The Communications Market Report: International
This is the eleventh year that Ofcom has published the International Communications Market Report. The report benchmarks the UK communications sector against 17 comparator countries.
UK communications sector revenues were the second highest in Europe, with people in the UK among the heaviest users of smartphones and the most avid users of catch-up services.
The communications sector’s total global revenue (incorporating the telecoms, television, postal and radio sectors) was £1,166bn in 2015. Telecoms and TV were the largest sectors, contributing £802bn and £263bn respectively.
UK communications sector revenues remained the fifth highest of our comparator countries. In 2015, as in recent years, the three largest communications markets by revenue were the US, China and Japan. Outside the top three, total UK revenue was second only to Germany.
The UK generated £758 per head across our communications industries in 2015, which was the highest of the EU5. This figure was £315 lower than the US, which once again had the highest revenue per head of our comparator countries, at £1,073 per person.
Global advertising expenditure was £308bn in 2015. TV accounted for the largest amount of advertising expenditure, at £106bn, followed by the internet (£102bn).
Of the £262.9bn that the television industry generated in 2015, subscription revenues contributed the largest proportion of revenue, at £137.4bn. Broadcast television advertising revenue accounted for £105.9bn, with public funding revenue at £19.6bn in 2015.
In the radio industry, satellite subscription revenue stood at £2.7bn in 2015. Revenue from radio advertising was £21.8bn in 2015, with public licence fee revenue at £4.2bn.
The UK ranked second among our six comparator countries in 2016, unchanged since 2015, with only France performing better when looking at a combination of stand-alone, bundled and ‘lowest-available’ prices.
Low prices in the UK were largely due to comparatively low-priced mobile phone services, particularly for tariffs that include a high data allowance.
In addition to low mobile prices, the UK also benefited from the cheapest ‘weighted average’ and ‘lowest-available’ dual-play standard broadband and fixed voice bundle prices, among our comparator countries in 2016. However, it compared less well for similar bundles of services that included a superfast broadband connection.
In general, UK stand-alone and bundle prices increased in nominal terms in 2016, although the UK did benefit from falling prices for higher-use mobile services. There were similar patterns in other countries, although France and Italy benefited from notable declines in dual-play (fixed voice and fixed broadband) bundles, and pay-TV prices.
Mobile services made up the greatest proportion of telecoms revenues in most of our comparator countries. Total retail telecoms revenues across our comparator countries were £597bn in 2015, with mobile voice and mobile data services contributing almost two-thirds (64%) of this total.
The UK had the highest number of fixed voice connections per 100 people of all comparator countries The UK had 62 fixed voice connections per 100 people (including managed VoIP) in 2015, up one connection since 2014. The UK was one of only three comparator countries where fixed voice take-up increased.
Household penetration of fixed broadband reached 80% in the UK, an increase of 3 percentage points since 2014, putting the UK fifth among our comparator countries.
Seventy-two per cent of respondents in the UK were satisfied with the reliability of their household fixed broadband services Overall satisfaction was 70% or higher in five out of nine of the comparator countries in which our consumer research took place, with the UK at 76%.
In the majority of our comparator countries, the number of mobile connections per 100 people was up in 2015; it ranged from 77 in India to 175 in Russia. The UK was ninth of 18 comparator countries, with 131 mobile connections per 100 people.
Most comparator countries also saw an increase in the number of average mobile call minutes per person In the UK, average use increased by 3.3% to 184 minutes per person in 2015, putting the UK ninth among the comparator countries.
However, the average number of monthly mobile messages per person decreased in most of our comparator countries. The UK had the third highest average mobile messaging use, with 131 messages per person per month.
Global TV revenues from broadcast advertising, channel subscription and public funding including licence fees reached £263bn in 2015. Subscription revenues continue to make up over half of total revenue, at £137bn. TV revenue per capita in the UK was £221 in 2015, the third highest of our comparator countries after Germany (£289) and the US (£351).
South Korea had the highest take-up of pay TV at 99%, compared to the UK which had one of the lowest of our comparator countries at 62%. Just over half of UK television homes received an HD service in 2015 (51%), putting the UK in tenth position among our 18 comparator countries.
Declines in viewing to broadcast TV occurred across many countries. The UK experienced a year-on-year decline in viewing to broadcast TV (-1.9%), with people watching an average of 3 hours 36 minutes of TV each day. Within the UK, time-shifted viewing contributed 29 minutes, or 13%, to total daily viewing. This figure, however, was not enough to counter-balance the overall decline in live viewing.
Many of our comparator countries also experienced a decline in viewing to broadcast TV. This decrease is likely to be partly driven by the increased availability and popularity of over-the-top services, such as Netflix and Amazon Prime Video.
The UK ranked third for online TV and video as revenues grew across each of our comparator countries. Although still small relative to the overall TV market, online TV and video revenue in the UK was £1.35bn in 2015. Per capita, the UK generated £20.81 of online TV and video revenue, compared to the US at £29.03.
The UK had the third largest proportion of subscribers to Video on Demand services Take-up stood at 30% of UK television households in 2015, compared to 21% in 2014. Recently released films remained the most watched content on services such as Netflix and Amazon Prime Video, cited by 69% of UK subscribers, but original programming made by the service provider is gaining traction as 60% cited this as content they watch.
The UK’s radio industry is the fourth largest among our 18 comparator countries, generating £1.2bn in 2015. At £19.30, the UK had the fifth highest total revenue per head, behind the US, Germany, Sweden and Australia. Overall, the worldwide radio industry generated £28.6bn in 2015, with more than three-quarters of worldwide radio revenue coming from advertising.
The BBC, through the licence fee, contributed 57% to overall UK radio industry revenue in 2015; only in Germany and Sweden did public licence fee money contribute a greater proportion of overall radio revenue in 2015.
At least nine in ten UK households listen to radio at least once a week. Digital radio has proved to be particularly successful in the UK, with both coverage and set take-up ranking highest among the comparator countries throughout 2016 (at 97% and 33% respectively).
Consumers listen to audio content via a range of formats. Streaming services, such as Spotify and Apple Music, podcasts and physical media like vinyl, continue to be used across our comparator countries.
In the UK, more than one in four respondents said they consumed audio through a portable media player (such as a smartphone) or a physical media player (such as a hi-fi or cassette player), while the weekly use of such devices was claimed by at least one in three people in Italy.
Portable devices were more popular than desktops in all the comparator countries. In the UK, 78% of consumers have access to a laptop and 72% use a smartphone, but only 53% of consumers have desktop computers.
Among our comparators, the UK stands relatively high on tablet take-up, at 60%, which is significantly higher than take-up in France, Germany, the US, Japan and Australia. However, the UK is comparatively low on smartphones; take-up is lower than in the majority of countries, with the exception of the US and Japan.
Smartphones stand out as being the device of choice for consumers to use to spend time online. In the US, smartphone users spent 87 hours per month browsing on their smartphones, compared to 34 hours on their laptops or desktops. UK smartphone users spent the second-longest time browsing online, at 66 hours per month.
The popularity of smartphones is reflected in substantial year-on-year increases in mobile advertising spend per head, with the UK maintaining its position in second place (£39.63 in 2015) behind the US (£42.02). China had the greatest share of all advertising expenditure on the internet; 53% of all its advertising spend was online, overtaking the UK (48%) and Sweden (48%).
Google and Facebook were among the most-visited online entities among the majority of comparator countries. In the UK, 73% use social networking sites at least once a week. In Italy and Spain, more than eight in ten consumers access social networks every week. In the UK, the US, Italy and Spain, Facebook is the second most visited online entity accessed on a smartphone or tablet.
The UK had the fifth highest per-capita mail volume of all the comparator countries. Volume per head was highest in the US; almost double that in Sweden, which had the second highest per-capita letter mail volume. In the UK, 190 letters were received per person in 2015, the fifth highest among the comparator countries. The US also had the highest mail volume in absolute terms, at 149 billion items, 12 times higher than the UK.
The UK is among the cheapest countries in Europe in which to send a large letter. The price of a First Class large letter is £1.27, second cheapest after Poland, where it costs less than £1. However, the UK is one of the most expensive countries in which to send a First Class small letter (64p), after Italy and Australia. However, sending a medium-sized letter in the UK costs the same as sending a small one, thus making it less expensive than most other developed markets.
Japan had the highest parcel volume per head of population, more than double that in the UK (71 and 31 respectively). The high per-capita parcel volumes in Japan are likely to be due to the large number of parcels sent between businesses. The UK ranked fifth among the comparator countries, higher than most other European countries for which we have comparable data (only Germany had a higher number of parcels per person).
Seven in ten adults in the UK have sent an item of post in the past month, on average sending around 3.9 items per month. In particular, people in the UK are among the most likely to have sent an invitation/greetings card.
Around six in ten people in the UK say they have made a purchase from an overseas retailer in the past year. One of the main problems encountered when making purchases from abroad is the long delivery time; four in ten people in the UK cite this as a problem.
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