Last week, for the seventh year, the UK’s communication industry regulator Ofcom published its annual 380-page “State of the Nation” opus on all facets of the domestic communication market. The report contains data and analysis on broadcast television and radio, broadband and fixed and mobile telephony. It also offers insights into how people are using the internet and converged devices to access audio-visual and audio content.

The report also sets out a range of data from the television and audio-visual content industries and the radio and audio sector. It continues with an analysis of internet take-up and the use of web-based content and concludes with an assessment of telecoms and networks. Each section now also includes analysis of converged media, devices and consumption.

Here are the Key Points by sector.

TELEVISION & AUDIOVISUAL

UK television broadcasters generated revenue of £11.1bn in 2009, a fall of £49m (-0.4%). Growing subscription revenues – up 7.5% to £4.6bn – failed to offset declining net advertising revenue (NAR), which fell by 9.6% to £3.1bn. The BBC’s estimated spending on TV services grew by 1.5% to £2.7bn.

The commercial public service broadcasters (PSBs) – ITV1 and the Channel 3 licensees, GMTV1, Channel 4, Five and S4C – jointly saw the steepest decline in advertising revenue. during 2009, down 14% to £1.9bn.

Since 2004, the BBC’s share of total TV revenue has remained broadly flat., at around 24%, while subscriptions’ share grew by seven percentage points to 41%. Since 2004, advertising’s share fell by six percentage points to 28%.

Spend on first-run originated programming for the five main PSB channels fell in 2009, down by 7.4% to £2.41bn. Over the last five years the decline has been 20.9%.

The number of television channels broadcasting in the UK declined for the first time, from 495 at the end of 2008 to 490 in 2009.

The average number of hours of television watched by individuals in the UK has increased slightly over the past five years, up by 3% from 3.7 hours a day in 2004 to 3.8 hours a day in 2009. In 2009, the growth in combined share of the PSBs and their portfolios began to plateau, falling from 71.8% in 2008 to 71.6%.

The viewing share of multichannel broadcasters continued to increase in 2009, passing the 40% mark for the first time to reach 41% of TV viewing.

Since 2006, the proportion of all TV viewing done via time-shifting devices has more than tripled, from 1.7% to 5.9%, according to BARB. A major factor behind this increase was the growth in popularity of digital video recorders (DVR). In homes that had a DVR, on average 15.1% of total viewing was recorded.

The growth in online catch-up TV services continued in 2009, as consumers increasingly watched internet-based content via their PC. Ofcom research in Q1 2010 found that 31% of adults with the internet had watched catch-up TV, up from 23% in Q1 2009, but this still constitutes a small amount of overall viewing.

The average person spends 252 minutes per week watching non-linear (also known as on-demand) audio-visual content across a variety of platforms and devices, Ofcom research has found. On-demand content accounts for 17% of the average consumer’s 1,461 total minutes of weekly audio-visual viewing.

Around 5.1 million homes had access to high-definition TV channels by the end of Q2 2010, up from 1.9 million in Q1 2009. HDTV is now showing mass-market appeal, as sales of HD-ready TV sets exceeded 24 million.

Independent UK producers commanded a growing share of the PSB origination spend total. The independents’ share of available production spending grew from 40% in 2005 to 46% in 2009.

RADIO & AUDIO

Total UK radio industry funding stood at £1.1bn in 2009, down by 4.0% on 2008. This came as a result of a fall in commercial radio revenues of 11.5% to £432m, while we estimate that BBC radio spend rose by 1.6% to £660m.

BBC expenditure on radio services rose by 26% over the five years to 2009, while commercial revenues fell by 22% over the same period. Taken together, radio industry income increased 1.5% in nominal terms over five years.

The number of radio listeners reached a new high of 90.6% (46.8 million adults) listening weekly in Q2 2010 - the highest recorded figure since a new RAJAR research methodology was introduced in 1999. It was up by almost half a million in a year and was also up by 300,000 listeners on Q1 2010. The combined reach of BBC stations was 67.0% in Q2 2010 and 63.7% for commercial radio.

Despite there being more radio listeners, the time each spent listening has fallen over the past five years. Listening hours were down by 5.3% in the five years to 2009, and by 0.4% on 2008. Total listening hours to all the BBC’s stations were down by 2.2% over five years and by 1.2% during 2009. By contrast, all commercial radio listener hours were stable over the year, but down 10.1% over five years.

Within this overall pattern of reductions, listening to national radio stations has risen, while local radio hours have fallen. BBC network radio listening hours have risen by 3.7% in five years; national commercial hours were up 1.3%. By comparison, local BBC station weekly hours fell by 25% and local commercial by 13%.

By Q2 2010, digital radio platforms accounted for almost a quarter (24.6%) of all radio listening hours, according to RAJAR. This was up by 3.5 percentage points from 21.1% in Q2 2009. The majority (64%) of digital listening was through a DAB digital radio set, which accounted for 15.8% of all radio listening. Digital television accounted for a further 4.1% and the internet 2.9%.

Cumulative sales of DAB digital radio sets reached 11 million by June 2010, up from 9 million a year before. RAJAR estimates that over a third (35.3%) of UK adults owned a DAB set by the end of Q2 2010, up by 2.3 percentage points in a year. Active radio sets in cars and homes were estimated to be well over 100 million, of which 10%-11% included a DAB digital radio tuner.

Younger adults (16-24s) spend twice as much time as older age groups listening to audio content through hand-held devices. Among 16-24s, almost a quarter (24%) of all audio consumption time was undertaken using a hand helddevice, compared to 11% on average across all adults.

Downloading audio was also most popular among the younger 16-24 age group, accounting for 15% of all the time they spent listening to audio or radio, (4% on average for all adults). Downloading audio via a mobile phone accounted for 7% of their audio consumption compared to 1% on average.

In the music industry, 19% of all recorded music revenues were generated by digital products in 2009. The decline in overall recorded music revenues slowed to just 0.8% in 2009. The slowing rate of reduction was aided by a 27% increase in singles sales alongside the growing contribution of digital sales.

INTERNET & WEB-BASED CONTENT

Internet take-up is almost at three-quarters of UK households. Internet take-up has now reached 73%, just below penetration of PCs (76%). Total broadband takeup is now 71%, with fixed broadband at 65% and mobile broadband at 15%.

Mobile broadband is driving broadband growth. Broadband take-up grew by three percentage points to 71% in Q1 2010, but this was driven by mobile broadband, as fixed remained flat at 65%.

Internet take-up is increasing among older age-groups. Take-up also grew rapidly among 55-64s (by 6pp) and 65-74s (by 7pp). Eight per cent of the male online universe is aged 65+, compared to just 3% for females. In contrast, 45% of the female online unique audience is under 35, but the corresponding figure among males is only 38%.

Two-thirds of internet households (66%) use a wireless router. Take-up increased by 14 percentage points on Q1 2009, and since Q1 2007 has nearly doubled, enabling users to connect multiple devices to the internet.

Social networking now accounts for nearly a quarter (23%) of all time spent online. This has been driven by the growth of Facebook, whose reach rose by 31% to reach a unique monthly audience of nearly 25 million in the year to May 2010.

Nearly a quarter of adults (23%) access content online on their mobile phones. The growth in smartphone adoption and fast data networks has driven increases in the number of consumers using mobile networks to access content. In Q1 2010 23% of adults used mobile data services in Q1 2010, up from 20% in Q1 2009. Among 15-24s, use of mobile data services rose to 45%.

Surfing the web is the most popular mobile internet activity. Our research shows that 18% of mobile phone users access the internet using their handsets, a five percentage point increase since Q2 2007.

Over half 15-24s have played games or downloaded music or film online. Thirty-nine per cent of internet users reported playing games online, compared to 38% who downloaded music or film online. Among 15-24 year-olds the figure for both activities rises to 55%.

Most internet users have limited interest in user-generated content. Aside from uploading photos and social networking, most people appear uninterested in user-generated content. Sixty-four per cent of internet users said they had no interest in the main forms of UGC (which include blogging and uploading videos).

Online advertising grew through the downturn to reach £3.5bn in 2009. The 6% increase on 2008 was driven by growth in search (8%) and display (11%), but other classified fell (-5%) as the recession hit the property, automotive and recruitment sectors.

TELECOMS & NETWORKS

Use of telecoms services continued to grow in 2009. Total mobile call volumes increased by 7% in 2009 (page 319), while the number of text messages increased by 25% (page 325). There was also a massive increase in data use: we estimate that total data volumes over the UK’s internet infrastructure increased by 68% during 2009, and data volumes over mobile networks increased by 240%.

But total retail revenues fell. Operator-reported retail telecoms revenue declined by 2.6% in 2009 to £30.4bn (the lowest annual figure since 2006), the first time since Oftel began collecting data on the telecoms industry in the 1990s. This was driven by the first year-on-year fall in mobile voice revenues (down 3.5%) combined with a small fall in fixed-line internet access revenues and an acceleration in the decline in fixed-voice revenues.

Average household spend on telecoms services fell by 3.7% to £62.10 in 2009. This represented 3.0% of average household spend, down from 3.2% in 2008, with most of this drop being due to falling mobile prices. Overall, household spend on telecoms services has fallen by over 13% in real terms in the past five years, despite a 10% increase in call volumes (fixed and mobile) and 50% growth in the number of internet connections over the same period.

Broadband speeds increased – but so did the gap between advertised and actual speeds. Average actual speeds increased from 4.1Mbit/s in April 2009 to 5.2Mbit/s in May 2010; however, this was just 46% of the average ‘up to’ advertised speed (page 288). Nearly half the population could have access to superfast broadband, but fewer than 0.5% of households did by the end of 2009.

The average cost of a residential fixed-line broadband connection fell by a third between 2005 and 2009. Despite increasing speeds, average broadband costs have fallen year on year. The average monthly cost was £13.31 in 2009.

Mobile broadband is driving increases in internet take-up. The proportion of households having mobile broadband as their only broadband connection increased from 3% of all households in Q1 2009 to 6% in Q1 2010. Fixed-line broadband takeup plateaued at 65%, households taking both fixed and mobile broadband was stable at 9% and the proportion of households with dial-up internet fell to 2%.

Adoption of 3G mobiles accelerates. Nearly one in three mobile connections were using 3G at the end of 2009, as total 3G connections increased by 39% during the year to 25.5 million.

Two-year mobile contracts are becoming standard. In Q2 2010, 63% of new mobile contracts were for 24 months, compared to 26% a year previously and just 3% in Q2 2008.

Use of text messaging continues to increase. The number of text messages sent increased by 25% in 2009 when over 100 billion texts were sent - equivalent to 1,700 for every person in the UK, and up 25% on 2008 and 290% on 2004.










The full report can be downloaded here.

Story filed 22.08.01