[2013] Ofcom - The Communications Market Report 2013

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[2013] Ofcom - The Communications Market Report 2013

  1. 1. Ofcom analyst briefingOfcom analyst briefing The CommunicationsThe Communications Market Report 2013 1 August 20131 August 2013
  2. 2. Agenda Market Overview James Thickett, Director of Research Th di i l i d t i Key consumer trends Lisa Etwell, Senior Research Manager, Market Research The audio-visual industries Jane Rumble, Head of Media Research and Market Intelligence Internet and web based content The telecoms industries Internet and web-based content Chris Adams, Head of Market Intelligence for Telecoms and Networks The telecoms industries Chris Adams, Head of Market Intelligence for Telecoms and Networks Post 1 Steven Cape, Senior Analyst, Market Intelligence
  3. 3. Market overviewMarket overview James Thickett, Director of Research 2
  4. 4. Average household spend has increased year on year following years of declineyear-on-year following years of decline £ per month (2012 prices) 122 42 118 87 5.2% 5.2% 5.2% 5.1% 5.2% 5.3% 5% 6% 150 Post Radio p ( p ) 11.74 11 35 11 44 10 92 11 91 28.92 28.20 29.13 28.93 28.91 28.41 122.42 118.87 116.13 113.04 112.75 113.51 3% 4% 100 Television Fixed internet M bil i 48.65 47.74 45.31 44.17 45.21 46.73 11.35 11.44 10.92 11.26 11.91 1% 2% 50 Mobile services Fixed voice % of total spend 27.98 26.62 25.33 24.52 22.48 21.61 0%0 2007 2008 2009 2010 2011 2012 % of total spend 3 Page 31 Figure 1.12 Source: Ofcom / operators/ ONS Notes: Adjusted for RPI
  5. 5. Take-up of key services and devices 100% +1 +/-0 +/-0 -1 +/-0 -2 +6 +12 +2 +13 +8 +2 -8 Year on year percentage point change: 80% 100% 97% 94% 84% 75% 72%40% 60% 72% 53% 53% 51% 44% 24% 22% 7% 5%0% 20% 7% 5%0% Source: Ofcom research, Q1 2013. DAB take-up from RAJAR Q1 2013. 4 Page 25 Figure 1.4
  6. 6. On average, each UK household owns 3 different types of internet-enabled devicesdifferent types of internet-enabled devices 75 100 olds(%) 1+ 2+ 50 75 nofhouseho 3+ 4+ 86% 74% 59% 44% 30% 25 Proportion 5+ 6+ 30% 18% 0 5 Source: Ofcom research, Q1 2013 Page 281 Figure 4.25
  7. 7. Take up of connected devices grows 39% 51% 60% Q1 2012 Q1 2013 39% 22% 24% 40% 14% 11% 5% 7% 20% 0% 6 Source: Ofcom research Page 25 Figure 1.4
  8. 8. Average mobile data use has tripled since 2010 M di thl d t (MB) has tripled since 2010 Median monthly data use (MB) 236 200 250 154 180 150 200 74 50 100 0 July 2010 January 2012 July 2012 January 2013 7 Source: BillMonitor Page 292 Figure 5.10
  9. 9. Fixed call volumes continued to decline and Minutes (billions) mobile call volumes down for a second year in a row Annual Change 141 128 121123 125 124 122 150 -9.2% -3.9% -9.8% -7.2% +5.2% +3.3% -0.8% -1.6% 115 128 121123 125 111 124 103 122 100 2008 50 2008 2009 2010 2011 0 Fixed Mobile 2011 2012 8 Source: Ofcom/operators Page 311 Figure 5.1
  10. 10. The growth in text message volumes has slowedslowed Messages (billions) Outgoing SMS message volumes 128 151 152 150 Messages (billions) 42 53 68 83 89 66 85 104 100 Post-pay 34 43 52 61 68 63 33 42 50 Pre-pay 0 2007 2008 2009 2010 2011 2012 9 Source: Ofcom / operators Page 343 Figure 5.39
  11. 11. Fixed voice and broadband remain most popular bundle of servicespopular bundle of services Proportion of households 6% 7% 50% 53% 57% 60% 60% 70% Other Mobile and broadband 19% 21%2% 2% 2% 2% 3% 1% 1% 1% 1% 1% 2% 2% 1% 5% 5% 6% 9% 8% 6% 40% 39% 46% 50% 40% 50% Fixed voice, broadband, mobile and multi-channel TV Fixed voice, dial-up and multichannel TV 7% 12% 16% 17% 16% 19% 5% 5% 1% 4% 4% 3% 3% 1% 1% 1% 1% 4% 3% 29% 29% 20% 30% Fixed voice and multichannel TV Fixed voice and dial-up Fixed voice broadband and 9% 12% 19% 17% 20% 22% 24% 27% 27% 3% 5%7% 5% 0% 10% Fixed voice, broadband and multichannel TV Fixed voice and broadband 1010 Source: Ofcom research Page 30 Figure 1.10 0% Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013
  12. 12. Key consumer trendsKey consumer trends Lisa Etwell, Senior Research Manager 11
  13. 13. The reinvention of the 1950s living roomThe reinvention of the 1950s living room 12
  14. 14. 13
  15. 15. Returning to the living room… 14
  16. 16. Returning to the living room… 15
  17. 17. Returning to the living room… 16
  18. 18. Returning to the living room… 17
  19. 19. Returning to the living room… 18
  20. 20. …but bringing devices with us 19
  21. 21. …but bringing devices with us 20
  22. 22. …but bringing devices with us 21
  23. 23. …but bringing devices with us 22
  24. 24. …but bringing devices with us 23
  25. 25. We now talk about TV live, while watching Wimbledon Men’s FinalWimbledon Men s Final.... •1 1 million people tweeted worldwide•1.1 million people tweeted worldwide • 2 6 million tweets2.6 million tweets • 80% tweets from mobile devices80% tweets from mobile devices 24 Source: Ofcom research, 2013, All with TV
  26. 26. The audio-visual industriesThe audio visual industries Jane Rumble, Head of Media Research and Market Intelligence 25
  27. 27. TV industry revenues grew by 0.8% in 2012 £11,018 £11,038£11,112 £11,664 £12,288£12,185 2 577 2 586 2,607 2,628 2,719 780 787 721 732 687 722 £9 000m £12,000m Other revenue 3 576 3,470 3,136 3,486 3619 3,547 2,598 2,577 2,586 £6,000m £9,000m BBC income allocated to TV 4 596 4 839 5 251 5 300 3,576 3,470 £3,000m £6,000m Net advertising revenue 4,064 4,277 4,596 4,839 5,251 5,300 £0m 2007 2008 2009 2010 2011 2012 Subscription revenue 26 2007 2008 2009 2010 2011 2012 Page 161 Figure 2.35 Source: Ofcom/broadcasters
  28. 28. NAR falls for the first time since 2009 £4,000m Net advertising revenue (£m) 1 year 5yr CAGR Growth £803m £808m £786 £824m £896m £905m £3,576m £3,471m £3,136m £3,486m £3,619m £3,547m £3,000m £3,500m , Commercial multichannels -2% -0.2% 1% 2% £386m £459m £453m £518m £563m £588m £786m £2,000m £2,500m Commercial PSB portfolio channels M i i l5% 3% 4% 9% £2,387m £2,204m £1,896m £2,144m £2,159m £2,054m £500 £1,000m £1,500m Main commercial PSB channels -5% -3% £0m £500m 2007 2008 2009 2010 2011 2012 27 Source: Ofcom/Broadcasters Page 163 Figure 2.37
  29. 29. TV viewing remains resilient 5 Average TV hours per viewer, per day 4 5 3 3.6 3.6 3.7 3.8 4.0 4.0 4.0 1 2 0 2006 2007 2008 2009 2010 2011 2012 28 Page 181 Heading 2.3.3 Source: BARB
  30. 30. Time-shifted viewing climbs but slower than DVR ownership... 80% p 55% 63% 67% 60% DVR take-up 29% 42% 40% Time-shifted viewing 18% 2% 4% 6% 7% 9% 10% 20% 0% 2007 2008 2009 2010 2011 2012 29 Source: BARB, all individuals
  31. 31. ...and time-shifted viewing varies by genre Proportion of time-shifted viewing, by programme genre: 2012 34 30 30% 40% 21 20 19 19 14 12 10 9 8 810% 20% 30% 10 9 8 8 3 0% 10% ama oaps Arts aries ilms ment sure usic ious en's port fairs ews Dra So A Documenta F Entertainm Hobbies/Leis M Religi Childre S CurrentAff N 30 Source: BARB, DVR Individuals 4+. Total minutes of viewing to each programme genre
  32. 32. The public service broadcasters maintain the greatest share of viewing 12.9% 12.8% 12.3% 11.8% 13.2% 11.4% 12.2% 100% Other Audience share 5 1% 5.6% 5.9% 6.0% 5.9% 5.9% 5.9% 8.7% 7.6% 6.8% 7.4% 8.4% 8.8% 8.3% 4.0% 3.9% 3.9% 4.0% 4.1% 4.0% 4.3%2.9% 2.7% 2.6% 2.7% 1.9% 2.3% 2.4%2.6% 2.7% 2.6% 2.6% 80% Virgin Media Viacom 22 0% 22 3% 22 6% 22 6% 22.7% 23.1% 22.3% 11.2% 11.2% 11.7% 11.5% 11.5% 11.8% 11.5% 5.1% 5 6% 60% UKTV BSkyB Channel 522.0% 22.3% 22.6% 22.6% 22.7% 20% 40% Channel 5 Channel 4 ITV 30.6% 31.2% 31.8% 31.4% 32.3% 32.7% 33.2% 0% 20% 2006 2007 2008 2009 2010 2011 2012 ITV BBC 31 Source: BARB Page 194 Figure 2.70 2006 2007 2008 2009 2010 2011 2012
  33. 33. Seven percent now own a smart TV Top reasons people buy a smart TVTop reasons people buy a smart TV 80 % 51 3340 % 60 % 33 29 25 25 18 18 20 % 40 % 0 % I needed a new TV and I liked the look and I wanted the best screen I like to keep up with the It was the best TV I I like the range of I wanted to stream TV decided to buy one with the latest technology design of the TV latest technology could get for my budget internet connected services available programmes/ films/ video clips straight to my TV 32 Page 133 Figure 2.7 Source: Ofcom research, Q1 2013
  34. 34. Revenues from online delivery models increase by 38% Revenues (£m) Total 252.4 250 300 Annual Growth 38% 142.9 140.6 183.3 150 200 FTV views 27% 22.3 24.5 62.0 32.2 73.5 112.8 21 4 49.6 72.7 50 100 Subscriptions PPV transactions -32% 153% 17.1 39.6 41.0 44.115.0 18.8 21.4 0 50 2007 2008 2009 2010 2011 2012 DTO transactions8% 33 Source: Screen Digest. Page 177 Figure 2.53
  35. 35. Forty percent watch catch up TV services regularlyregularly 53%Video clips either streamed or downloaded 40% Catch up TV services either streamed or downloaded 16%TV and Film services e.g. Netflix/Lovefilm 0% 10% 20% 30% 40% 50% 60% 34 Source: Ofcom research, Feb 2013. Page 138 Figure 2.13
  36. 36. BBC iPlayer remains the most popular TV catch up service Unique audience 12,000 BBC iPlayer Channel4 4oD Demand 5 8,000 10,000 y 4 000 6,000 2,000 4,000 0 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 35 Source: comScore MMX Page 205 Figure 2.83 M S N J M M S N J M M S N J M
  37. 37. Unique visitors to selected online film/TV sites Total unique visitors (thousands) 3,000 1 807 2,467 2,326 2,000 2,500 Apr-12 1,205 1,807 1,636 1,594 1 000 1,500 , Sep-12 Apr-13 370 614 500 1,000 Apr 13 0 36 Page 207 Figure 2.85Source: comScore MMX
  38. 38. Internet and web-based contentInternet and web based content CChris Adams, Head of Market Intelligence for Telecoms and Networks 37
  39. 39. Digital advertising was worth £5.4bn Digital advertising expenditure, by type: 2008 - 2012 ££ millions 854 4,809 5,416 6000 3 168715 677 751 788 854 3,350 3,541 4,097 4000 Other Classified 1,987 2,148 2,345 2,769 3,168715 2000 Classified Search Display 637 709 945 1,143 1,304 0 2008 2009 2010 2011 2012 38 Source: IAB / PwC Digital Adspend 2008 – 2012 Page 266 Figure 4.8
  40. 40. Digital advertising accounted for £623m across TV and press advertising channelsacross TV and press advertising channels Digital advertising expenditure, by channel: 2012 4793 623 5,416Internet Expenditure (£ millions) 3,517 4,376 519 2 127 4,036 4,480 Direct Mail Press brands TV Non-Digital 553 970 2,127 Radio Out of home Direct Mail Digital Overlap 213 0 1000 2000 3000 4000 5000 6000 Cinema 39 Source: AA/Warc Advertising Expenditure Report 2013, http://expenditurereport.warc.com/ Page 265 Figure 4.7
  41. 41. Mobile advertising expenditure more than doubled in 2012doubled in 2012 Mobile advertising expenditure, and mobile internet take-up 526 49 60600 Expenditure (£ millions) UK adult take-up (%) 20320 21 32 39 40400 29 38 84 20320 21 20200 00 2008 2009 2010 2011 2012 Mobile Advertising Expenditure Internet on mobile phone take-up 40 Source: IAB / PwC Digital Adspend 2008 – 2012; Ofcom consumer research. Page 267 Figure 4.10
  42. 42. Mobile internet audiences are growing faster than those on laptops and desktopsfaster than those on laptops and desktops ( ) 60 YoY growth YoY growth 4.1%3.1% Unique audience (millions) 20 40 10.6%16.5% 0 Laptop and desktop audience Mobile audience Digital audience 41 Source: comScore MMX,UK, home and work panel, April 2011 to April 2013; comScore MMX Multi-Platform, UK, home and work panel, January 2013 to April 2013; comScore GSMA MMM, UK, April 2011 to April 2013. Page 276 Figure 4.19
  43. 43. Smartphones and tablets now make up more than 30% of webpage trafficmore than 30% of webpage traffic P ti f i (% f ll i d) Desktop/Laptop Tablets Mobiles Proportion of page views (% of all page views served) 89 4 8March 2012 69 8 23February 2013 0% 20% 40% 60% 80% 100% 42 Source: comScore Device Essentials, March 2012 and February 2013, UK ,Tablet figures are from BETA data. Page 283 Figure 4.27
  44. 44. Despite growth of smartphones and tablets, laptops and desktops are still importantlaptops and desktops are still important Most important device for internet access I t t (%)Internet users (%) Smartphone Tablet 8% Laptop 46% p 15% 46% Desktop 28% 43 Source: Ofcom research, Q1 2013 Page 284 Figure 4.28
  45. 45. 96% of internet users visit Google at least once a month Top 10 most popular internet properties among the digital audience A ti h (%) 96 75 71 7180 100 Active reach (%) 71 71 58 57 52 51 50 49 40 60 80 0 20 Google Sites Microsoft Sites Amazon Sites Facebook BBC Sites Yahoo! Sites Wikimedia Foundation Sites eBay Apple Inc. Glam Media 43.6 34.1 32.5 32.4 26.4 26.2 23.6 23.4 22.7 22.5 Unique Audience (millions) 44 Source: comScore MMX Multi-Platform, UK, April 2013 Page 292 Figure 4.35
  46. 46. Users spend on average 8 hours a month on FacebookFacebook Top 10 sites by time spent among the top 100 internet properties Mi t i it th 458 486 Google Sites Facebook Minutes per visitor per month 105 150 166 Microsoft Sites eBay Yahoo! Sites 66 78 84 90 Perform Sports DAILYMOTION.COM Trader Media Group TUMBLR.COM* 61 66 0 100 200 300 400 500 600 BBC Sites Perform Sports 45 Source: comScore MMX Multi-Platform, UK, April 2013 Page 293 Figure 4.36
  47. 47. Average weekly internet sales peaked at £850m during Christmas 2012£850m during Christmas 2012 GB i t t t il l (£ ) / All t ili l di t ti f l (%) 12 15 800 1000 Average weekly internet sales Internet sales as a proportion of all retailing GB internet retail sales (£m) / All retailing excluding automotive fuel (%) 6 9 12 400 600 800 0 3 6 0 200 400 00 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 46 Source: Office for National Statistics, Retail Sales Statistical Bulletin, May 2009 to May 2013 http://www.ons.gov.uk/ons/rel/rsi/retail-sales/may-2013/rft-rsi-tables-may-2013.xls Page 302 Figure 4.50
  48. 48. Half of all internet users visit Amazon and eBayAmazon and eBay Active reach of selected online retailers on laptop, desktop and mobileActive reach of selected online retailers on laptop, desktop and mobile Active reach (%) 51 52 eBay Amazon 14 18 21 51 Asda Tesco Argos eBay 8 9 9 10 John Lewis ASOS Marks and Spencer Next 8 0 20 40 60 Debenhams 47 Source: comScore MMX Multi-Platform, UK, April 2013 Page 303 Figure 4.51
  49. 49. A fifth of mobile internet users have made h f h i h dpurchases from their handset Mobile retail activities conducted by mobile internet users (%) 22 25Found store location Mobile internet users (%) 17 16 20 21 Compared product prices Purchased goods or services Apr-13 13 16 17 20 Checked product availability Researched product features Apr 13 Apr-12 14 17 0 5 10 15 20 25 30 Found coupons or deals 48 Source: comScore MobiLens, UK, 3 month averages ending April 2013 and April 2012 Page 305 Figure 4.54
  50. 50. The telecoms industryThe telecoms industry CChris Adams, Head of Market Intelligence for Telecoms and Networks 49
  51. 51. SummarySummary • Total telecoms revenue Retail revenues • Total fixed lines but in residential lines • Call volumes while the basket price of residential fixed services • Active mobile subscribers and average mobile data consumption • Over a million additional fixed broadband connections • Superfast broadband take-up has doubled since June 2012 50 Superfast broadband take up has doubled since June 2012
  52. 52. Total telecoms revenue fell by 1.8% in 2012… 50 Revenue (£bn) 15 0 15 5 3.2 3.2 3.3 3.4 3.5 3.5 42.1 42.5 41.2 40.4 39.5 38.8 40 50 Corporate data services Retail mobile 13.6 13.4 12.9 12 5 12 2 12 2 15.0 15.5 14.9 14.9 15.1 15.3 20 30 Retail mobile Retail fixed 10.3 10.5 10.1 9.7 8.8 7.8 12.5 12.2 12.2 0 10 Wholesale S Of / t / IDC 2007 2008 2009 2010 2011 2012 51 Source: Ofcom / operators / IDC Page 332 Figure 5.22
  53. 53. … however, retail revenues increased by 0.9% during the year Revenue (£bn) 2.7 2.8 2.6 2 6 2 5 2 4 0.8 1.2 1.5 1.7 2.0 2.4 28.5 28.9 27.8 27.4 27.3 27.530 Mobile data Revenue (£bn) 11.5 11.5 10.9 10.6 10.5 10.6 2.6 2.5 2.4 20 Mobile messaging Mobile access & voice 10.4 10.2 9.6 9.3 8.8 8.5 3.2 3.2 3.3 3.2 3.4 3.710 voice Broadband and narrowband Fixed voice 0 2007 2008 2009 2010 2011 2012 ed o ce 52 Source: Ofcom / operators Page 333 Figure 5.23
  54. 54. Average household telecoms spend increased after a period of decline 3 8% 3 8% £ per month (2012 prices) As a % of total expenditure 11 4 £88.38 £85.71 £82.07 £79 62 £78 94 £80.25 3.8% 3.7% 3.7% 3.6% 3.7% 3.8% 3% 4% 100 Internet & broadband 48.65 47.74 45 31 44 17 45 21 46 73 11.74 11.35 11.44 10.92 11.26 11.91 £79.62 £78.94 £80.25 2% 50 Mobile voice & data 27.98 26.62 25.33 24.52 22.48 21.61 45.31 44.17 45.21 46.73 1% Fixed voice As a proportion of 0%0 2007 2008 2009 2010 2011 2012 As a proportion of total household spend 53 Source: Ofcom / operators / ONS Page 354 Figure 5.50
  55. 55. Total call volumes continued to decline in 2012, falling by 4.2% during the year, g y g y Billions of minutes 25 28 29 27 21 254 256 249 248 235 225 300 Billions of minutes 80 87 91 98 102 104 29 27 21 18 200 Pre-pay mobile Post-pay mobile 149 141 128 123 111 103 0 100 p y Fixed 0 2007 2008 2009 2010 2011 2012 54 Source: Ofcom / operators Page 333 Figure 5.24
  56. 56. The average cost of a mobile-originated call minute is 5% lower than for fixed calls 15 Pence per minute 7 6 7.9 8.1 8.1 8.6 9.1 10.9 10.0 9.0 8.5 8.5 8.6 10 Fixed 7.6 7.9 0 5 Mobile 0 2007 2008 2009 2010 2011 2012 Source: Ofcom / operators Page 356 Figure 5.53
  57. 57. Fixed voiceFixed voice
  58. 58. The total number of fixed lines fell in 2012, but residential lines increased by 2.1%y Lines (millions) 34.5 34.2 33.5 33.4 33.3 33.1 40 10.9 10.7 10.2 9.7 9.4 8.8 20 30 Business 23.6 23.5 23.4 23.8 23.9 24.4 10 20 Residential 0 2007 2008 2009 2010 2011 2012 57 Page 338 Figure 5.31Source: Ofcom / operators
  59. 59. Fixed voice volumes fell by 7.7% in 2012 Minutes (billions) 6 9 31.0 28.2 23 7 21 7 149.5 140.7 127.9 123.0 111.1 102 5 150 Others I i l14.6 13.5 12.3 11.8 10.3 9.4 6.9 7.1 6.7 6.7 6.5 5.8 23.7 21.7 19.7 18.4 102.5 100 International calls Calls to mobiles 97.0 91.9 85.1 82.8 74.6 68.9 50 mobiles UK geographic calls 0 2007 2008 2009 2010 2011 2012 58 Source: Ofcom / operators Page 336 Figure 5.29
  60. 60. Use of alternatives to traditional voice calls are increasing P ti f d t ( t) g 80 68 80 71 81 78 80 100 2011 Proportion of respondents (per cent) 68 47 52 22 54 28 24 40 60 2011 2012 19 12 22 17 24 0 20 Mobile Email Social networking VoIP Mobile instant 2013 Mobile messaging Email Social networking sites VoIP Mobile instant messaging S Of h d t t Q1 f h 59 Source: Ofcom research, data as at Q1 of each year Page 358 Figure 5.56
  61. 61. The price of a basket of residential fixed voice services increased in 2012 £ per month (2012 prices) 1.75 1.44 1.22 1.11 0.91 0.82 2.36 2.50 2.55 2.60 2.52 2.34 22.44 22.18 21.72 21.69 21.17 21.27 20 25 Calls to mobiles 18.33 18.25 17.95 17.98 17.74 18.11 10 15 International calls Fixed access & 0 5 2007 2008 2009 2010 2011 2012 Fixed access & UK geographic calls 2007 2008 2009 2010 2011 2012 S Of / t -1.2% -1.1% -2.1% -0.1% -2.4% +0.5% Annual change 60 Source: Ofcom / operators Page 360 Figure 5.58
  62. 62. Mobile telecomsMobile telecoms
  63. 63. Smartphone take-up is driving shifts in the mobile market Number of active mobile subscribers, by pre-pay and post-pay 76 5 80.3 81.2 81.6 82.7 100 Connections (millions) 27.4 30.2 33.2 37.1 40.2 43.7 73.8 76.5 60 80 Post-pay 46.4 46.3 47.1 44.0 41.4 39.020 40 Pre-pay 0 2007 2008 2009 2010 2011 2012 62 Source: Ofcom / operators Page 346 Figure 5.42
  64. 64. Most new contracts have a 24-month minimum term Proportion of sales (%) 68 67 63 2 3 5 7 13 26 41 47 50 63 69 70 68 70 69 70 67 68 69 72 67 4 60 80 100 Other 24 months 13 12 8 5 3 3 3 3 4 7 8 8 10 9 11 13 16 17 18 15 18 72 68 67 63 60 50 35 28 24 12 6 4 3 3 2 3 2 69 70 70 69 70 67 68 69 72 20 40 60 18 months 12 months 10 15 19 24 24 21 20 21 21 18 17 17 19 18 18 14 14 13 12 12 14 13 12 3 3 7 8 8 13 16 17 18 15 0 20 2008 Q2 Q3 Q4 2009 Q2 Q3 Q4 2010 Q2 Q3 Q4 2011 Q2 Q3 Q4 2012 Q2 Q3 Q4 2013 1 month Q12 Q12 Q12 Q12 Q12 Q12 63 Source: GfK Retail and Technology UK Ltd Page 374 Figure 5.74
  65. 65. ARPU increased slightly as subscribers shifted to post-paid tariffs in 2012 Average revenue per user per month (£) 17.40 17.15 16.03 15.47 15.43 15.57 15 20 Average revenue per user per month (£) 10 15 0 5 0 2007 2008 2009 2010 2011 2012 64 Source: Ofcom / operators Page 341 Figure 5.36
  66. 66. Over 25% of mobile users download apps or Use instant messagingg g Proportion of mobile users using service (per cent) 40 47 3640 50 2011 Proportion of mobile users using service (per cent) 28 17 12 13 29 19 19 29 26 20 30 2012 0 10 Web browsing Emailing Downloading apps Instant messaging 2013 65 Source: Ofcom research, data as at Q1 of each year Page 379 Figure 5.82
  67. 67. Fixed broadband servicesFixed broadband services
  68. 68. Proportion of homes using mobile broadband fell in the year to Q1 2013y Household penetration of fixed and mobile broadbandp 100% 68% Total broadband take-up75%74% 40% 60% 80% Mobile only Fixed and mobile 0% 20% 40% Fixed only Source: Ofcom research 0% 2009 2011 2013 67 Source: Ofcom research Page 358 Figure 5.55
  69. 69. There were over a million additional fixed broadband connections in 2012 Total fixed broadband connections (millions) 4 1 4 30.1 0.4 1.1 17.3 18.2 19.5 20.6 21.7 20 25 Total fixed broadband connections (millions) 3 7 5.5 6.4 7.5 7.9 8.8 3.4 3.7 3.8 4.0 4.1 4.30.1 15.6 17.3 10 15 Other (inc. FTTx) Cable LLU ADSL 8.4 8.1 8.0 7.8 8.1 7.5 3.7 5 10 LLU ADSL Non-LLU ADSL 0 2007 2008 2009 2010 2011 2012 Source: Ofcom / operators 68 Source: Ofcom / operators Page 339 Figure 5.33
  70. 70. Take-up of superfast broadband services has doubled since June 2012 205 Connections (millions) Per cent 11 0 15.0 17.5 15 20 4 5 Superfast connections (left axis) 2 4 3.3 3.8 2 9 4.2 5.3 6.5 8.9 11.0 5 10 2 3 (left axis) Superfast as a % of all 0.1 0.1 0.1 0.2 0.4 0.6 0.9 1.1 1.4 1.9 2.4 0.3 0.4 0.5 0.9 1.8 2.9 0 5 0 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 connections (right axis) 2010Q Q Q Q 2011Q Q Q Q 2012Q Q Q Q 2013Q 69 Source: Ofcom / operators. Superfast is defined as a package having a headline speed greater than 30Mb/s Page 323 Figure 5.13
  71. 71. Superfast broadband driving home-working 3%100% Change in use, compared to previous broadband connection 27% 35% 34% 45% 46% 3% 3% 80% 100% Much decreased use 26% 28% 34% 46% 40% 60% Slightly decreased use Use about the same 46% 36% 30% 22% 27% 30% 24% 20% 40% Slightly increased use M h i d 30% 22% 27% 0% Streaming HD TV programmes films Streaming TV programmes or films Uploading to cloud services Uploading video content Working from home Much increased use 70 Source: Ofcom research, 2013
  72. 72. Average price of a fixed broadband connection increased in real terms in 2012 £ per month -13 3% -5 1% -8 9%-11 5% -0 1% +1 1% Annual 20 25 13.3% 5.1% 8.9%11.5% 0.1% +1.1% change £21.17 £18.73 £17.77 £16.20 £16.17 £16.35 10 15 £16.20 £16.17 £16.35 0 5 2007 2008 2009 2010 2011 20122007 2008 2009 2010 2011 2012 Average actual speed 3.6Mbit/s (November) 4.1Mbit/s (April) 6.2Mbit/s (November) 7.6Mbit/s (November) 12.0Mbit/s (November) n/a 71 Source: Ofcom / operators Page 365 Figure 5.64
  73. 73. 4G4G
  74. 74. 30% of smartphone users intend to upgrade to 4G after their contract expirespg p % of respondents 14% 22% 16% 14% % Strongly agree Slightly agree None Sli htl di 34% 14% Slightly disagree Strongly disagree 73 Source: Ofcom research, April 2013 Page 314 Figure 5.4
  75. 75. PostPost S CSteven Cape, Senior Analyst, Market Intelligence 74
  76. 76. Mail volumes have declined by 5.9% Volume (million items) 21,587 20,553 18,632 17,52720,000 25,000 Total mail 17,527 16,657 15,675 17,946 15,489 12,528 10,519 9,502 8,444 10 000 15,000 Royal Mail end-to-end, 3 641 5,064 6,092 6,996 7,147 7,213 5,000 10,000 end to end Total access 3,641 0 2007 2008 2009 2010 2011 2012 Source: Ofcom / operators 75 Source: Ofcom / operators Page 394 Figure 6.11
  77. 77. But total revenues have risen by 7.2% Revenue (£m) 6,843 6,764 6,661 6,517 6,704 7,185 7,0226 000 8,000 Total mail 6,755 6,653 6,522 6,371 6,551 , 6,254 5,922 5,601 5,281 5,279 5,569 4,000 6,000 Royal Mail total mail Royal Mail end-to- d 501 731 921 1,090 1,272 1,453 88 112 2,000 end Royal Mail access 88 112 140 142 150 157 0 2007 2008 2009 2010 2011 2012 Access operators Source: Ofcom / operators 76 Page 394 Figure 6.10 p
  78. 78. Despite increases, the volume of mail delivered by other operators still accountsdelivered by other operators still accounts for less than 0.2% of total volumes 20 Volume (million items) 15 11.8 11.3 8 5 18.0 5 10 8.5 0 5 2009 2010 2011 2012 7777 2009 2010 2011 2012 Page 396 Figure 6.14Source: Ofcom / operators
  79. 79. The growth in access volumes continues tog slow while its contribution to total mail volumes grows Proportion of access in total mail volume Year on year growth rate of access volumes 71.8% 39.1% 20.3% 14.8% 2.2% 0.9% 40% 50% Proportion of access in total mail volume 17% 25% 33% 40% 43% 46% 10% 20% 30% 17% 0% 10% 2007 2008 2009 2010 2011 2012 78 Page 395 Figure 6.12Source: Ofcom / operators
  80. 80. But despite the continued growth in accessBut despite the continued growth in access, the majority of business senders use only Royal Mail Proportion of respondents (%) 24% 19% 28% 31% 2% 2% 2% 1% 80% 100% Other provider only % 78%40% 60% only Royal Mail + 73% 78% 69% 68% 0% 20% 40% other provider Royal Mail0% All businesses Administrative only Critical for communications Core to business operations Royal Mail only Role of post in the organisation 79 Source: Ofcom research, Q3 2012-Q2 2013 Role of post in the organisation Page 411 Figure 6.27
  81. 81. And the majority of mail received byAnd the majority of mail received by consumers is sent by businesses 90 Proportion of respondents (%) 81 30 60 46 35 17 32 26 28 33 0 Direct Transactional Catalogues / Subscription Larger Smaller Personal Invitations / mail mail g brochures p magazines g parcels parcels letters greetings cards Business to consumer Parcels Consumer to consumer 8080 Source: Ofcom research, Q3 2012-Q2 2013 Page 405 Figure 6.22
  82. 82. Questions?Questions? 81

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