International Communications Market Report 2017
This is the twelfth year in which Ofcom has published the International Communications Market Report, which provides comparative international data on the communications sector. In this report we compare industry structures and consumer outcomes in the UK with those in 16 comparator countries, in telecoms, TV and video, radio and audio, internet and online content, and post.
The aim of the report is to compare the UK communications sector with a range of countries in order to assess how the UK is performing in an international context.
This report is intended to be used in a number of ways: to benchmark the UK’s communications sector, to learn from market and regulatory developments in other countries, and to provide the context for Ofcom’s regulatory initiatives. It also contributes to the information we draw upon, enabling us to understand how our actions and priorities can influence outcomes for citizens and consumers, and for communications markets generally. This report complements other research published by Ofcom and forms part of the Communications Market Report series, which includes the UK Communications Market Report and specific reports for Northern Ireland, Scotland and Wales (all published in August 2017).
- UK consumers benefit from the high availability of superfast broadband, but low fibre-to-the-premises coverage means that the UK trails in ultrafast broadband
- 4G take-up is more advanced in the US, Korea, Japan and Australia than in Europe
- UK smartphone users spend more time accessing the internet on their mobile than users in most countries, but less than in the US
- Connected televisions are commonplace in the UK and most comparator countries, and there is high interest in other smart devices
- Three-quarters of people in Spain are concerned that their online personal information is not stored securely, compared to two-thirds of people in the UK
- UK consumers spend more than consumers in other countries on internet shopping, but use of mobile payment is more advanced in Sweden.
- Digital radio listening is higher in the UK than in all other comparator countries
- Music streaming services are growing in the UK and other countries, but radio still has very high reach
- High levels of watching time-shifted TV in the UK is linked to use of on-demand services like BBC iPlayer, which are more popular than similar services in other countries
- Subscription video-on-demand services are most popular in the US and the UK, supported by large libraries of English-language content
- Pay TV has been growing in most countries, including the UK, although a decline in subscribers in the US indicates a potential threat from video-on-demand services
This section provides an overview of recent and ongoing regulatory developments at EU15 and international levels in the communications sector. It does not aim to be a comprehensive examination of regulatory frameworks across the comparator countries, but highlights significant developments to provide some context to the analysis of the international communications market elsewhere in the report.
The section covers the telecommunications and postal sectors as well as the area of content regulation and the protection of audiences. It concludes with an overview of international and European radio spectrum policy developments.
In this section of the report we compare communications service prices in the UK to those in the other EU5 countries and the US.
We have included international pricing comparisons in the International Communications report since 2008; however, in this year’s report we have used a different methodology.
For landline, mobile phone and fixed broadband services, we have used a methodology similar to that used by Teligen in its ongoing price benchmarking work for the Organisation of Economic Co-operation and Development (OECD). For dual-play and triple-play bundled services, we have used data from Teligen’s Bundle Benchmarking service, and have compared the cost of these services using a similar methodology to that used for landline, mobile phone and fixed broadband services.
The UK generated £31bn in fixed and mobile voice and data service revenues in 2016, the fourth highest total among our 19 comparator countries after the US, China and Japan. The UK also ranked fourth in terms of average per-capita monthly telecoms spend, after Japan, the US and Australia, at £39 per person.
A common trend is the declining use of fixed voice services, evident in most of our comparator countries, including the UK, in 2016. However, the resilience of the UK’s landline market is notable, with the UK ranking first among our 19 countries in terms of the take-up of fixed voice connections (including managed VoIP), at 61 per 100 people, just ahead of France. In the UK, landline take-up has remained high due to the requirement to take a landline in order to receive most fixed broadband services, and while the UK had the highest per-capita landline take-up among our countries, it ranked third (after Germany and New Zealand) in average outgoing fixed-line voice call minutes per person, at 106 minutes per month (an 11% decline since 2015).
Fixed broadband services offering advertised speeds of 10Mbit/s or more were available to 98% of UK households at the end of 2016 (the fourth highest among our comparator countries), and the UK ranked fifth in the proportion of homes that could receive superfast fixed broadband products with advertised speeds of 30Mbit/s or more (92%). However, the UK continued to trail on the availability of ultrafast products offering advertised speeds of 300Mbit/s or more, ranking fifteenth of our 19 comparator countries (at just under 2% at the end of 2016 – although ultrafast speeds have been much more widely available since Virgin Media launched 300Mbit/s on its cable network in March 2017). The UK ranked eighteenth for the proportion of homes that could receive full-fibre services (also less than 2%), a marginal increase since 2015 due to the continuing roll-out of ‘full-fibre’.
Global TV revenues exceeded £300bn for the first time in 2016, driven by growth in pay-TV subscriptions and advertising. Pay TV is still the largest component, making up just over half of total revenue, at £154bn. The US continued to have the highest TV revenue (£132bn), and the highest revenue per capita (£407). UK revenue was £14.3bn, and its per-capita revenue of £218 was the third highest among our comparator countries, behind the US and Germany (£256). Unlike the US, the UK and Germany both generate a significant proportion of revenues from public funding; the licence fee in Germany generated £112 per person in 2016, compared to £58 in the UK.
A majority of households in the UK have a pay-TV subscription (58%). There is large variation in the take-up of pay TV: it is ubiquitous in the Netherlands (98%), Korea (96%), India (92%) and Sweden (88%), but is only in a third (or less) of homes in Italy, Spain, Brazil and Nigeria.
Take-up of paid on-demand and streaming services has grown across all comparator countries, the US had the highest penetration of subscription video on-demand services (SVoD) among TV households in 2016 (84%), with the UK second at 41% (up 12pp since 2015). Just under a quarter of UK respondents prefer SVoD services as a cheaper alternative to pay-TV, a similar proportion to all the comparator countries.
The UK radio industry was the fourth largest across our comparator countries in 2016, with revenues of £1.2bn, of which 60% were derived from public licence fees. Only in Germany and Sweden did public licence fees contribute a greater proportion of overall radio revenue in 2016 (78% and 77% respectively).
Despite increases in the popularity of music streaming services such as Spotify and Apple Music, the reach of radio across the 17 comparator countries has remained relatively stable over recent years. At least 90% of households listened to radio at least once a week in the UK, Sweden, Poland and China.
In addition to listening via analogue platforms (FM/AM), consumers across the world are listening to digital radio, including via DAB, via digital television platforms and on the internet through connected devices. Of the comparator countries, the UK led the way in the proportion of its population that can now receive DAB digital radio (at 97%, followed by 96% in Germany and 75% in Italy) and also in how many people listen to radio through any digital platform (40% in the UK, followed by 30% in the US and Germany).
Ubiquitous high-speed fixed and mobile networks are enabling consumers around the world to live more of their lives online – communicating, being entertained, buying goods and finding information. Our need to be constantly connected has driven the proliferation of internet-connected devices, and at the forefront is the smartphone. At least three-quarters of internet users in all the countries we surveyed said they personally used a smartphone; 83% in the UK, which was higher than in the US (76%), but lower than in Spain and Italy (each 90%). Smartphones are also the internet devices on which consumers spend the most time. According to comScore, adults in the UK spent an average of 62 hours on their smartphone in August 2017, but those in the US spent the most time, averaging 75 hours. This compares to an average of 27 hours in the UK, and 25 hours in the US, spent using the internet on a laptop or desktop computer.
Smartphones and tablets (personally used by 52% of UK internet users, higher than in most other comparator countries), enable people to connect while on the move. And online video services are also increasingly available on their television sets. Around a third of internet users in the UK (31%) reported having a smart TV (i.e. a TV that can be connected directly to the internet); take-up was highest in Spain (39%) and Germany (37%). Streaming sticks (such as Roku or Amazon Fire) are also widely used to access online services on the TV set; take-up of these was highest in the UK (18%) along with Sweden (20%) and the US (18%).
Despite differences in the specification of postal products around the world, overall trends in postal markets were relatively consistent across our key comparator markets, including the UK. However, there are variations in the speed and depth of some of the changes that the increasing take-up of electronic communications and e-commerce is bringing to the postal markets covered in this report.
Letters volumes declined year on year between 2015 and 2016 across almost all comparator countries. The decline of 5.0% in letters volumes in the UK was greater than in Spain, Germany and Sweden, but letter volumes fell at a steeper rate in Italy, Australia and the Netherlands. There are several reasons behind the differences in these declines, including differences in how governments approach paperless transactions (for example, the federal system in Germany may make it difficult to roll out e-Government initiatives at a national level, compared to more centralised countries). Another variable is the speed of decline in direct mail advertising, as advertisers switch to digital platforms. Interestingly, despite the take-up of online and mobile banking and payments service people in most of the countries we surveyed said they were more likely to receive invoices, bills or statements than other types of mail; this may indicate either consumer preference, or a legal requirement that certain financial documents are sent in paper form.