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1.1.1 The scope and structure of this report

This is Ofcom’s second annual International Communications Market Report, and is designed to provide a robust and statistically-driven international comparative context for the UK communications sector.

The document seeks to provide an overview of the communications sector in a range of countries. The main body of the document draws comparisons between the UK and six key countries – France, Germany, Italy, the US, Canada and Japan. Where data are available, and where we feel it adds significantly to the analysis, we also look at five other nations – Poland, Spain, the Netherlands, Sweden and the Republic of Ireland. (To assist the reader, we keep all 12 countries in this order in bar charts throughout the document).

Last year’s document also included China as a key comparator country. This year we have omitted it from direct comparisons, but have added a new section covering communications markets in Brazil, Russia, India and China (the so-called ‘BRIC’ economies). Because of their different stages of development, we provide fewer comparisons with the full set of comparator countries. They do, however, provide useful insight into trends in the global communications market; not only because of the scale and speed of their growth, but also because their relative lack of legacy infrastructure provides an interesting, and different, pattern of development.

The structure of this document is as follows:

• This introductory Overview has four main sub-sections. We begin by providing an overview of the key indicators in international communications markets to put the UK in context. We then identify some of the key issues currently dominating the regulatory landscape. The next section compares the pricing of baskets of communications services for a range of household-types in the UK, France, Germany, Italy and the US. The overview concludes with a summary of the rapidly developing communications sector in Brazil, Russia, India and China.
• A section on Converging Communications Markets and the Internet then builds on the approach to reporting market developments which was developed for the 2007 UK Communications Market Report. In reviewing converged industries we use international comparisons to examine how content is developed which can be delivered over a variety of platforms and networks and how these services are consumed using a range of devices capable of receiving multiple content types. We then compare how use of the internet and the use of non-voice services on mobile phones differs by country.
• The section on Television examines five key market developments across our comparator countries: (i) the growth of high-definition television; (ii) the switchover from analogue to digital; (iii) the growth of international news channels; (iv) the gathering pace of mergers and acquisitions; and (v) the role of sports rights in driving pay-TV take-up. We then provide a comparative analysis of the television sectors in our comparator countries, first from an industry point of view and then from a consumer perspective.
• The key market developments identified in the Radio section of the report are the roll-out of digital radio and growth in the number of consumers accessing radio through different digital platforms. We then provide a statistically-driven overview of the sector in our comparator countries from an industry and from a consumer perspective.
• The Telecoms section picks up three key themes which we believe provide insight both into overall trends and into the different characteristics of the national markets; (i) the rise of mobile and the substitution of mobile for fixed voice services; (ii) variations in broadband markets, and in particular the speeds of access networks; and (iii) the growth of non-SMS mobile data services and the emergence of ‘mobile broadband’. As with television and radio, we then provide a statistically-driven overview of the telecoms sector from an industry and a consumer perspective.
• At the back of the report, Country Profiles provide a quick reference point for the key market data, regulatory structures and recent market developments in our key comparator countries. Appendices are provided to detail the methodologies behind our price benchmarking analysis and consumer survey, along with sources for basic data. A Glossary defines industry terms and abbreviations used throughout the document.

Data in this report cover the 2006 calendar year, with additional figures from 2007 where available. We show trends using a five-year historical time line series where possible and where relevant.

All currency conversions have been made at the average market exchange rate during 2006 as provided by the IMF. We have opted to convert data from each year at this fixed exchange rate, as we believe that this is the best way to ensure that trends are not obscured by currency fluctuations. The one exception to this methodology of currency conversion is in Section 1.4, where we have used a purchasing power parity (PPP)-adjusted exchange rate to compare international pricing (based on IMF average exchange rates in August 2007 and OECD comparative price levels in August 2007). All figures are nominal unless otherwise stated.

The document was written using a mixture of desk research and talks with industry bodies, operators, regulators and commentators. The data were gathered with the support of the consultancy firm IDATE, which has attempted to verify sources and provide market estimates where data are incomplete. The Canadian regulator, the CRTC, provided additional data for the Canadian market. In addition, we commissioned Synovate to conduct original consumer research into broadband speeds and the use of mobile phone functions.

We would like to thank the following organisations which have granted us permission to use and interpret their data: Analysys, Euromonitor, The European Audiovisual Observatory, The European Broadcasting Union, individual members of the EBU Information and Statistics Network, The European Information Technology Observatory, Informa, The International Federation of Phonographic Industry, M:Metrics, The Motion Picture Association, Nielsen Online, OECD, PriceWaterhouseCoopers, Screen Digest and The World Advertising Research Centre.

We endeavour to ensure that data in this report are comprehensive and the most accurate currently available. However, with a document so wide in scope, and with reliance on third parties for some data, there will always be omissions and occasional inaccuracies. Comments and responses to this report are welcomed at: market.intelligence@ofcom.org.uk.

The information set out in this report does not represent any proposal or conclusion by Ofcom in respect of the current or future definition of markets and/or the assessment of licence applications or significant market power or dominant position for the purposes of the Communications Act 2003, the Competition Act 1998 or other relevant legislation.

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