Connection 6

Connection 7

Connection 8

Connection 9

UK

GER

FRA

ESP

ITA

USA

Presenter

Presentation Notes

France connection 6 in 2010 is odd UK connection 8 is so much cheaper than in any other country. Why? Interesting that overall prices in Italy are increasing whereas falling in all other countries. can we explain?

Questions?

61

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