Broadband now mainstream in the UK

MUMBAI: For the first time, there are now more households in Britain with broadband than dial-up internet connections.

2005 was the year in which broadband became a genuinely mainstream consumer product, now present in almost 30 per cent of all UK households and businesses and actively considered by many more.

These findings were released yesterday by UK's telecommunications regulator Ofcom in its second annual Communications Market report. In the report, Ofcom has identified a range of new trends in broadband, digital broadcasting and other communications services. These include:

The number of new broadband connections per week has increased almost 15-fold in three years - from 5,500 per week in 2001 to 73,800 per week in 2004. This rapid acceleration in take-up has led to a (provisional) total of 8.1 million connections as of June 2005, more than double the number of connections at the end of 2003. By the end of 2005, 99.6 per cent of UK homes will be connected to a broadband-enabled exchange.

More digital

More than 60 per cent of UK households now receive digital television; and every month more than 250,000 households - switch on to digital for the first time or add set-top boxes for additional televisions in the home.

70 per cent of that growth in 2004 was driven by Freeview; by the end of 2004, almost 20 per cent of households (4.6 million) received digital television via Freeview alone.

In radio, 36 per cent of adults with access to digital television have at some point listened to radio via their sets (up from 29 per cent in 2003) and 19 per cent of adults with internet connections have listened to radio online (up from 15 per cent in 2003). DAB digital radio continues to expand. By the autumn of 2003, 250,000 DAB sets had been sold; by Q1 2005, that figure increased five-fold to 1.5 million.

More mobile

Total revenues for the mobile telecoms industry now exceed those of fixed-line calls and access as consumer usage of mobile increases, encouraged by price reductions and the emergence of new services. Between 2000 and 2004, the total number of minutes spent making mobile calls in the UK almost doubled (from 34 billion minutes to 62 billion). During the same period, minutes spent making calls over traditional fixed-line networks fell by 6 per cent (from 174 billion minutes to 164 billion). As a consequence, between 2003 and 2004, mobile telecoms revenues increased by 16 per cent to ?12.3 billion. Revenues from traditional fixed-line voice services fell by 6.2 per cent to ?10.5bn from ?11.2bn in 2003.

Communications services are growing in importance for consumers. As more consumers adopt broadband and digital television for the first time and as mobile phone usage increases, these services command a greater share of household expenditure.

Ofcom chief executive Stephen Carter said: ?For consumers and businesses, these services are becoming cheaper, faster, more capable and even more important.?

Industry trends

In 2004 total revenues in the UK communications market were ?55.9 billion, accounting for 4.1 per cent of UK GDP. The majority of this was derived from telecommunications, although the television industry experienced the fastest revenue growth (up 9 per cent from ?9.3 billion in 2003 to ?10.1 billion in 2004), mainly driven by increased consumer spending on subscriptions, teleshopping and interactive services.

Telecommunications: Continuing price reductions in broadband meant that whilst the total number of connections doubled in 2004, revenues only increased by 6.8 per cent. In the traditional fixed-line voice market, intense competition between companies offering discounted call packages over BT?s network has driven greater switching by consumers; more than one-third of UK households now take services from a provider other than BT.

Television: Subscriptions remained the largest single source of revenue, rising by 10 per cent in 2004 to ?3.6bn (excluding the BBC TV Licence Fee). Revenues earned by commercial multi-channel operators rose by around 28 per cent whilst television shopping remains the largest component of other revenue streams at ?178.7 million.

Radio: As digital radio grows in popularity, 8 per cent of commercial radio sector listening is now to digital-only stations across DAB, digital television and the internet. Since the beginning of 2003, both AM and FM listening has fallen by 4 percentage points. Digital listeners also listen to radio for longer ? 28 hours per week compared to 24 hours for all listeners. For the first time, revenues from radio advertising were matched by internet advertising (?0.6 billion in early 2005). In 2004 the radio industry began to respond to changes in ownership rules brought in by the Communications Act; during 2004, more than one in ten analogue radio licences changed hands.

Ofcom Senior Partner, Strategy and Market Developments Ed Richards said: ?This report shows that UK households are now accelerating into the digital age. In parallel, industries formed over decades are being reshaped by digital broadcasting and broadband with every month that passes.?

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