The Communications Market Report: International

10 December 2015

UK communications sector revenues were the second highest in Europe.

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The communications sector’s total global revenues in 2014 were £1,190bn, growing by 1.5% year on year (incorporating the telecoms, television, postal and radio sectors). Global television industries had the largest increase in revenue in 2014, up by £12bn (5%), to £244bn. Telecommunications revenue, although the largest by a considerable margin, registered slow growth of 0.5% to reach £846bn.

UK communications sector revenues were the fifth highest of our comparator countries and the second highest in Europe. In 2014, as in recent years, the three largest communications markets by revenue were in the US (£316bn), China (£135bn) and Japan (£110bn). Outside the top three, the total UK revenue of £48bn was second only to Germany (£55bn).

4G mobile population coverage (from at least one operator) increased in most comparator countries in 2014, with China having the largest year-on-year increase, rising from 1% to 73%. The UK had 84% 4G mobile population coverage at year-end 2014, an increase of 21 percentage points.

The UK had the highest proportion of total mobile connections that were 4G, of the EU5 countries in 2014, at 28%. Among all our comparator countries, South Korea had the highest proportion of mobile connections that were 4G, at 63% of connections, followed by the US (40%), and Australia and Singapore (both 39%).

Around two-thirds (67%) of UK respondents use a smartphone. This is in line with France, Germany and Australia. Spain and Italy had the highest smartphone take-up, at 83% and 79% of respondents respectively, and the US reported the lowest take-up of our comparator countries, at 57%.

Spain (45%) and the UK (42%) have the highest levels of ownership of connected TVs (either smart TV sets, or sets connected to the internet via another device, such as a set-top box, video games console, or other internet-enabled device).

Nearly two-thirds (66%) of people in the UK had used an online service to watch TV or films within the past week (increasing to 81% in the past month); the highest proportion across all of the countries surveyed.

Around four in ten (44%) UK respondents had used a catch-up service from a free-to-air broadcaster within the past week, the greatest proportion of any country surveyed.

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Overall, UK communications service prices compare favourably to those in the rest of the EU5 countries and the US. The UK ranked second in the overall pricing rank (combining stand-alone, bundled and ‘lowest available’ prices) in 2015, behind France. This was a fall of one place compared to 2014.

While the UK’s overall rank fell in 2015, its average rank across all of the baskets and metrics used in the analysis was unchanged. In contrast, France’s average rank improved, resulting in it overtaking the UK in terms of its overall rank.

The UK was cheapest in terms of stand-alone pricing (i.e. when services are not purchased in a bundle. The cheapest stand-alone fixed broadband and mobile phone prices were both found in the UK in 2015. France overtook the UK in terms of lowest bundled service pricing in 2015. In almost all cases, it was cheaper to purchase a bundle where the household required fixed broadband.

The UK performed less well in terms of fixed voice prices. The cheapest available landline services for our households’ requirements were the most expensive among the six countries included in the analysis in 2015, following an increase in prices during the year.

The UK improved its ranking in terms of the 'lowest available' prices in 2015. During the year, the UK overtook Italy to rank second after France, which offered the ‘lowest available’ prices for two of the five household usage profiles used in the analysis in 2015 (as did the UK).

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Global TV revenues (including broadcast advertising, channel subscription and public licence fees only) increased by 5% in 2014 to reach £244bn.

TV revenues in the UK increased by 4.0% year on year; from £13.4bn in 2013 to £14bn in 2014. Following three consecutive years of decline, Spain recorded the largest annual growth in TV revenues among the European comparator countries in 2014 (9.1%), driven by stronger TV advertising revenues.

Revenues from both short and long-form online TV and video in the UK continued to grow, up by £278m to £908m in 2014. However, the US remains the largest online TV and video market among our comparator countries; between 2009 and 2014, online TV and video revenue grew from £1.3bn to £6.8bn.

In the UK, digital satellite (including Freesat) was the country’s most popular viewing platform on primary sets in 2014, (at 45% of TV households) followed by digital terrestrial at 33%.

IPTV was the most popular TV platform in France and South Korea in 2014, with take-up of 41% and 30% respectively. The proportion of UK TV homes with IPTV as their main platform increased by 3pp in 2014 to 8%.

Across the comparator countries, audiences watched an average of 3 hours 43 minutes of broadcast TV per person per day in 2014. Seven of the 15 comparator countries had a year-on-year decline in daily TV viewing minutes per head. The UK had the largest proportional decline, down by 4.9% (11 minutes) to 3 hours 40 minutes. Some of the UK decline may be explained by: increased viewing of online TV content on tablets and smartphones, an increase in SVoD viewing, falling unemployment and the effect of the weather.

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Worldwide radio revenue grew by 3.9% in 2014 to reach £28.1bn. Revenues have increased each year since 2010. The 18 comparator countries that we study in this report account for the majority of worldwide radio revenue (£22.9bn), which increased by 3.5% in 2014.

The only two of our comparator countries where revenue declined were Japan and Italy. In Japan, there was a decline of £17.1m, a 2.4% proportional decrease on the 2013 figure, while in Italy revenue decreased by £5.5m, a 1.5% decrease year on year. These declines were mainly due to decreases in advertising revenue.

Public radio licence fees contributed the largest proportion of revenues in Germany, Sweden and the UK. Germany had the highest public funding ratio, with 79% of revenue coming from public radio licence fees. Sweden followed closely with 78%, and in the UK 60% of radio revenues came from public radio licence fees.

Digital radio set take-up in the UK was the highest of all surveyed comparator countries in 2015, at 50% of radio listeners. This is a rise of 9 percentage points from 2014. DAB coverage is also highest in the UK, reaching 96% of households.

The UK had one of the largest proportions of digital broadcast stations among the comparator countries. The 283 digital radio stations in the UK in 2014 represent 33% of all radio stations. Of all the comparator countries in 2014, this proportion is second only to Germany (37%).

A quarter (25%) of mobile phone users in the UK use their device to listen to music on a weekly basis. This is second only to the US, where a third (33%) of mobile phone users listen to music on their devices.

Between 2013 and 2015 there was an increase in the use of streaming audio services among mobile phone owners, with around three in ten mobile phone owners using their device in this way in Italy (33%) and the US (31%).

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Total comparator country retail telecoms revenues increased by 0.7% in 2014. These revenues (which include those generated by fixed voice, fixed broadband, mobile voice and mobile data services) increased by £4bn to £589bn during the year, mainly as a result of increasing use of fixed broadband and mobile data services.

The UK had the highest proportion of fixed broadband lines that were superfast products among the EU5 countries at the end of 2014. Over a third of UK fixed broadband connections (35%) had an advertised speed ≥30Mbit/s at the end of 2014, the eighth-highest proportion among our comparator countries and higher than in any of the other EU5 countries.

The Netherlands had the highest fixed broadband penetration among our comparator countries at the end of 2014, with 41 fixed broadband connections per 100 population at the end of 2014. By comparison, the UK had 37 connections per 100 population, the fifth highest number among all 18 of our comparator countries.

Total comparator country mobile internet revenues increased by 6.6% in 2014. Mobile internet revenues (which exclude messaging revenues) continued to grow in 2014, increasing by £11bn to £173bn. This was largely the result of increasing mobile data volumes, which grew by 76% to 16 exabytes during the year.

Take-up of mobile internet (excluding messaging) services was highest in Singapore in 2014. There were 183 mobile internet connections per 100 people (including dedicated mobile internet connections and access on mobile handsets) in Singapore at the end of 2014. By comparison, the UK had 87 connections per 100 people in 2014, the eighth highest proportion among our comparator countries.

More than eight in ten UK fixed broadband users were satisfied with their service in 2015, the highest proportion among our comparator countries. UK satisfaction levels with download speeds (77%), upload speeds (76%) and connection speed/quality with multiple devices (75%) were also the highest among our comparator countries.

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The UK had the highest per-capita spend on e-commerce in 2014, at £1591 per head. E-commerce expenditure per head in the UK was over 50% higher than in the US, the next highest-valued market, which had an average spend of £918 per head.

In the UK, over a third (34%) of smartphone owners claimed to use their device to shop online, at least weekly or more often. Online shopping with a smartphone at least weekly was most common in the US, where 38% claimed to do this.

Social networking, instant messaging and gaming apps are the most commonly downloaded apps on iPhone and Google Play, across comparator countries. On iPhone, WhatsApp Messenger was the most downloaded app in Spain, Singapore, Brazil, India and Nigeria. On Google Play, Facebook was the most downloaded app in the UK, France, Germany, Australia, Poland and Nigeria. On both iPhone and Google Play, at least one gaming app featured in 12 countries’ top five most downloaded apps.

In the UK, tablet users spent an average of nearly 32 hours browsing the internet in August 2015. This was slightly exceeded by US tablet users, who spent over 23 minutes longer browsing in the same month.

Laptop and desktop active audiences are getting older in the comparator countries. The highest proportion of over-55 laptop and desktop users was in Australia, at 30%, and in the UK over-55s accounted for a quarter of users.

US internet users spend the most time browsing online on a laptop or desktop, at 34 hours per month, followed by the UK, at 33 hours per month. The least time spent browsing was in Japan, at 18 hours per month.

In 2014, Google was the most popular search engine across all comparator countries except Japan. As Yahoo! Search’s active reach in Japan declined substantially year on year to August 2015, Google became the most popular search engine.

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Letter mail volumes across our comparator countries have declined by 10.2% since 2010 - from a total of 309.7 billion items in 2010 to 278.2 billion items in 2014.

Volume decline year on year in the UK was among the lowest of our comparators. Mail volume in the UK fell by 1.5% in 2014, the slowest rate of decline among our European comparators.

The UK was the only country among our European comparators in which revenue did not decline in 2014. Letter revenue in the UK grew slightly in 2014, increasing by 0.4% year on year. Losses in revenue for our European comparators were more pronounced, particularly in Italy and Spain, where declines in volume contributed to revenue losses of 8.2% and 6.8% respectively.

The UK is among the cheapest countries in Europe in which to send a medium-sized letter. It costs 63p to send a First Class medium-sized (C5 size, 100g or less) letter in the UK. The only European country in which this is cheaper is Poland (45p). With the exception of Spain, it costs over £1 to send a medium-sized letter in all of our other European comparators.

Seven in ten (72%) of the online population in the UK had sent an item of post in the past month. Only in France and in Germany, where nearly eight in ten had sent at least one item, were people more likely to have sent something by post in the past month.

The average number of items of post sent per month has remained broadly stable in the UK and has increased in France, Italy and the US. People in the UK are more likely than those in any of the other countries we surveyed to send invitations, cards and postcards.

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