The Market in Context

Home , BBC Radio 6 Music, ITV Play, TalkTalk Group, Virgin TV

The market in context

UK CMR 2011 Figure 1.1 Communications industry revenue

1 year 5 year 60 52.6 54.3 54.8 53.4 53.4 growth CAGR 50.8 1.2 1.1 1.1 1.1 1.1 1.1 11.0 11.2 Total 10.5 10.6 11.1 11.8 0% 1.0% 40

nominal (£bn) Radio 2.3% -0.6% –

42.1 42.5 41.2 20 39.2 40.8 40.5 TV 6.2% 2.4% Revenue Telecoms -1.7% 0.7% 0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes licence fee allocation for radio and TV

1 Figure 1.2 Digital communications service availability, 2008 and 2009

UK UK Platform UK 2010 England Scotland Wales N Ireland 2009 change Fixed line 100% 100% 0pp 100% 100% 100% 100% 2G mobile1 96% - n/a 99% 85% 84% 87% 3G mobile2 95% - n/a 99% 84% 82% 54% Cable broadband3 48% 48% 0pp 51% 37% 23% 30% LLU4 89% 85% 4pp 91% 81% 84% 75% FTTC5 23% - - 23% 8% 14% 81% Digital satellite TV 98% 98% 0 - - - - Digital terrestrial TV6 85% 81% 4pp 85% 99% 98% 66% DAB BBC Network7 92% - - 94% 87% 78% 79%

DAB commercial 85% - - 90% 75% 59% - Sources:network Ofcom (Digital and: One)8 Sources: Ofcom and operators: 1. Based on Q2 2011. Proportion of population living in postal districts where at least one operator reports at least 90% 2G area coverage. Source from GSM Association / Europa Technologies 2. Based on Q2 2011. Proportion of population living in postal districts where at least one operator reports at least 90% 3G area coverage. Source from GSM Association / Europa Technologies. Data are not comparable with previous report due to changes made by the mobile operators in the methodology used to calculate coverage 3. Proportion of homes passed by Virgin Media’s cable broadband network, June 2010; 4. Proportion of homes connected to an LLU-enabled BT local exchange, December 2010; 5. Proportion of homes connected to an FTTC-enabled BT local exchange, June 2011; 2 6 Calculations based on the estimated proportion of homes that can now receive at least 17 channels versus the coverage of the DTT signal prio Figure 1.3

See Figure 4.14 – same chart

3 Figure 1.4 Digital radio listening by age group, (monthly)

Proportion of households

100% 80% 60% 96% 91% 40% 54% 46% 20% 39% 32% 32% 12% 27% 4% 2% 0%

Source: Ofcom research, Q1 2011 Base: All who listen to the radio (n=2811) Q: Use digital radio at least monthly

4 Figure 1.5 Take-up of bundled services over time Proportion of households 60% 53% 50% 50% 46% 11% 10% Other 40% 39% 7% 2% 40% 2% 5% 6% 2% Fixed voice, dial-up and 1% multichannel TV 29% 29% 3% 3% 16% 30% 1% 17% Fixed voice and multichannel 3% 5% 4% 1% 20% TV 1% 4% 7% 12% 4% Fixed voice and dial-up 20% 5% 7% 5% Fixed voice, broadband and 22% 24% 10% 3% 19% multichannel TV 17% 16% 12% 9% Fixed voice and broadband 0% Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011

QG1. Do you receive more than one of these services as part of an overall deal or package from the same supplier? Source: Ofcom technology tracker

5 5 Figure 1.6 Average time per day spent using communications services

250 242 219 200 185 173

150 2005

100 2010 50 28 15 15 12 7 13 Minutes perperson perday Minutes 0 Television Radio Internet - fixed Phone - fixed Phone - mobile Source: Ofcom / BARB / RAJAR / Nielsen Netratings (home use only) Note: Daily figures were calculated from monthly data on the assumption that there are 30.4 days in the average month; the exception was for internet consumption where the quoted figures relate to May 2004 and May 2009, and 31 days were used; the internet consumption figures include the use of online applications such as streaming media and only include use at home; mobile telephony figures are estimated assuming that the average time taken to send and receive a text message is 35 seconds.

6 Figure 1.7 Overall satisfaction with communication services

94 94 94 93 100 88 91 91 89 89 87 90 86 88 83 83 80 35 32 33 32 Satisfied 32 34 34 32 34 40 37 41 46 60 40 44

40 56 57 57 57 59 62 61 61 55 Very 50 50 46 42 42 Proportion of users(%) 20 39 satisfied 0 2011 Q1 2011 Q1 2011 Q1 2011 Q1 2011 2008 Q1 2009 Q1 2010 Q1 2008 Q1 2009 Q1 2010 Q1 2008 Q1 2009 Q1 2010 Q1 2008 Q1 2009 Q1 2010 Q1 Fixed Mobile Fixed Mobile telephony telephony Broadband Broadband

Source: Ofcom research Note: Shows the proportion of users with each service, includes only those who expressed an opinion.

7 A2 – Which one of these would you miss doing the most? Base: All adults aged 16+ (3244 in 2005, 2905 in 2007, 1824 in 2009, 2117 in 2010), adults aged 16-24 (530 in 2005, 413 in 2007, 253 in 2009, 295 in 2010), adult Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May 2009 and September to October 2010

Figure 1.8 Which media activity consumers would miss the most

100% 3% Watch videos/DVDs 6% 4% 5% 4% 5% 7% 6% 4% 3% 3% 4% 12% 4% 13% 5% 4% 4% 5% 8% 6% 4% 13% Listen to a portable 9% 10% 16% 8% 18% 3% 12% music device/MP3 player 80% 6% 17% 11% 4% Play console/computer 12% 13% 13% 32% 19% 7% 15% games 33% 28% 12% 6% 60% 15% 2% 10% 12% 4% Listen to music on a hi- 17% 8% 10% 6% fi/CD or tape player 8% 28% 18% Read newspapers/ magazines 40% 21% 26% Listen to the radio 11% 57% 52% 50% 48% 50% 49% 44% 44% 20% 36% Use a mobile phone 28% 22% 23% Use the internet via 0% computer/laptop 2005 All 2007 All 2009 All 2010 All 2005 2007 2009 2010 2005 2007 2009 2010 adults adults adults adults 16-24 16-24 16-24 16-24 55-64 55-64 55-64 55-64 Watch television

A2 – Which one of these would you miss doing the most? Base: All adults aged 16+ (3244 in 2005, 2905 in 2007, 1824 in 2009, 2117 in 2010), adults aged 16-24 (530 in 2005, 413 in 2007, 253 in 2009, 295 in 2010), adults aged 55-64 (412 in 2005, 344 in 2007, 276 in 2009, 336 in 2010) Circles show statistically significant change between 2009 and 2010. Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May 2009 and September to October 2010

8 Figure 1.9

Average household spend on communications services

150 6% Radio

4.78% 4.77% 4.74% 4.66% 4.63% 4.66% Television prices) £106.50 £104.22 £101.49 £98.41 2.69 2.70 £96.42 £93.61 100 2.72 2.57 4% 2.54 2.54 2010 28.24 27.75 Fixed internet 27.85 27.28 27.95 27.97 10.39 11.01 9.91 10.22 Mobile services 10.38 9.48 50 2% 37.20 36.63

36.26 spend total % of As 34.87 33.02 31.34 Fixed voice £ per month ( per £ month

27.97 26.13 24.76 23.48 22.52 22.27 As a %age of total 0 0% household spend 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

9 Figure 1.10 Average monthly household spend on communications services, 2010 prices

150 6% Radio 4.78% 4.73% 4.77% 4.74% 4.66% 4.63% 4.66% 4.48% prices) 4.31% £106.50 Television 4.12% £105.07 £104.22£101.49 3.82% £99.43 2.49 2.69 £98.41 £96.42 100 £95.80 2.70 2.72 £93.61 4% £90.89 2.89 2.57 2.54 2010 2.95 2.54 £83.01 2.77 27.72 28.24 27.75 Fixed internet 2.77 26.28 27.85 27.28 23.30 26.22 27.95 27.97 21.08 8.99 10.39 7.31 11.01 9.91 6.34 6.07 10.22 Mobile services 4.06 10.38 9.48

50 23.24 25.90 30.05 35.22 37.20 2% spend total % of As 19.63 36.63 36.26 £ per month ( per £ month 34.87 33.02 31.34 Fixed voice

35.47 35.24 34.67 32.91 30.65 27.97 26.13 24.76 23.48 22.52 22.27 As a %age of total 0 0% household spend 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: ONS Notes: Radio data prior to 2004 was compiled using a different methodology and is not directly comparable to subsequent figures TV includes PPV from 2004 onwards 2010 % of average household spend uses an estimate of household spend based on data for the previous four years

0 Industry revenues ended the decade at £53. 4bn

Communications industry annual revenue, real terms

Total ) 58.0 59.1 59.3 58.7 nn 56. 7 57. 0 60 54.3 54.1 1.3 1.3 1.3 55. 9 1.3 1.3 1.2 1.1 53.4 49.5 1.3 1.3 12.2 12.0 11.9 1.1 1.4 11.5 11.5 11.6 11.6 11.1 11.3 11.7 Radio 10.2 40 djusted (£b TV 43.9 45.2 45.6 46.1 45.5 44.2 43.1 20 38.0 42.0 41.5 40.5 enue –RPI a

vv Telecoms

Re 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Note: Includes licence fee allocation for radio and TV

0 Figure 1.12 Real terms broadcasting advertising spend

6 5.9 5.4 0.7 5.2 5.3 5.2 5.4 4.9 2010 10 year 0.6 4.9 5 0.6 0.6 0.6 0.7 4.6 4.5 growth CAGR 0.5 0.5 0.5 4.1 0.4 4 0.4 Radio -0.7% -5.0% 3 spend 5.2 4.5 4.7 4.6 4.7 4.8 4.4 4.3 4.1 4.1 2 3.7 TV spend 10.7% -2.4% Revenues (£ bn ) 1

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Ofcom calculations based on AA/Warc Expenditure Report. Note: excludes sponsorship/branded content. Figures are in 2010 prices based on the Retail Prices Index (RPI).

2 Figure 1.13 UK total pay-TV subscriber revenue

3 4.8 4.8 4.4 4.5 2 4.1 4.3 4.3 3.2 3.7 3.7 2.7 Revenues (£ bn ) 1

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Ofcom/ broadcasters Notes: Figures are adjusted for RPI

3 Figure 1.14 Real terms pay TV annual revenue per user by platform

500 460 472 405 405 2010 10 year 400 379 change change

318 1.1% 24.5% 302 309 Satellite 300 290 261 285 Cable 3.7% 18.2% 200 218 145 DTT -1.7% -33.5% AnnualARPU (£) 95 IPTV 6.6% -59.9% 100 116 Total 1.3% 27.5% 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Ofcom calculations based on data from Screen Digest. Figures are in 2010 prices based on the Retail Prices Index (RPI).

4 Figure 1.15 Real terms PSB network spending, CPI Adjusted, 2010 prices 4 3.3 3.5 3.3 3.3 2010 10 year 3.3 3.2 3.2 3.0 growth CAGR 2.9 0.4 0.5 0.5 2.9 2.9 3 0.4 0.5 0.5 0.4 0.5 0.4 0.5 0.5 First-run -0.7% +1.3% (£ bn ) acquisitions 2 and repeats Spend 2.9 2.9 3.0 2.9 2.8 2.7 2.5 2.6 2.6 2.4 2.5 First-run +2.2% -0.1% 1 originations

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Ofcom/broadcasters. Figures include BBC1, BBC2, BBC3, BBC4, CBBC, CBeebies, BBC News, BBC Parliament, ITV1, GMTV1/Daybreak, Channel 4 and Channel 5. The analysis does not include S4C, BBC Alba or BBC HD. Figures exclude nations/regions programming. Figures are in 2010 prices based on the Consumer Prices Index (CPI). 5 Figure 1.16 Radio industry revenue and spend, RPI adjusted, 2010 prices

1.5 1.4 1.3 1.3 1.3 1.3 1.3 1.3 1.3 2010 10 year 1.2 growth CAGR 1.25 1.1 1.1

1 0.7 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.5 Commercial -3.1% -4.6% (£ bn ) 0.5 0.4 radio 0.75 revenue

0.5 BBC spend -0.8% +0.2% 0.7 0.7 0.6 0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.7 0.25 Revenue/spend

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Commercial operators and Ofcom estimates based on BBC Annual Reports 1999/00-2010/11. Figures are in 2010 prices based on the Retail Prices Index (RPI).

6 Figure 1.17 UK fixed and mobile operator-reported UK telecoms industry retail revenue, RPI adjusted, 2010 prices 40 34.2 34.4 34.7 34.3 32.7 33.2 32.4 30.9 30.9 30.8 30 28.2 12.1 14.2 15.3 15.7 16.2 10.2 10.5 16.1 15.6 8.5 15.1 Mobile 20 revenues

Fixed 10 19.7 20.7 20.4 20.7 19.9 19.2 revenues Revenues (£bns) 19.0 18.1 17.2 16.9 15.8

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

7 Figure 1.18 UK fixed broadband and narrowband operator-reported UK telecoms industry retail revenue, RPI adjusted, 2010 prices

4 3.6 3.5 3.4 3.4 3.3 0.1 0.1 3.0 3.0 0.7 0.3 3 0.1 2.5 1.0 2.4 2.2 1.4 2 1.6 1.6 3.3 3.3 3.2 3.0 1.8 2.9 2.2 2.4 1 Revenues (£bns) 1.6 1.6 1.0 0.006 0.1 0.4 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Ofcom / operators

8 Figure 1.19 UK communications services milestones, 2000 – 2010

Q3 2002 Multi- Q1 2005 Broadband channel TV ownership overtakes ownership overtakes narrowband dial up terrestrial analogue Q1 2011 Internet penetration exceeds Q1 2002 Q2 2003 Multichannel PC ownership Q4 2006 Broadband Dial up internet TV ownership ownership reaches ownership peaks at reaches 50% 50% 46% Q4 2003 Digital TV ownership Q3 2008 Mobile Q1 2003 PC Q2 2000 reaches 50% phone ownership Mobile phone ownership reaches Q4 2005 exceeds fixed phone ownership reaches 50% Fixed line ownership ownership 50% of adults falls below 90% Q3 2003 Internet ownership reaches 50%

2006 HDTV services available 2010 3DTV 2008 Freesat services 2002 2003 2003 2008 ‘up to’ Freeview from BBC/ 50Mbitp/s launched 3G mobile Communications ITV launched launched services Act and 2006 LLU cable 2010 iPad launched in UK available formation of services broadband services Ofcom available to 2007 iPhone 2010 Nationwide launch of launched Source: Ofcom 50% of launched in fibre to the cabinet services population UK

9 Figure 1.20 Take-up of communications services 2000 – 2011

Q3 2002 Q1 2005 Q3 2008 Mobile Multi-channel Broadband overtakes phone overtakes overtakes analogue narrowband fixed terrestrial TV % of UK adults

Mobile phone 100% 93% 93% 91% 85% Fixed line phone 80% 76% 74% 62% 60% Internet 50% Broadband 40% 36% 25% 20% Dial up internet (main connection) 4% 0% 3% 2% Multi-channel TV

Analogue terrestrial TV

Source: Based on face to face survey data (Oftel/ Ofcom)

10 Figure 1.21 Communications service device ownership

% of households

98 93 94 100 85 85 80 69 60 54 55 60 46 47 39 33 40 27 32 12 20 2 2 4 4 0

Source: Ofcom technology tracking survey, Q1 2011 Base: UK adults aged 16+, n = 3474 11 Figure 1.22 Annual television sets sales 2002-2010

10 9.06 9.55 6.89 Analogue 8 8.38 5.98 HD ready 6 4.75 5.60 4.60 Total 4 4.65

2.41 2 Volume of units sold (millions) Volume 1.52 0.03 0.07 0 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: GfK sales data

12 Figure 1.23

Years 16

12 st) enetration 10 aa pp

8 15 14 14 6 12 12 10

chieve 50% chieve 50% 4 ctual or forec ctual or

aa 777

aa 6 6 6

( 5 2 44

0 Years to

Source: Oliver and Ohlbaum

0 Figure 1.24 Television consumption, 2000 - 2010

Average hours per 2000 2010 day 4.0 4 3.7

Source: BARB

14 Figure 1.25 All day channel shares in all homes, 2000 – 2010 50%

45%

40% Others 35% Five 30% Channel 4*

25% ITV 1

20% BBC Two BBC One 15%

10%

0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: BARB, All homes. Notes: i) New BARB panel introduced 1st Jan 2010. As a result pre and post panel change data must be viewed with caution (see dotted line). * C4 data 2006-09 includes S4C; in 2010 it is excluded as S4C became a separate channel following DSO in Wales. S4C 2010 share = 0.1%

15 Figure 1.26 Multichannel take-up by platform % homes % of homes 41.7% 44.7% 48.0% 56.7% 64.9% 71.8% 80.3% 87.2% 89.6% 92.1% 93.1%

TV Households (m) Data from Q1 2007 is based on consumer research 26 24 Analogue 22 terrestrial only 20 Digital terrestrial only 18 Analogue cable 16 14 Digital cable 12 10 Free-to-view 8 digital satellite 6 Analogue satellite 4 Pay digital 2 satellite 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Ofcom, GfK NOP research from Q1 2007, previous quarters include subscriber data and Ofcom market estimates for DTT and free satellite Note: Digital terrestrial relates to DTT-only homes Figure 1.27 Radio consumption, 2000 - 2010 Average hours per day 2000 2010 4 3.4 3.2 3

Source: RAJAR

17 Figure 1.28 Radio listening shares: 2000-2010 Listening hours share for BBC and commercial stations, local/national

BBC Network BBC Local/National National Commercial Local Commercial Other

100% 2 2 2 2 2 2 2 2 2 2 2 11 12 11 11 11 11 11 10 10 9 9

80%

35 34 34 34 34 39 38 38 37 36 35 60%

9 9 8 9 8 8 9 8 8 8 8 40%

44 45 46 46 46 20% 40 41 41 42 43 44

0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: RAJAR, All adults (15+), data relates to full 12 months of each corresponding year.

18 Figure 1.29 Digital radio listening share by platform

% of digital listening hours in Q1 17.8% 20.1% 24.0% 26.5% % of listening hours 100% 90% Analogue radio 80% Unspecified 70% 60% DAB 50% DTV 40%

30% Internet 20% 10% Digital unspecified 0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 Source: RAJAR / Ipsos MORI / RSMB. Figure 1.30 UK volumes of call minutes/ SMS messages

Billions of minutes/ SMS message 2000 2010 300 254 250 209 200

150 129

100

50 7 0 Total voice call minutes Mobile SMS messages

Source: Ofcom/ operators

20 Figure 1.31 UK volumes of call minutes

Billions of minutes/ SMS message 2000 2010 200 174

150 129 125

100

50 35

0 Fixed voice minutes (inc NTS) Mobile voice minutes

Source: Ofcom/ operators

21 Figure 1.32 Main methods of telephony: 2001 - 2011

2001 2011

4% 1% 2% 1% Fixed phone

15% Mobile 51% 79% 46% Fixed phone at work

Public payphone & other

Source: Ofcom/ Oftel technology tracking survey, Q1 2011, Q1 2001 2011 Base: UK adults aged 16+, n = 3474 22 Figure 1.33 Use of fixed line suppliers

100%

79 79 79 78 80% 78 74 65 65 BT 60% 61 59 56 Cable

40% Other 26 23 22 23 20% 20 20 20 19 19 19 20 19 18 19 9 15 12 6 5 4 6 4 0% Q3 2000 Q2 2001 Q2 2002 Q2 2003 Q1 2004 Q2 2005 Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010

Base: Those with a landline phone at home Source: Ofcom communications tracking survey. Q3 2000, Q2 2001-2003, Q1 2004, Q2 2005-2010

23 Figure 1.34 Mobile provider used most often

91% personal ownership of mobile phones "3", (6% share)

T-Mobile, Orange, Vodafone, O2, Q1 (12% share (23% share of mobile Virgin, Other, (20% share of mobile (26% share of mobile 2011 of mobile customers) (6% share) (2% share) customers) customers) customers)

Tesco, (5% share)

50% personal ownership of mobile phones

BT Cellnet, Vodafone, (26% share of One2One, Orange, Other, (28% share Q2 mobile (21% share (22% share (2% share) 2000 of mobile customers) of mobile of mobile customers) customers) customers)

Source: Oftel/ Ofcom research Base: Adults who own a mobile phone, n = 1007 Q2 2000, n = 2,054, Q1 2011 %s shown on bars indicate share of residential customers’ main network

24 Figure 1.35 Percentage of consumers buying bundled services

60%

50%

40%

30% 50% 53% 45% 20% 41% 44% 31% 35% 10% 21% 18% 17% 17% 18% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -10%

Source: Ofcom communication tracking survey Base: All adults 15+ (2005, 8766) (2006, 9134) (2007, 8960) (2008, 7496) (2009, 8199) (2010, 10611) QG1. Do you receive more than one of these services as part of an overall deal or package from the same supplier?/ QG3. Do you receive a discount or special deal for subscribing to this package of services? For 2000 – 2004 Cable telephone use is reported as a proxy for bundling, which may overstate the percentage slightly.

25 Figure 1.36 Overall satisfaction with communications services Q1 2004 – Q1 2011 % of UK adults

100% Mobile phone 95% 93% 91% 90% 87% 89% Fixed line phone 87% 88% 86% 85% 82% 80% Internet

75%

Digital TV

Source: Based on face to face survey data, those reporting that they are very or fairly satisfied (Ofcom) Note: Data has been interpolated for some survey periods where the question was not asked.

26 The Smartphone Revolution charts Figure 1.37 Take up of mobile phones/smart phones among GB population

96 96 95 96 99 100% 92 94 89 89 90 86 77 80% Total mobile 46 51 54 49 49 57 66 60 60% 63 69 66 70 40% Smart phone 50 47 48 20% 42 45 32 32 26 29 21 20 7 0% GB Male Female 16-24 25-34 35-54 55+ ABC1 C2DE Teens Male Female

Source: Ofcom omnibus research, March 2011 Q2. How many mobile phones, if any, with different telephone numbers do you personally use at least once a month Q.3A Do you personally use a Smartphone ? Base: Total GB Adults aged 16+ (n = 2073). Total GB adults who use a mobile phone (n = 1810) Base: Total GB teens aged 12 – 15 (n = 521). Total GB teens aged 12 – 15 who use a mobile phone (n = 502)

2 Figure 1.38 Demographic profile of Smartphone users versus regular phone users

Smart phone Regular mobile 100%

80%

64 58 60% 56 52 52 48 4850 50 44 42 3937 38 40% 34 27 25

20% 14 11 9

0% Male Female 16-24 25-34 35-54 55+ ABC1 C2DE Male Teens Female Teens

3 Figure 1.39 Smartphone brand choice among users

100% 2 3 21 2 3 2 2 1 2 3 2 Other/DK 2 1 4 1 1 5 2 5 4 6 5 6 4 10 6 6 8 4 6 7 2 9 10 7 7 9 8 9 11 LG 12 13 12 80% 9 18 12 12 12 12 11 12 8 Sony 13 13 16 8 Ericsson 12 18 9 14 15 12 17 13 60% 11 Samsung 8 14 9 25 20 19 24 20 30 37 Nokia 40% 28 23 37 20 44 HTC-Android

20% 34 36 36 37 Blackberry 32 29 25 23 23 24 17 10 Apple iphone 0% GB Male Female 16-24 25-34 35-54 55+ ABC1 C2DE Teens Male Female Teens Teens

Source: Ofcom omnibus research, March 2011 Q.4 Which make of Smartphone do you have ? If you use more than one Smartphone, please tell me about the one that you use most often. Base: Total GB Adults aged 16+ with a Smartphone (n = 474). Base: Total GB teens aged 12 – 15 with a Smartphone (n = 243).

4 Figure 1.40 Type of mobile package

Adults Teens

100% 4 3 7 11 17 23 Organised by other 80% 35 19 48 29 60% 40 77 Post pay/Monthly 40% 75 63 61 49 20% 46 Pre pay/PAYG 16 0% GB total Smartphone Regular mobile Teens total Smartphone Regular mobile

Note: Figures add to more than 100% due to some respondents having more than phone

Source: Ofcom omnibus research, March 2011 Q.6A Which of these best describes the mobile package you are on ? Total GB adults who use a mobile phone (n = 1810) Total GB teens aged 12 – 15 who use a mobile phone (n = 502)

5 Figure 1.41 Frequency of making/receiving calls: Adults

Total Contract PAYG 100% Every day (365)

38 80% Several times a 53 week (182) 59

60% 81 77 At least once a 85 week (52) 21 At least once a month (12) 40% 19 21 18 Less often (3) 13 20% 11 9 12 17 7 10 Never (0) 6 12 5 7 5 4 3 0% 01 1 1 1 2 Smart Regular Smart Regular Smart Regular

Mean score 0.9 0.7 0.9 0.9 0.7 0.5

Source: Ofcom omnibus research, March 2011 Q.7a/b How often, if at all, do you use your mobile phone to make or receive calls ? Base: Total GB adults who use a mobile phone (n = 1810)

6 Figure 1.42 Frequency of making/receiving texts: Adults

Total Contract PAYG 100% Every day (365)

38 80% Several times a 50 week (182) 60 72 60% 79 At least once a 84 week (52) 16

At least once a 15 40% 12 month (12) 16 10 7 Less often (3) 5 5 13 5 20% 4 10 7 9 6 2 22 Never (0) 5 16 3 3 4 2 11 1 0% 2 12 5 Smart Regular Smart Regular Smart Regular

Mean score 0.9 0.6 0.9 0.8 0.7 0.5

Source: Ofcom omnibus research, March 2011 Q.7a/b How often, if at all, do you use your mobile phone to make or receive texts ? Base: Total GB adults who use a mobile phone (n = 1810)

7 Figure 1.43 Frequency of making/receiving calls and texts: Teens Phone conversation Sent a text message Total Contract PAYG Total Contract PAYG 100% Every day (365) 26 80% 35 47 47 Several times a 56 57 week (182) 65 64 76 26 80 At least once a 60% 84 90 week (52) 26 At least once a 40% 28 27 month (12) 23 26 23 19 Less often (3) 20% 26 28 11 16 14 9 14 11 13 12 12 8 Never (0) 9 7 5 9 7 7 9 4 5 8 4 3 5 0% 2 1 2 3 1 1 2 4 Smart Regular Smart Regular Smart Regular Smart Regular Smart Regular Smart Regular

Mean score 0.7 0.5 0.8 0.8 0.6 0.4 0.9 0.7 0.9 0.9 0.8 0.6

Source: Ofcom omnibus research, March 2011 Q.7a/b How often, if at all, do you use your mobile phone to make or receive calls/texts ? Total GB teens aged 12 – 15 who use a mobile phone (n = 502)

8 Figure 1.44 Activities conducted on a smartphone: Adults

Internet surfing 41 28 69

Taking photos/video 35 33 68

Email 46 21 67

Social networking 40 15 55

Listening to music 32 21 53

Playing games 20 27 47 Used regularly Downloading apps 20 27 47 Ever used

Picture messaging (MMS) 18 28 46

Instant Messaging (IM) 28 17 45

Maps/GPS 18 26 44

Watching video clips 16 22 38

Accessing general news 16 19 35

Accessing sports news 14 13 27

Wating TV programmes/film 6 10 16

0% 20% 40% 60% 80% 100% Source: Ofcom omnibus research, March 2011 Q.8 Which, if any, of the following functions or activities have you ever used your mobile phone for ? Q.9 Which of them do you use your mobile phone for regularly ? Total GB adults who use a smartphone (n = 474) 9 Figure 1.45 Activities conducted on a smartphone: Teens

Listening to music 62 20 82

Taking photos/video 47 34 81

Playing games 50 28 78

Social networking 62 12 74

Internet surfing 38 31 69

Downloading apps 28 35 63

Instant Messaging (IM) 38 15 53

Watching video clips 20 31 51

Picture messaging (MMS) 17 32 49 Used regularly

Email 27 18 45 Ever used

Accessing sports news 8 13 21

Maps/GPS 5 15 20

Watching TV programmes/film 9 10 19

Accessing general news 8 10 18

0% 20% 40% 60% 80% 100% Source: Ofcom omnibus research, March 2011 Q.8 Which, if any, of the following functions or activities have you ever used your mobile phone for ? Q.9 Which of them do you use your mobile phone for regularly ? Total GB teens who use a smartphone (n = 243) 10 Figure 1.46 Number of times took part in an activity yesterday (all who take part in that activity): Smart phone users

Adults Teens 1 1 100% 2 5 3 7 Don't know 15 17 21 14 16 31 Didn't do (0) 80% 5 35 44 7 20 5 10 22 20 + times (25) 6 17 2 5 2 60% 14 1 6 11-20 times (15) 7 10 4 16 19 3 21 13 13 6 6-10 times (8) 40% 17 20 12 18 20 17 3-5 times (4) 20 14 17 18 13 20% 12 Twice (2)

10 22 20 18 22 13 16 13 Once (1) 7 0% IM'd Social networked Email Used an app IM'd Social networked Email Used an app

Mean score 8.65 7.99 3.97 2.81 8.16 7.38 4.25 2.38

Source: Ofcom omnibus research, March 2011 Q.11 For each activity, please tell me how many times you did that activity using your mobile phone yesterday? Base: Total GB adult smartphone users aged 16+ who take part in activity regularly Base: Total GB teen smartphone users aged 12 – 15 who take part in activity regularly

11 Figure 1.47 Activities taking part in less since having Smartphone: Adults vs Teens

Adults Teens

Any activity 55 Any activity 68

Taking photos on a camera 16 Playing games on PC/console 30

Taking photos on a camera 30 Using a computer 15

Using a computer 28 Reading a printed newspaper 13 Watching television 23 Using a paper map 13 Reading books 15 Watching television 10 Using a paper map 14 Reading books 9 Reading a printed newspaper 14

Playing games on PC/console 7 9

Socialising with friends 4 Socialising with friends 7

Taking part in sports 4 Taking part in sports 6

0% 20% 40% 60% 80% 0% 20% 40% 60% 80% Source: Ofcom omnibus research, March 2011 Q.25 Since you got your smartphone which, if any, of the following activities do you now take part in less than you used to ? Total GB adults who use a smartphone (n = 474). Total GB teens who use a smartphone (n = 243)

12 Figure 1.48 Mobile phone addictiveness

Adults Teens 100% 12 19 33 High (7/8/9/10) 37 80% 46 26 60 30 60%

34 Moderate 37 40% 32 61 51 30 20% 33 25 22 Low (1/2/3) 10 0% GB total Smartphone Regular mobile Teens total Smartphone Regular mobile

Source: Ofcom omnibus research, March 2011 Q16 Choose a number between 1 and 10, where 1 represents ‘I’m not at all addicted to my mobile phone’ and 10 represents ‘I’m completely addicted to my mobile phone’. Total GB adults who use a mobile phone (n = 1810) Total GB teens aged 12 – 15 who use a mobile phone (n = 502)

13 Figure 1.49 How often phone is on

Adults Teens 100% Generally on, even when in bed

80% 51 60 61 Generally switched on in 66 71 day, but off at night when in bed 60% 81

Only switched on when I 40% need to use it 28 18 17 26 20% Generally switched off 12 23 9 15 17 11 9 7 5 0% 21 1 3 GB total Smartphone Regular mobile Teens total Smartphone Regular mobile

Source: Ofcom omnibus research, March 2011 Q12 Which of these statements best applies to how often your phone is switched on? Total GB adults who use a mobile phone (n = 1810) Total GB teens aged 12 – 15 who use a mobile phone (n = 502) 14 Figure 1.50 Activities where use the phone: Adults Socialising with Wakes you when Use/answer in During mealtimes In a venue where others sleeping toilet/bathroom with others asked to switch off

60% Rarely 51 Occasionally 7 Regularly 40% 37 38 18 7 13 25 22 23 16 18 20% 10 9 5 6 13 6 26 11 7 7 4 9 10 2 5 13 14 4 4 9 5 8 5 7 7 3 0% 3 2 Smartphone Regular Smartphone Regular Smartphone Regular Smartphone Regular Smartphone Regular mobile mobile mobile mobile mobile

Source: Ofcom omnibus research, March 2011 Q14a Which of the following do you ever do? Q14b and how often do you do it? Base: Total GB adults who use a mobile phone (n = 1810)

15 Figure 1.51 Activities where use the phone: Teens

Socialising with Use/answer in Wakes you when During mealtimes In a venue where others toilet/bathroom sleeping with others asked to switch off 65 64 2 60% 3 Rarely

26 47 Occasionally 32 4 40 Regularly 40% 34 31 7 22 3 27 27 5 22 15 4 13 7 20% 12 3 17 37 11 5 28 10 13 21 18 8 14 17 12 9 7 5 0% Smartphone Regular Smartphone Regular Smartphone Regular Smartphone Regular Smartphone Regular mobile mobile mobile mobile mobile

Source: Ofcom omnibus research, March 2011 Q14a Which of the following do you ever do? Q14b and how often do you do it? Base: Total GB teens aged 12 – 15 who use a mobile phone (n = 502)

16 Figure 1.52 Attitude statements: Adults

It’s ok to use phone when with I would never use my mobile if it was others/in a public place disturbing/interrupting others

100% 11 12 10

8 9 34 8 80% 44 48 Disagree

60% 12

12 12 Neither/nor 40% 81 80 81

53 44 20% 40 Agree

0% Adult total Smartphone Regular mobile Adult total Smartphone Regular mobile

Source: Ofcom omnibus research, March 2011 Q15 Please tell me the extent you agree or disagree with the following statements? Total GB adults who use a mobile phone (n = 1810)

17 Figure 1.53 Attitude statements Teens

It’s ok to use phone when with I would never use my mobile if it was others/in a public place disturbing/ interrupting others 100% 16 16 13 19 22 18 Disagree 80% 16 21 18 20 19 19 Neither/nor 60%

40% Agree 67 64 66 63 59 63 20%

0% Teen total Smartphone Regular mobile Teens total Smartphone Regular mobile

Source: Ofcom omnibus research, March 2011 Q15 Please tell me the extent you agree or disagree with the following statements? Total GB teens who use a mobile phone (n = 502)

18 Figure 1.54 Demographic profile of people who use a mobile phone at work: smartphone users versus regular phone users

Smart phone Regular mobile 100%

80% 70 71 62 63 60% 53 47 45 37 40% 33 30 29

17 20% 16 14 7 6

0% Male Female 16-24 25-34 35-54 55+ ABC1 C2DE

Source: Ofcom omnibus research, March 2011 Q2. How many mobile phones with different telephone numbers do you use at least once a month Q.3A Do you personally use a Smartphone ? Base: Total GB Adults aged 16+ who use a mobile phone when working (n = 614). Total GB adults who use a smart phone when working (n = 257)

19 Figure 1.55 Work activities where use a mobile phone Take part in personal phone Take part in work related Take part in work related calls during working hours phone calls whilst on holiday phone calls during your or annual leave personal time outside of 100% 93 office hours 88 85 87 80% 22 Rarely 24 18 20 70 Occasionally

60% 18 57 Regularly

41 32 30 18 41 40% 28

20% 35 37 30 23 24 16 0% Smartphone Regular mobile Smartphone Regular mobile Smartphone Regular mobile

Source: Ofcom omnibus research, March 2011 Q18. How often do you do the following using your mobile phone? ..... Base: Total GB Adults aged 16+ who use a mobile phone when working (n = 614). Total GB adults who use a smart phone when working (n = 257)

20 Figure 1.56 Work activities where use a smartphone

Personal calls/ Personal Work calls/ Work emails/ Work calls/ Work emails/ Email/text in work emails/ work Personal time personal time annual leave annual leave meetings 100% 93

85 83 Rarely 80% 22 18 73 Occasionally 19 70 71 Regularly 13 16 60% 18 53 41 32 33 28 16 26 40% 28

18 20% 35 30 31 32 29 24 19

Source: Ofcom omnibus research, March 2011 Q18. How often do you do the following using your mobile phone? ..... Base: Total GB adults who use a smart phone when working (n = 257)

21 CMR 2011 The Generation Gap Landline and mobile services, by age - 2011

Figure 1.57

Proportion of respondents with service (per cent) +23 +10 +9 +6 +1

Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in January/February 2011 Base: All adults aged 16+ (3474) QC1. Is there a landline phone in your home that can be used to make and receive calls? QD2. Do you personally use a mobile phone? How many mobile phones with different telephone numbers do you use at least once a month? Please include any phones used for work or other purposes.

1 Figure 1.58 Household penetration of fixed and mobile telephony, by socio-economic group and age

Proportion of respondents (per cent)

Source: Ofcom research Base: All adults aged 16+

2 Main method of making and receiving telephone calls

Figure 1.59

Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in January/February 2011 Base: All adults aged 16+ (3474) QC3 (QC28). Which of these do you consider to be your MAIN method of making and receiving telephone calls?

3 Home internet access by age 2011

Figure 1.60

Q: Do you or does anyone in your houSource: Ofcom technology tracker survey, Q1 2006 and Q1 2011 Base: 2006: All adults aged 15+ (2214); 2011: all adults aged 16+ (3474) sehold have access to the internet/ world wide web at home (via any device, e.g. PC, mobile phone etc.)? 4 Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in January/February 2011 Base: All adults aged 16+ (3474) Q:Use Do you of or mobile does anyone phone in your householdto get haveonline access by to theage internet/ 2011 world wide web at home (via any device, e.g. PC, mobile phone etc.)?

Figure 1.61

Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in January/February 2011 Base: All adults aged 16+ (3474) QD28: Which, if any, of the following activities, other than making and receiving calls, do you use your mobile for?

5 Which media would be missed the most, by age - 2010

Figure 1.62 All aged 16+ 16-24 75+

15% 5 5 10% 28% Use Mobile 23% 13% Use Watch 44% Mobile TV 65% Watch TV Watch TV 17% 26% Internet Internet

Watch TV Use the internet Use a mobile Listen to Read Newspapers Listen to music on Play console/ Listen to portable6 Via PC/Laptop phone the radio /Magazines Hi-fi/CD/Tape player Video games MP3 device Regular media activities carried out by age, 2010

Figure 1.63

A1 – Which of the following do you regularly do? (Prompted responses, multi-coded) Base: All adults aged 16+ (2117 in 2010). Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010

7 Volume of internet use per week, by age 2010 (Self-reported)

Figure 1.64

9.9 hours

12.1 hours

12.2 hours

14.2 hours

Age 17.2 hours

15.7 hours

14.2 hours

14.5 hours

11.1 hours

6.7 hours

IN7A-C – How many hours in a typical week would you say you use the internet at home/ at your workplace or place of education/ anywhere else? (Unprompted responses, single coded) Base: All adults aged 16+ who use the internet at home or elsewhere (1746 in 2005, 1723 in 2007, 1282 in 2009, 1489 in 2010) Significance testing shows any change between 2009 and 2010, any difference between any age group and all adults aged 16+, between males and females, between any socio- economic group and all adults aged 16+ Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010 8 Why people say they use the internet, by age - 2010 Figure 1.65 Preferred communication method for making contact, by age 2010

Figure 1.66

Getting in touch with a friend to arrange to meet

Booking a holiday

NZ2A-D. Please use this list to say which one way you would prefer to make contact for a few different reasons that I’ll read out. (Prompted responses, single coded) *2005 wording was ‘Contacting the local council’. Base: All adults aged 16+ (3244 in 2005, 1012 in 2009, 2117 in 2010). Significance testing shows any change between 2009 and 2010 Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010 10 Weekly internet activities carried out, by age 2010

Figure 1.67

11 Confidence as an internet user, by age 2010

Figure 1.68

How confident are you using the internet to do creative things – like making blogs, sharing photos online, or uploading short videos?*²

How confident are you in judging whether a website you use is truthful?*³

IN10F/G/A/B/C/D – I’m going to read out some questions about confidence using the internet, for each one please say which of the options on the card applies to you. (Prompted responses, single coded) Base: Adults aged 16+ who use the internet at home or elsewhere (1723 in 2007, 1282 in 2009, 1489 in 2010). Significance testing shows any change between 2009 and 2010. *¹ 2007 – ‘That you can find the content or information you want when you go online’ *² 2007 – ‘Using the creative elements that media such as the internet and mobile phones offer? This includes creating blogs (or online diaries), editing photos and sharing them with friends and uploading short videos from a mobile phone’ *³ 2007 – ‘Being able to tell if a website you use is truthful and reliable’ Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010 12 Information prepared to share online, by age 2010

Figure 1.69

Photos from your holidays

Information about how you are feeling in general

Information about how you are feeling about work or college The Nations comms market

UK CMR 2011 Figure 1.70

UK Rural UK urban Ireland Northern Northern Wales Scotland England UK

Digital TV take-up 96 96 97 96 95 99 90 among TV homes +4 +4 +6 +4 +3

Broadband 74 71 74 80 76 61 75 take-up +3 +7 +4 +5

17 18 Mobile broadband 9 16 13 17 14 +2 +3

91 92 91 Mobile phone take-up 86 87 92 92 +2 +2 +2

Use mobile to access 32 34 21 29 34 25 23 internet +9 +9 +6 +8 +8

Smartphone 30 31 21 29 23 30 30 take-up amongst mobile + + + + + + + phone owners

Fixed landline take-up 85 85 80 80 84 84 90

Households taking 54 53 54 49 47 46 47 bundles +3

DAB ownership 37 39 31 27 28 37 40 amongst radio listeners

1 Figure 1.71 Communications infrastructure availability across the UK’s nations, 2011

UK England Scotland Wales Northern Ireland 100% 100% 100% 100% 100% 99% 99% 99% 98% 96% 95%

100 91% 89% 87% 85% 85% 85% 84% 84% 84% 82% 81% 81%

80 75% 66% 54%

60 51% 48%

40 37% 30% 23% 23% 23%

20 14% 8%

Proportion of individuals/homes 0 Fixed telephony Digital terrestrial 2G mobile 3G mobile LLU Cable FTTC television broadband Sources: Ofcom and: 1. DTT: Availability of 17 services. Ofcom estimates. 2. Proportion of population living in postal districts where at least one operator reports at least 90% 2G area coverage. Sourced from GSM Association / Europa Technologies (Q2 2011). Note that coverage data has been restated; this means that year-on-year comparisons are not possible. 3. Proportion of population living in postal districts where at least one operator reports at least 90% 3G area coverage. Sourced from GSM Association / Europa Technologies (Q2 2011). Note that coverage data has been restated; this means that year-on-year comparisons are not possible. 5. Proportion of households connected to an LLU-enabled exchange 6. Proportion of households passed by Virgin Media’s broadband-enabled network 7. Proportion of households connected to an FTTC-enabled exchange , June 2011

2 Figure 1.72

2G coverage 3G coverage

3 Figure 1.73

Patterns communications service adoption across the nations, 2011 Figure above bar shows % point change from Q1 2010 +/-0 +2 +3 +4 -1 +1 +2 +3 +4 +/-0 +1 +1 +/-0 +6 -5 +1 -2 +7 +2 -2 +3 +4 +5 +3 +6 99% 100 96% 96% 97% 91% 92% 92% 90% 87% 85% 85% 86% 84% 80% 80% 80 74% 76% 75% 71% 61% 60

39% 40 37% 31% 27% 28%

20 Proportion of individuals

0 UK England Scotland Wales N Ireland

Fixed Mobile Broadband DTV DAB* Source: Ofcom research, Quarter 1 2011 Fixed line, broadband, mobile bases: All adults aged 16+ (n = 3474 UK, 1983 England, 487 Scotland, 493 Wales, 511 Northern Ireland) Fixed line question: Is there a landline phone in your home that can be used to make and receive calls? DTV base: Adults aged 16+ with a TV in the household (n= 3412 UK, 1941 England, 479 Scotland, 483 Wales, 509 Northern Ireland) DTV question. Which, if any, of these types of television does your household use at the moment? Broadband question: Which of these methods does your household use to connect to the internet at home? DAB base: Adults aged 16+ with any active radio sets in the household who listen to radio. *NB Data previous to 2011 is based on all who listen to radio (n = 2811 UK, 1629 England, 357 Scotland, 397 Wales, 428 Northern Ireland) DAB question: How many of these radio sets are digital radios? Response represents those with one or more sets. Note: Remaining percentages are Don’t know responses Mobile question: Do you personally use a mobile phone?

4 Figure 1.74

Adoption of communications technology/services in urban and rural locations

UK England Scotland Wales Northern Ireland

99 9898 100 9697 95 969697 9596 92 9394 9293 92 90 89 9189 86 87 8485 83 85 84 85 7878 80 80 75 75 74 72 74 6867 60 60

40 Proportion of homes/individuals 20

0 Urban Rural Urban Rural Urban Rural Urban Rural

Fixed telephony Mobile telephony Broadband Digital television Source: Ofcom research, Quarter 1 2011 Fixed telephony, mobile telephony, broadband base: All adults aged 16+ (n = 3474 UK, 1983 England, 487 Scotland, 493 Wales, 511 Northern Ireland) DTV base: Adults aged 16+ with a TV in the household (n= 3412 UK, 1941 England, 479 Scotland, 483 Wales, 509 Northern Ireland) 5 Figure 1.75

Take-up of smartphones

100%

80%

60%

40%

20% 30 29 31 30 21 23 23 0% UK 2011 Wales 2011 England 2011 Scotland 2011 N Ireland 2011 Wales urban 2011 Wales rural 2011

QD24B. Do you personally use a Smartphone? A Smartphone is a phone on which you can easily access emails, download files and applications, as well as view websites and generally surf the internet. Popular brands of Smartphone include BlackBerry, iPhone and Android phones such as the HTC Desire. Source: Ofcom research, Quarter 1 2011 Base: Adults aged 16+ who personally use a mobile phone (n = 3091 UK, 416 Wales, 1786 England, 425 Scotland, 464 Northern Ireland, 208 Wales urban, 208 Wales rural) 6 Figure 1.76

Mobile-only households in the UK

100% 15 14 15 Neither 19 17 fixed or 6 80% 6 6 mobile 7 8 Mobile only 60%

Fixed only 40% 79 80 78 73 72

20% Fixed and mobile

0% UK Wales England Scotland N Ireland QC1. Is there a landline phone in your home that can be used to make and receive calls?/ QD1. How many mobile phones in total do you and members of your household use? Source: Ofcom research, Quarter 1 2011 Base: All adults aged 16+ (3474 UK, 493 Wales, 1983 England, 487 Scotland, 511 Northern Ireland, 241 Wales urban, 252 Wales rural, 811 Wales 2008, 987 Wales 2009, 1075 Wales 2010, 493 Wales 2011)

7 Figure 1.77 Take-up of bundles, by nation

Homes with bundles (%) and increase year-on-year (percentage points) 53% 54% 49% 47% 46% Number of 3pp 2pp 5pp 4pp 2pp services 100% 3% 3% 4% 4% 2% 8% Other

80% 32% 32% 33% 35% 22% Quad

bundles by 60% type (%) 40% Triple 66% 66% 61% 61% 59%

Distribution of 20% Dual

0% UK England Scotland Wales N Ireland

Source: Ofcom research, Q1 2011 Base: All adults aged 16+ with a package of services regardless of whether or not these include a discount (n = 1680 UK, 1035 England, 226 Scotland, 197 Wales, 222 Northern Ireland) Note: Remaining percentages are Don’t know responses

8 Figure 1.78 Spend per head on UK-originated content by broadcast by PSBs on TV and radio, 2010 Spend per head (£) 70.00

£60.48  2.2% 60.00 £10.95 50.00 BBC Nations/Local radio

 4.5% 40.00 £38.23 £37.43  5.5% £35.60 3.8 £3.87 £2.83 % £26.01 £31.03  7.5% Welsh, Irish and Gaelic first-run £1.52 £3.17 £7.37 30.00 £4.30 television programming £2.53 £11.93 20.00 £9.95 £8.27 £1.49 BBC/ITV1/STV/UTV first-run spend £28.54 £31.43 on TV content for the nations 10.00 £13.25 £15.75 £15.25 BBC/ITV1/STV/UTV qualifying first- £4.36 run network TV spend 0.00 UK England Scotland Wales NI

Source: Operators, Annual Reports and Ofcom calculations

9 Figure 1.79

Hours of daily TV and radio use by nation, 2010

Hours per person per day 4.0 3.2 3.7-4.5 3.2 4.5 3.1 4.5 3.3 4.2 3.2

Audience share (%) 100%

80% 38% 45% 45% 48% 44% 45% 46% 47% 55% 51% 60% 8% Non-PSBs 40% PSBs 62% 55% 55% 56% 55% 52% 54% 53% 49% 20% 45%

0% TV Radio TV Radio TV Radio TV Radio TV Radio UK England Scotland Wales N Ireland

Source: BARB. i) TV: PSBs = BBC One, BBC Two, ITV1, C4+S4C, Five. (ii) Radio : PSBs = all BBC radio stations. Notes: For England TV, a range is displayed reflecting the regions with the highest and lowest average daily viewing figures respectively For Wales, TV viewing hours shows an increase of 0.9 hours on 2009 figures. While it is likely that there has been an increase in viewing in Wales, due to digital switchover, this increase may also be attributable to the effects of the new BARB panel introduced at the start of 2010. There are two important changes to note regarding the new BARB panel: 1) The panel is based on completely different viewers to the previous panel, so data comparisons pre- and post-2010 should be viewed with caution. 2) There was a redefining of border boundaries under the new panel change. Previously, viewing of C4 in some areas registered as ‘out of area’ and so did not count towards the Wales area viewing figures; under the new panel and re-defined regions, however, viewing of C4 in these regions is now included.

10 Figure 1.80 Consumers’ use of converging platforms, 2011

Statistically significant year-on-year changes (percentage points)

+3 - +9 - - +10 +7 - +6 - +4 - - -4 +8 50

following (%) 20 41 42 40 32 34 35 33 25 29 10 21 14 15 9 13 11 0 TV over over internet TV over internet TV over internet TV over internet TV over internet TV their householdtheir does the Data over over Data mobile over Data mobile over Data mobile over Data mobile over Data mobile Radio over over Radio internet over Radio internet over Radio internet over Radio internet over Radio internet Proportion of individuals Proportion who claim someone in that UK England Scotland Wales N Ireland

Source: Ofcom research, Quarter 1 2011 Base: All adults aged 16+ (n = 3474 UK, 1983 England, 487 Scotland, 493 Wales, 511 Northern Ireland) QE5A-B. Which, if any, of these do you or members of your household use the internet for whilst at home? QD28A-B. Which, if any, of the following activities, other than making and receiving calls, do you use your mobile for?/ Includes download free applications, download paid for applications, 11 send/ receive emails, accessing the internet, connecting to the internet using Wi-Fi, using VoIP service, download a new video clip, video streaming, TV streaming, accessing/ receiving, sports/ team news/ scores, accessing/ receiving news, use IM/ Instant messaging

11 2. Television and audio visual

0 Figure 2.1 Industry metrics

UK television industry 2005 2006 2007 2008 2009 2010

Total TV industry revenue (£bn) 10.5 10.6 11.1 11.2 11.1 11.7

Proportion of revenue generated by public funds 25% 25% 25% 24% 25% 23%

Proportion of revenue generated by advertising 35% 33% 32% 31% 28% 30%

Proportion of revenue generated by subscriptions 35% 36% 37% 39% 41% 41%

TV as a proportion of total advertising spend 30% 28% 27% 27% 28% 29%

Spend on originated output by 5 main networks (£bn) 3.0 2.8 2.7 2.6 2.4 2.5

Digital TV take-up 61.9% 69.7% 86.3% 87.1% 91.4% 92.5%

Proportion of DTV homes paying for TV (Q1) 64% 60% 55% 53% 55% 55%

Viewing per head, per day (hours) in all homes 3.65 3.60 3.63 3.74 3.75 4.04

Share of the five main channels in all homes 70% 67% 64% 61% 58% 56%

Number of channels broadcasting in the UK 416 433 470 495 490 510 Source: Ofcom/broadcasters/Advertising Association/Warc/BARB/GfK. Note: Public funds include the DCMS grant to S4C and BBC funding that is allocated to TV; TV as a proportion of total advertising spend excludes direct mail and is based on Advertising Association/Warc Expenditure Report (www.warc.com/expenditurereport); spend on originations includes spend on nations and regions programming (not Welsh and Gaelic language programmes but some Irish language). Note that digital television take-up in Q1 2011 had reached 93%. 1 Figure 2.2 Total TV industry revenue, by source

Revenue (£m) 11,800 +1% +3% +5.7% +6% 11,700 £27m £19m +12% £49m +6% £54m 11,600

11,500 £243m 11,400 +13% £11,747m 11,300 £248m 11,200

11,100 £11,109m 11,000 2009 PSB NAR Subscriber PSB portfolio Other NAR BBC TV Other 2010 revenue revenue NAR spending revenue

Source: Ofcom/broadcasters

2 Figure 2.3 Advertising revenue, by share

1-year change (%) £m £ 3,136m £3,486m 11.2% 4,000 7.8% GMTV1 £55m £507m 3,000 £51m £453m 11.9% PSB portfolio £835m channels £786m 6.2% Other 2,000 £216m multichannels £207m £600m 4.3% Five £538m 1,000 11.5% Channel 4/S4C £1,100m £1,273m 15.7% ITV1/Channel 3 0 2009 2010

Source: Ofcom/broadcasters. Note: Totals may not equal the sum of the components due to rounding. ITV1/Channel 3 includes ITV Plc, STV, UTV and Channel Television. GMTV1 includes ITV Breakfast.

3 Figure 2.4 Multichannel take-up in UK households

% of homes 41.7% 44.7% 48.0% 56.7% 64.9% 71.8% 80.3% 87.2% 89.6% 92.1% 93.1% TV Households (m) 26 24 Analogue 22 terrestrial only 20 Digital terrestrial only 18 Analogue cable 16 14 Digital cable 12 10 Free-to-view 8 digital satellite 6 Analogue satellite 4 Pay digital 2 satellite 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Ofcom, GfK NOP research from Q1 2007, previous quarters include subscriber data and Ofcom market estimates for DTT and free satellite Note: Digital terrestrial relates to DTT- only homes. Figure 2.5 Number of broadcast HD homes: BSkyB, Virgin Media, Freesat and Freeview

9,000 8,000 Freeview 7,000 HD 6,000 Freesat 5,000 HD 4,000 Virgin Media 3,000 Homes ( 000s ) Homes Sky+ HD 2,000 1,000 0 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011

Source:BSkyB/Virgin Media/GfK Note: Figures represent latest available data. Freesat HD and Freeview HD figures based on HD device sales, therefore the cumulative number of HD homes is indicative only and 5 should be regarded as an upper boundary figure. Figure 2.6 Usage and access to Freeview DTT services: 2005-2011

Total Freeview enabled TVs (000) 6700 11264 16665 23383 26108 28777 30699 Homes (000’s) 20000

Total homes 15000 using Freeview

10000

Freeview- 5000 only homes

0 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Source: Ofcom estimates based on GfK research and sales data. Note: Q1 2009 total Freeview-enabled TVs figure has been adjusted by Ofcom. 6 Figure 2.7 Live vs. time-shifted TV viewing, DVR homes

Proportion of viewing (%)

100% 8% 8% 8% 7% 90% 7% 7% 7% 7% 80% Viewed 1-7 days after broadcast 70% 60% Viewed on same 50% day 86% 40% 85% 85% 85%

30% Live 20% 10% 0% 2007 2008 2009 2010

Source: BARB. All individuals with DVRs. Note: New BARB panel introduced 1 Jan 2010. As a result pre- and post-panel change data must be treated with caution

7 Figure 2.8 2010 top ten programmes – all channels, DVR homes

Recorded viewing Live viewing Programme Channel Date (m) (m)

1 Doctor Who BBC1 25/12/2010 3.2 4.5

2 Come Fly With Me BBC1 25/12/2010 2.9 4.8

3 The X Factor ITV1 03/10/2010 2.4 5.4

4 The Royle Family BBC1 25/12/2010 2.4 4.4

5 Sherlock BBC1 25/07/2010 2.0 2.5

6 EastEnders BBC1 19/02/2010 2.0 5.4

7 Gavin & Stacey BBC1 01/01/2010 1.9 2.8

8 Strictly Come Dancing BBC1 18/12/2010 1.9 5.8

9 Britain’s Got Talent ITV1 05/06/2010 1.7 4.5

10 Upstairs Downstairs BBC1 26/12/2010 1.7 3.2

Source: BARB. All individuals with DVRs. Includes viewing on respective +1 channels. Only highest incidence of programmes reported. 8

Figure 2.11 2010 average, all time-shifted content

48% Proportion of total recorded content 52%

Distribution of DVR viewing within 24 Distribution of DVR viewing within hours of broadcast one-seven days of broadcast

80 70 59% 60 50 40 35% 30 25% 20 14% 14% 8% 9% 9% 7% 10 5% 6% 6% 3% Proportion of of viewers % Proportion 0 0-1 1-2 2-3 3-4 4-8 8-24 1 day 2 days 3 days 4 days 5 days 6 days 7 days hours hours hours hours hours hours after after after after after after after

Source: BARB. All individuals with DVRs. Includes viewing on respective +1 channels.

11 Figure 2.12 Average online catch-up TV requests, 2010 Average monthly 5.2 3.4 3.2 2.5 sessions per person Universe Reach (%) 20

15 15

4 5 3 1 0 BBC iPlayer 4OD ITV Player Sky Player Source: UKOM/ Nielsen. Home and work panel. Applications included. Note: Universe reach is the percentage of all UK internet-accessible persons (aged 2+) who visited the site or used the application in the average month. ‘Internet-accessible’ is defined as anyone who has access to an internet-enabled computer within the time periods covered. These figures are based on averages across each calendar month of 2010.

12 Figure 2.13 2010 average monthly online catch-up TV requests, by age group

100% 2 65+ 6 5 3 11 90% 24 23 24 50 - 64 80% 24 70% 35 - 49 60% 29 33 36 50% 29 25 - 34

40% 18 - 24 30% 22 24 24 20% 27 12 - 17 13 10% 12 8 4 7 3 3 0% 2 - 11 BBC iPlayer Channel 4oD ITV Player Sky Player Source: UKOM/ Nielsen. Home and work panel. Applications included. These figures are based on averages across each calendar month of 2010

13 Figure 2.14 2010 average monthly online catch-up TV requests, by gender

100%

90% 30 80% 41

70% 55 70 60% Male

50% Female 40% 70 30% 59

20% 45 30 10%

0% BBC iPlayer Channel 4oD ITV Player Sky Player Source: UKOM/ Nielsen. Home and work panel. Applications included. These figures are based on averages across each calendar month of 2010

14 Figure 2.15 Age profile of those who have a games console at home

100

80 74 73 70 70 67 63 60 54 49 46 36 38 40 30 27 24 20 9 11 7 4 0 Any games console Fixed games console Handheld/ portable games player

Total 16-24 25-34 35-54 55-64 65+

Source: Ofcom residential tracker, w1 2011. Base: All adults 16+ (3,474). Which of the following do you, or does anyone in your household, have in your home at the moment?

15 Figure 2.16 Age profile of those who personally use a games console

100

80 70 72 66 65 60

34 34 40 31 30 28 29 15 15 20 9 8 3 2 4 1 0 Any games console Fixed games console Handheld/ portable games player

Total 16-24 25-34 35-54 55-64 65+

Source: Ofcom residential tracker, w1 2011. Base: all adults 16+ (3,474). And do you personally use….

16 Figure 2.17 What consumers use games consoles for

20 22 19 4 22 11 9 10 0 IPTV content web/internet Browsing the Iplayer online gaming Watching video Watching Ray DVDs Watching 'live' TV programmes/content Watching DVD/ Blue programmes on BBC

Source: Ofcom residential tracker, w1 2011. Base: all adults 16+ with access to a games console at home (1,793). QB4 (QB4) Which, if any, of these do you use your games console for?

17 Figure 2.18 Size of the children’s television audience by time of year

25 1200

20 1000 800 15 Average Audience 600 10 400 5 200 % iof Average Audience, Average 000s % % of viewing audience viewing 0 0 audience 11:00 06:30 08:00 09:30 12:30 14:00 15:30 17:00 18:30 20:00 21:30 23:00 ------10:30 06:00 07:30 09:00 12:00 13:30 15:00 16:30 18:00 19:30 21:00 22:30

Source: BARB Figure 2.19 Average hours of weekly TV viewing by children

Average weekly viewing (Hrs, Mins)

19 Children Children 4-9 Children 10-15 18.2 18 17.3 17 16.6 16.3 16.5 16.1 16.1 16.0 16 15.5 15.6 15.4 15.4 15.4 15.3 15.3 15.1 15.1 15.3 15

11 2005 2006 2007 2008 2009 2010

Source: BARB

19 Figure 2.20 Proportion of time-shifted viewing by children, by daypart

20 Children

15 Children 4-9 viewing

% of 10 Children 10-15

0 11:00 12:00 07:00 08:00 09:00 10:00 13:00 14:00 15:00 16:00 17:00 19:00 21:00 22:00 23:00 24:00 18:00 20:00 ------10:00 11:00 11:00 06:00 07:00 08:00 09:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00

Source: BARB Figure 2.21 Proportion of total viewing in the child’s bedroom, by daypart

Children 15 viewing

Children 4-9

% of 10

5 Children 10-15

0 11:00 12:00 13:00 14:00 15:00 07:00 08:00 09:00 10:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 ------10:00 11:00 13:00 14:00 06:00 07:00 08:00 09:00 12:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 Source: BARB Figure 2.22 Total TV industry revenue, by source 5yr Growth: 1 year Revenue (£m) CAGR £10,030 £10,502 £10,619 £11,041 £11,157 £11,109 £11,747 5.7% 2% 5,000 4,596 4,839 4,277 5% 6% Subscription 4,064 revenue 4,000 3,699 3,795 3,410 11% -1% Net 3,576 3,431 3,615 3,462 3,470 3,486 advertising 3,000 3,136 revenue

2,690 2,622 2,623 2,663 1% 2% BBC 2,443 2,464 2,525 2,000 income allocated to TV 837 3% 0% Other 1,000 746 724 780 787 713 732 revenue

0 2004 2005 2006 2007 2008 2009 2010 Source: Ofcom/broadcasters Note: Figures expressed in nominal terms and replace previous Ofcom revenue data for TV industry, owing to restatements and improvements in methodologies. ‘Subscription revenue’ includes Ofcom’s estimates of BSkyB, Virgin Media, BT Vision, TalkTalkTV, Setanta Sports (until its closure), ESPN and Top Up TV television subscriber revenue in the UK (Republic of Ireland revenue is excluded). It also excludes revenue generated by broadband and telephony. ‘Other’ includes TV shopping, sponsorship, interactive (including premium-rate telephony services), programme sales and S4C’s grant from the DCMS. The BBC restated licence fee revenue in 2008. Totals may not equal the sum of the components due to rounding. 22 Figure 2.23 TV industry revenues, by share TV industry revenue shares (%) £10,030 £10,502 £10,619 £11,041 £11,157 £11,109 £11, 747 50% Subscription 41.4% 40.8% revenue 36.8% 38.3% 40% 34.0% 35.2% 35.7% 28.2% Net advertising 30% 34.4% 34.2% 32.6% 32.4% 31.1% 29.7% revenue

20% 24.4% 23.5% 23.8% 23.7% 23.5% 24.0% 22.7% BBC income 10% allocated to TV

7.4% 6.9% 7.9% 7.1% 7.1% 6.4% 6.2% 0% Other revenue 2004 2005 2006 2007 2008 2009 2010

Source: Ofcom/broadcasters Note: Figures expressed in nominal terms and replace previous Ofcom revenue data for TV industry, owing to restatements and improvements in methodologies. ‘Subscription revenue’ includes Ofcom’s estimates of BSkyB, Virgin Media, BT Vision, TalkTalkTV, Setanta Sports (until its closure), ESPN and Top Up TV television subscriber revenue in the UK (Republic of Ireland revenue is excluded). It also excludes revenue generated by broadband and telephony. ‘Other’ includes TV shopping, sponsorship, interactive (including premium-rate telephony services), programme sales and S4C’s grant from the DCMS. The BBC restated licence fee revenue in 2008. Totals may not equal the sum of the components due to rounding.

23 Figure 2.24

Total TV industry revenue by sector Growth 5yr Revenue (£m) 1 year CAGR £10,030 £10,502 £10,619 £11,041 £11,157 £11,109 £11,747 5.7% 2% 12,000

5% 6% Platform 10,000 operators £4,064 £4,277 £4,839 £3,699 £3,795 £4,596 8,000 £3,410 8% 6% Commercial multichannels £1,300 £1,477 £1,650 6,000 £1,239 £1,726 £1,619 £1,755 11% -4% Main commercial 4,000 £2,843 £2,906 £2,725 £2,603 £2,420 £2,359 £2,123 PSB channels

2,000 £2,538 £2,597 £2,622 £2,725 £2,734 £2,768 £2,795 1% 1% Publicly-funded channels 0 2004 2005 2006 2007 2008 2009 2010 Source: Ofcom/broadcasters Note: Figures are nominal. Main commercial PSB channels comprise ITV1, STV, UTV, Channel Television, GMTV1, Channel 4, Five and S4C. Commercial multichannels comprise all multichannels including those owned by ITV1, Channel 4 and Five. Publicly-funded channels comprise BBC One, BBC Two, the BBC’s portfolio of digital-only television channels and S4C. S4C is listed under publicly-funded and commercial analogue channels because it has a mixed advertising and public funding model. The BBC restated licence fee revenue in 2008. Totals may not equal the sum of the components due to rounding.

24 Figure 2.25 TV net advertising revenues, by source Net advertising revenue (£m) Growth

4000 £3,239m £3,431m £3,615m £3,462m £3,576m £3,470m £3,136m £3,487m 1 year 5yr CAGR 3500 11% -1% £758m £803m £640m £759m £808m £835m 3000 £676m 6% 2% Commercial £105m £173m £786m multichannels £276m £386m 2500 £459m £507m £453m 2000 12% 24% Commercial PSB portfolio 1500 channels £2,686m £2,684m £2,563m £2,427m £2,387m £2,204m £2,144m 1000 £1,896m 13% -4% Main commercial 500 PSB channels

0 2003 2004 2005 2006 2007 2008 2009 2010

Source: Ofcom/broadcasters. Note: Figures expressed are in nominal terms and replace previous data published by Ofcom. Main commercial PSB channels comprise ITV1, STV, UTV, Channel Television, 1/DaybreakGMTV1/Daybreak, Channel 4, Five and S4C; Commercial PSB portfolio channels include, where relevant, ITV2, 3, 4, Men & Motors, CiTV, E4, More 4, Film 4, 4Music, Five USA and Fiver (and their ‘+1’ channels). For previous years closed channels have also been included. Sponsorship revenueis not included. Totals may not equal the sum of the components due to rounding.

25 Figure 2.26 TV net advertising revenue market shares: 2009 - 2010

Proportion of NAR by broadcaster (%)

Total = £3,470m Total = £3,136m Total = £3,486m 100% 23.3% 25.1% 24.0% Other multichannels 80% PSB portfolios 13.2% 14.4% 14.5% 60% 1.6% 1.6% 1.6% 7.8% 6.6% 6.2% GMTV1 18.1% 17.2% 40% 17.2% Five Channel 4/S4C 20% 36.1% 35.1% 36.5% ITV1/Channel 3 0% 2008 2009 2010

Source: Ofcom/broadcasters. Note: ITV1/Channel 3 includes ITV1, STV, UTV and Channel Television.

26 Figure 2.27 Breakdown of other / non-broadcast revenue: 2010 Total non-broadcast revenue = £732m (2.7%)

Other Revenue Sponsorship £125m (7%) £178m (-6%)

TV Shopping Programme Sales £190m (16%) £36m (39%)

Interactive £53m (-21%)

Pay-per view £48m (-17%) Other Public Funding (S4C) £102m (-1%)

Source: Ofcom/broadcasters. Note: Percentage figures in brackets represent year-on-year change. TV shopping represents aggregate operating margin of products sold via television. Percent figures represent year-on-year change. Totals may not equal the sum of the components due to rounding. Owing to the nature of these revenue components, annual changes may be a function of a higher number of broadcaster returns being made by the time of writing, rather than material changes in the contributions that these revenue components are making to total industry income. 27 Figure 2.28 Revenue generated by multichannel broadcasters, by genre: 2010

Total revenue = £4,100m across the eight genres included (10%)

Music Movies £104m (-4%) £561m (4%) News Entertainment £64m (-52%) £1,200m (11%) Leisure £54m (-22%)

Factual £201m (36%) Children's Sport £164m (3%) £1,800m (17%)

Source: Ofcom/broadcasters Note: Percentage figures in brackets represent year-on-year change. The figures in this chart include all sources of revenue accruing to multichannels and are expressed in nominal terms. This includes those set out in Figure 1.22 plus wholesale subscriber payments from platform operators.

28 Figure 2.29 Spend on network TV programmes: 2007 - 2010 1 yr change £m £4,972m £5,108m £5,107m £5,369m 5% 5,500 £162m 9% Five £204m 5,000 £205m £149m £191m £224m £210m £230m £219m £206m £348m -3% Other PSB portfolio channels 4,500 £224m £216m £361m £357m £378m £475m 4,000 £507m £467m 12% BBC digital channels £528m 3,500 £716m £672m £755m -3% BBC Two 3,000 £623m £847m £810m 2% Channel 4 2,500 £840m £856m 2,000 £869m Other digital channels £799m -5% 1,500 £802m £868m 5% ITV1 + GMTV1 1,000 £1,338m £1,546m 500 £1,166m £1,199m 9% BBC One 0 16% Film/Sport channels 2007 2008 2009 2010 Source: Ofcom/broadcasters. Note: Figures expressed in nominal terms. Figures do not include spend on nations and regions output. BBC digital channels includes BBC Three, BBC Four, BBC News Channel, BBC Parliament, CBBC and CBeebies (but not BBC HD). ‘Other digital channels’ include all genres (excluding Sports and Films). Programme spend comprises in-house commissions, productions, commissions from independents, spend on first-run acquired programmes, spend on rights and on repeats (originations or acquisitions). 29 Figure 2.30 Spend on first-run originated output on the five main networks

Growth 1 year 5yr CAGR £m £2,636m £2,633m £2,598m £2,616m £2,413m £2,522m 5% -1% 3,000

2,500 £337m £321m £323m £303m £266m 4% -5% Regional £256m £285m £246m £239m £335m £185m £208m 2,000 13% -9% Late night £646m £615m £620m £603m £614m £628m 1,500 2% 0% Day time

1,000 5% 1% Peak time £1,349m £1,407m £1,427m £1,427m £1,358m £1,420m 500

0 2005 2006 2007 2008 2009 2010

Source: Ofcom/broadcasters. Note: Figures are expressed in 2010 prices. They include GMTV1, spending in the nations and regions on English- language programming (and a small amount of Irish-language programmes) but do not include the BBC’s digital channels.

Figure 2.32 Hours of first-run originated output on the five main channels

Growth 1 Year 5 yr CAGR

32,866 33,379 34,048 33,045 30,485 30,027 -1.5% -1.8% 35,000

5.8% 30,000 -1.8% Regional 11,859 12,114 11,825 11,912 25,000 10,439 11,046

20,000 -9.0% -2.5% Non-peak network 15,000 16,021 16,646 15,536 15,142 14,632 13,316 10,000 4.6% 0.2% Peak-time 5,000 network 5,610 5,533 5,543 5,597 5,414 5,665 0 2005 2006 2007 2008 2009 2010

Source: Ofcom/broadcasters. Note: Figures include GMTV1 but do not include the BBC’s digital channels. Regional hours exclude Welsh and Gaelic-language programming but do include a small proportion of Irish-language programmes.

32 Figure 2.33 First-run originated output by the PSBs per week, all day and peak time

All Day Peak-Time

800 200 179 168 171 177 167 172 667 675 672 661 627 613

BBC digital BBC digital 600 150 channels channels 72 64 70 64 269 261 247 257 62 63 Five Five 243 248

Channel 4 Channel 4 400 71 100 14 13 12 14 11 12 74 69 65 54 27 Hours per week 63 Hoursper week 21 22 22 21 21 22 ITV1+GMTV1 66 65 61 56 53 ITV1+GMTV1 25 25 26 95 105 119 103 100 106 25 26 26 BBC Two 200 BBC Two 50 68 70 68 70 70 73 21 21 21 20 20 22 BBC One BBC One 103 99 105 101 104 106 26 25 26 25 26 26 0 0 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010

Source: Ofcom/broadcasters. Note: Figures do not include spend on nations and regions output.

33 Figure 2.34 Genre mix on five main PSB channels in peak time, by hours Proportion of total hours 7,933 7,936 7,929 7,923 7,978 7,964 8,009 100% Sport 401 341 507 366 457 357 483 Light Entertainment & 1,268 1,277 1,144 1,395 1,362 1,282 1,225 Modern Music 80% Films 688 618 611 757 579 630 675 Drama 1,746 60% 1,935 1,952 1,833 1,648 Education 1,863 1,954 General Factual

40% Religious/Ethics 2,656 2,512 2,105 2,253 2,149 2,370 2,365 Children's

20% Arts & Classical Music 52 73 64 51 54 50 56 296 318 318 303 312 308 328 Current Affairs 835 785 788 792 871 878 879 0% News 2004 2005 2006 2007 2008 2009 2010 Source: Ofcom/broadcasters. Note: Includes five main channels including GMTV1, figures do not include hours of nations and regions output. 34 Figure 2.35 Genre mix on five main PSB channels in daytime Proportions of total hours 21,668 21,553 21,313 21,703 21,612 21,597 21,654 100% Sport 1,958 1,837 1,753 1,687 1,796 1,505 1,650 Light Entertainment & 2,491 2,370 2,435 2,814 2,596 2,810 2,713 Modern Music 80% Films 1,811 1,716 1,593 1,645 1,557 2,080 2,464 2,759 2,817 2,590 2,719 Drama 2,056 1,797 2,654 60% 275 738 821 816 810 733 659 Education 3,150 General Factual 3,512 3,744 4,368 4,637 4,775 5,232 40% Religious

4,906 4,575 Children's 4,333 4,275 4,074 4,137 4,214 20% Arts & Classical Music 379 384 460 451 459 438 440 Current Affairs 3,299 3,191 3,041 3,068 2,901 2,881 2,793 0% News 2004 2005 2006 2007 2008 2009 2010 Source: Ofcom/broadcasters. Note: Includes five main channels plus GMTV1. Figures do not include hours of nations and regions output.

35 Figure 2.36 The BBC’s digital channels genre mix by hours: all day Output (hrs) 32,792 32,838 32,506 33,148 33069 33151 33202 Investment (£m) £231m £233m £223m £224m £216m £206m £230m 100% 1,738 1,690 1,788 1,576 1,622 1,588 2,210 Other 1,143 1,452 1,386 1,743 1,569 1,532 1,768 1,478 1,167 1,077 1,048 1,182 1,077 1,296 2,297 2,482 2,335 2,471 2,629 2,405 80% 2,503 Light Entertainment & Modern Music

8,021 8,033 7,957 8,326 8,347 8,406 8,213 Arts & Classical Music 60% 340 225 611 1,168 1,331 1,339 1,472 General Factual

40% Children's 17,890 17,674 16,762 16,740 16,593 16,546 16,460 20% Current Affairs

News 0% 2004 2005 2006 2007 2008 2009 2010 Source: Ofcom/broadcasters. Note: BBC digital channels include BBC Three, BBC Four, BBC News 24, BBC Parliament, CBBC, CBeebies. Investment figures are in 2009 prices. ‘Other’ includes: Education, Drama, Film, Religion and Sports. The BBC allocated Parliamentary coverage to the Current Affairs genre in the data for 1998 to 2003. From 2004, it has been allocated to either News or Current Affairs.

36 Figure 2.37 Total multichannel hours and first-run originations/acquisitions, 2010

Proportion of hours by channel genre (%) Total = 1,544,668 Total = 250,253 1 year change % Total (2009 = 1,562,613) (Total 2009 = 250,819) Total First Run

100% 4% 206% 171,074 17,598 Movies 34,045 80% 281,280 1,496 6% -15% Music 32,009 126,884 -65% -60% Leisure 60% 81,042 224,550 6% -10% News 40% 175,947 50,271 46% 46% Sport 102,309 5,085 20% 6,729 -15% -64% Factual 430,615 53,987 -17% 9% Kids 0% All Hours First-Run Hours 0% -5% Entertainment

Source: Ofcom/broadcasters Note: Broadcast hours exclude Sky Box Office and ‘barker’ channels, which promote TV content. First-run hours include first-run in-house, commissioned and acquired content.

37 Figure 2.38 Content spend by commercial multichannels in key genres: 2009 - 2010

1 year £m Total £2,086m Total £2,322m change % 2,500 £23m £23m 2% Music £71m £42m £23m £32m £99m 2,000 £59m £56m £257m -29% Leisure £100m £279m -24% Children's 1,500 £518m £479m 19% Factual 1,000 -1% News £1,289m 500 £1059m -8% Films

8% Entertainment 0 2009 2010 22% Sport

Source: Ofcom/broadcasters. Note: Excludes BBC digital channels.

38 Figure 2.39 Online TV revenues

Revenues (£m) Annual Growth 160 151.7

140 95% Total 120 82.8 116% FTV views 100 78.0 80 14% Subscriptions

60 49.6 38.3 20.4 12% PPV 40 19.1 transactions 21.6 17.9 15.0 43.3 152% DTO 20 6.7 11.0 11.7 17.2 transactions 0 8.4 2005 2006 2007 2008 2009 2010

Source: Screen Digest. Note: FTV = free to view; PPV = pay per view; DTO = download to own. Due to different data sources this chart is not directly comparable with previous charts.

39 Figure 2.40 Availability of digital television platforms

Proportion of population covered (%) 100% 80% 60% 98% 40% 85% 20% 48% 0% Digital satellite television Digital terrestrial television Digital cable television

Source: Ofcom research/operators. Note that the DTT coverage figures represent the availability of a service of 17 television channels. DTT coverage levels represent Ofcom estimates. Data correct as at June 2011.

40 Figure 2.41 Take-up of multichannel TV on main sets Penetration of homes (%) 41.7% 44.7% 48.0% 56.7% 64.9% 71.8% 80.3% 87.2% 89.6% 92.1% 93.1% TV Households (m) 26 24 Digital terrestrial 22 only 20 Analogue cable 18 16 Digital cable 14 12 Free-to-view 10 digital satellite 8 Analogue 6 satellite 4 Pay digital 2 satellite 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Ofcom, GfK, Sky, Virgin Media. Data from Q1 2007 are based on consumer research, previous quarters use platform operator data, research and Ofcom estimates. Note: Digital terrestrial relates to DTT-only homes. Figure 2.42 Platform share, by TV set

Penetration (%) Main TV set TV Set 2 TV Set 3 TV Set 4 100% 6 13 12 8 19 21 25 27 33 33 Analogue 80% 36 40 40 terrestrial 45 49 46 40 38 51 38 38 60 63 33 67 60% DTT

11 11 56 61 12 11 11 40% 48 53 61 40 48 50 59 Cable 39 43 25 39 25 20% 38 41 42 22 36 37 4 4 3 3 3 3 2 3 3 3 2 1 2 2 Satellite 13 12 13 14 14 1 10 9 9 11 9 9 9 8 8 6

0% 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1

Source: GfK NOP consumer research. Note: columns do not always equal 100% due to the exclusion of some services from the chart, such as TV via broadband. Figure 2.43 DTT, satellite and cable net additions, year to Q1 2011

Homes added (000’s) DTT-only additions Pay-satellite additions Free-to-air satellite additions Cable additions

750 650 550 450 350 738 250 150 305

50 59 -40 -50

Source: Pay platform additions based on Virgin Media results and Ofcom- estimated UK

*figures based on BSkyB UK & Ireland results. DTT and free satellite additions based on Q1 2011 and Q1 2010 consumer survey results. Note: Chart uses multiple sources and is therefore intended to be considered only as a general indication of performance. Figure 2.44

Platform demographics by age, socio-economic group and viewing hours: 2010

% platform profile Average Hours per day

16-24 25-44 45-64 65+ AB C1 C2 DE 4.2 100% 4.0 4.0 4.5 13% 11% 3.9 18% 23% 23% 23% 4 27% 32% 80% 44% 39% 3.5 30% 31% 18% 30% 18% 21% 3 60% 31% 19% 16% 2.5 24% 31% 2 40% 30% 31% 40% 44% 28% 38% 32% 27% 1.5 20% 20% 1 28% 25% 19% 21% 26% 0.5 15% 13% 14% 13% 19% 0% 0

Source: Ofcom and BARB 44 Figure 2.45

Average hours of television viewing per day, by age, all homes

Hours viewed

6 Individuals 5 Children Adults 16-24 4.04 4 3.7 3.65 3.6 3.63 3.74 3.75 Adults 25-34 Adults 35-44 3 Adults 45-54 Adults 55-64 2 Adults 65+

0 2004 2005 2006 2007 2008 2009 2010 Source: BARB. Note: due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years.

45 Figure 2.46

Average weekly TV reach in all homes, by channel 15-minute consecutive weekly reach – full weeks (%) 100%

82% 83% 80% 78% 80% 79% 78% 79% Multichannels 77% 77% 71% 70% 69% 79% 74% 74% BBC One 68% 63% 69% 68% 60% 61% 58% 60% 57%63% 64%57% 59% BBC Two 62% 56% 50% 58% 55% 57% 54% 54% ITV1 41% 40% 44% 44% 40% 42% 40% 40% C4 + S4C Five 20%

0% 2004 2005 2006 2007 2008 2009 2010 Source: BARB Note: due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years. Note: In 2010 C4 and S4C became two separate channels following digital switchover in Wales. For the purposes of this report the two channels remain labelled together in relevant charts. S4C weekly reach’s in 2010 was 0.7%. 46 Figure 2.47

Average 2010 audiences, weekdays/weekends: by day part, all homes

Average audience (millions) 28

16 Weekend 12 Weekday 8

0 06:00 - 09:00 - 12:00 - 15:00 - 18:00 - 21:00 - 00:00 - 03:00 - 07:00 10:00 13:00 16:00 19:00 22:00 01:00 04:00 Source: BARB

47 Figure 2.48

Average 2010 weekday audiences, by day part and age, all homes Average audience (millions) 7

6 Children Adults 16-24 5 Adults 25-34 Adults 35-44 4 Adults 45-54 3 Adults 55-64 Adults 65+ 2

0 06:00 - 09:00 - 12:00 - 15:00 - 18:00 - 21:00 - 00:00 - 03:00 - 07:00 10:00 13:00 16:00 19:00 22:00 01:00 04:00 Source: BARB

48 Figure 2.49

Average 2010 weekend audiences, by day part and age, all homes Average audience (millions) 7

6 Children Adults 16-24 5 Adults 25-34 Adults 35-44 4 Adults 45-54 3 Adults 55-64 Adults 65+ 2

0 06:00 - 09:00 - 12:00 - 15:00 - 18:00 - 21:00 - 00:00 - 03:00 - 07:00 10:00 13:00 16:00 19:00 22:00 01:00 04:00 Source: BARB

49 Figure 2.50

Channel shares in all homes: 1983 to 2010 Audience share, all homes (%) 60%

50% BBC One

40% BBC Two

30% ITV 1

Channel 20% 4 + S4C Five 10% Others 0% 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: BARB, TAM JICTAR and Ofcom estimates. Note: due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years. Note: In 2010 C4 and S4C became two separate channels following digital switchover in Wales. For the purposes of this report the two channels remain labelled together in relevant charts.S4C 2010 channel share = 0.1%.

50 Figure 2.51

Five main PSB channels’ audience share, all homes Audience share (%) 73.8% 70.3% 66.8% 63.6% 60.8% 57.8% 55.5% 80% 70% 6.6% 6.4% 5.7% 9.8% 5.2% 60% 9.7% 5.0% Five 9.8% 8.6% 4.9% 7.8% 4.5% 50% 6.8% 22.8% 6.3% Channel 4 + 21.5% 19.7% S4C 40% 19.2% 18.4% 17.8% 17.0% ITV1 30% 10.0% 9.4% 8.8% 8.6% 7.8% 7.5% 6.9% 20% BBC Two

24.7% 23.3% 22.8% 22.0% 21.8% 20.9% 20.8% 10% BBC One 0% 2004 2005 2006 2007 2008 2009 2010 Source: BARB. Note: due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years. Note: In 2010 C4 and S4C became two separate channels following digital switchover in Wales. For the purposes of this report the two channels remain labelled together in relevant charts.S4C 2010 channel share = 0.1%. 51 Figure 2.52

Five main PSB channels’ audience shares, by platform Audience share (%) 100% 100%

Terrestrial homes 80% 74% 69% 65% 62% Digital 69% 60% 56% terrestrial 60% 65% 62% 60% 58% 56% homes All homes 49% 48% 49% 48% 49% 40% 48%

Cable and 20% satellite homes

0% Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Source: BARB, all homes, all viewers, various platforms. Note: due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years. Note: In 2010 C4 and S4C became two separate channels following digital switchover in Wales. For the purposes of this report the two channels remain grouped together in relevant charts.S4C 2010 channel share (all homes)= 0.1%. 52 Figure 2.53

Channel share, by platform: 2010

Audience share (%) Analogue terrestrial Digital terrestrial Digital cable Digital satellite 60% 53% 50%

42% 40% 37%

28%

21% 18% 17% 20% 18% 16% 16% 15% 11% 7% 6% 6% 6% 6% 5% 4% 5% 3% 3% 0% BBC One BBC Two ITV1 C4 + S4C Five Other Source: BARB. Note: In 2010 C4 and S4C became two separate channels following digital switchover in Wales. For the purposes of this report the two channels remain labelled together in relevant charts.S4C 2010 channel share (all homes) = 0.1%.

53 Figure 2.54

PSB and portfolio channel shares in multichannel homes Audience share (%) 100%

33.1% 31.2% 29.7% 28.1% 28.4% 28.6% 80% 35.1% Other digital channels

11.3% 13.6% 15.9% 16.9% 60% 7.4% 9.2% 17.4% PSB portfolio channels 40%

57.5% 57.7% 57.6% 56.7% 56.0% 54.8% 54.0% PSB channels 20%

0% 2004 2005 2006 2007 2008 2009 2010 Source: BARB. Note: due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years. Note: In 2010 C4 and S4C became two separate channels following digital switchover in Wales. For the purposes of this report the two channels remain grouped together in relevant charts.S4C 2010 channel share = 0.1%.

54 Figure 2.55 Broadcaster portfolio shares in multichannel homes Audience share (%) 100% 14.3% 14.0% 12.9% 12.8% 12.3% 11.8% 12.8% Other 2.6% 2.6% 2.8% 2.8% 2.6% 2.7% 2.7% 1.9% 3.1% 2.9% 2.7% 2.6% 4.1% Virgin Media 80% 3.4% 3.9% 3.9% 4.0% 4.2% 4.0% 4.0% 8.4% 7.6% 6.8% 7.4% 9.3% 8.7% Viacom 10.4% 5.9% 6.0% 5.9% 5.1% 5.6% 5.1% 5.3% 11.5% UKTV 60% 11.2% 11.2% 11.7% 11.5% 8.6% 9.6% BSkyB* 22.0% 22.3% 22.6% 22.6% 22.7% 40% 21.7% 22.1% Five

Channel 4 20% 29.5% 29.8% 30.6% 31.2% 31.8% 31.4% 32.3% ITV BBC 0% 2004 2005 2006 2007 2008 2009 2010 Source: BARB. Note: due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years.*BSkyB took ownership of VMTV in June 2010, Virgin Media TV portfolio shares are included in the BSkyB figure for the whole of 2010. ITV includes all ITV network channels, not just those owned by ITV plc. Note: In 2010 C4 and S4C became two separate channels following digital switchover in Wales. For the purposes of this report the two channels remain grouped together in relevant charts.S4C 2010 channel share = 0.1%. 55 Figure 2.56

BBC portfolio share in multichannel homes Audience share (%) 29.5% 29.8% 30.6% 31.2% 31.8% 31.4% 32.2% 1.3% 1.3% 1.3% 1.3% 30% 1.2% 0.6% 0.6% 0.6%0.7% 1.3% 0.5%0.8% 0.8% 0.8% 1.1% 1.3% 0.6%0.6% 0.5% 0.5%0.6% 0.6% 0.5%0.6% 1.0% 0.4%1.1% 0.4%1.2% 1.3% 1.4% 0.7% 0.2%0.9% 0.3% Other 25% 6.9% 7.1% 7.0% 6.9% 6.6% 6.7% 6.9% CBeebies 20% CBBC BBC News 24 15% BBC Four BBC Three 10% 19.5% 19.3% 20.0% 19.9% 20.4% 20.0% 20.2% BBC Two 5% BBC One

0% 2004 2005 2006 2007 2008 2009 2010 Source: BARB Note: ‘Other’ includes BBC Parliament, BBC Choice, BBC HD and BBC Knowledge. Due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years 56 Figure 2.57 ITV portfolio shares in multichannel homes

Audience share (%) 22.1% 22.0% 22.3% 22.6% 22.7% 25% 21.7% 22.6%

0.9% 0.9% 1.0% 1.0% 1.2% 0.5% 0.7% Other 1.4% 1.4% 1.6% 1.8% 2.2% 20% 1.7% 2.0% 2.0% 2.2% 2.4% 2.6% 2.6% CITV 15% ITV4

10% 18.9% 18.4% ITV3 17.5% 17.6% 17.2% 16.9% 16.6%

5% ITV2

ITV1 0% 2004 2005 2006 2007 2008 2009 2010 Source: BARB Note: ‘Other’ includes (when relevant) ITV Play, Men & Motors, GMTV2, Granada Breeze, Plus, ITV News. ITV1, ITV2, ITV3 and ITV4 and include +1 services’ share and HD services from 2010. Due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years. 57 Figure 2.58

Channel 4 portfolio shares in multichannel homes Audience share (%) 8.6% 9.6% 11.2% 11.2% 11.7% 11.5% 11.5% 12% 0.3% 0.2% 0.3% 0.3% 0.6% 0.8% 0.8% 0.8% 0.8% 10% 0.5% 1.0% 4Music 0.1% 0.9% 1.2% 1.2% 1.9% 1.0% 1.6% 1.0% 1.8% 1.2% C4+1 8% 1.2% 1.8% 1.8% 1.9% More4 Total 6% Film4 Total 8.2% 4% 7.9% 7.4% 7.3% 6.8% 6.4% 6.1% E4 Total 2% C4 + S4C

0% 2004 2005 2006 2007 2008 2009 2010 Source: BARB. Note: due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years.E4, More4 and Film 4 respective +1 channel shares are included. Note: In 2010 C4 and S4C became two separate channels following digital switchover in Wales. For the purposes of this report the two channels remain labelled together in relevant charts.S4C 2010 channel share = 0.1%. 58 Figure 2.59

Five portfolio shares in multichannel homes

Audience share (%) 7% 5.1% 5.3% 5.1% 5.6% 5.9% 6.0% 5.9%

6% 0.8% 0.7% 0.9% 0.1% 0.6% 5% 0.6% 0.6% 0.1%0.4% 0.5% Five USA/5 USA 4% Fiver/5* 3% 5.3% 5.1% 4.9% 4.6% 4.7% 4.7% 4.5% 2% Five 1%

0% 2004 2005 2006 2007 2008 2009 2010 Source: BARB Note: 5* and 5 US include their +1 service share. Due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years 59 Figure 2.60

BSkyB portfolio shares in multichannel homes Audience share (%)

10.4% 9.2% 8.7% 7.6% 6.8% 7.4% 8.4% Former Virgin TV 12% portfolio* 0.3% Sky Arts/Real Lives 10% 0.6% 0.3% 0.1% 0.6% 0.5% Sky Travel 8% 2.9% 1.5% 2.4% 0.5% 2.7% 0.5% 0.0% 0.5% 0.6% Sky News 6% 2.2% 2.4% 3.1% 2.1% 2.2% 2.5% 4% 2.2% 1.6% Sky One/Two/Three 1.5% 1.5% 1.3% Sky movie channels 2% 3.6% 3.4% 3.2% 3.2% 2.6% 2.9% 2.7% 0% Sky sports channels 2004 2005 2006 2007 2008 2009 2010 Source: BARB. Note: due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years. *BSkyB took ownership of VMTV in June 2010, Virgin Media TV portfolio shares are included in the BSkyB figure for the whole of 2010.

60 Figure 2.61

UKTV portfolio shares in multichannel homes Audience share (%) 5% 4.2% 4.0% 4.0% 3.9% 3.9% 4.0% 4.1% Other

4% 0.2% 0.1% 0.1% UKTV G2/Dave 0.2% 0.3% 0.3% 0.2% 0.1% 0.1% 0.2% 0.4% 0.2% 0.7% 1.3% UKTV Drama/Alibi 0.3% 0.2% 1.3% 0.2% 0.5% 1.2% 3% 0.3% 0.4% 0.2% 0.6% UKTV 0.5% 0.2% 0.1% 0.4% Documentary/Eden 0.5% 0.4% 0.1% 0.8% 0.6% 0.2% 0.1% 0.1% 2% 0.1% UKTV Food/Good Food 0.7% 0.6% 0.3% 0.2% 0.6% 0.4% 0.4% 0.4% UKTV 0.4% 0.2% 0.3% 0.3% History/Yesterday 1% 1.9% UKTV Style/Home 1.6% 1.4% 1.2% 1.1% 1.2% 1.2% UKTV 0% Gold/G.O.L.D/Watch 2004 2005 2006 2007 2008 2009 2010 Source: BARB Note: UKTV portfolio channels have evolved over the past twelve months. In the 2008 figures, new channel names and shares have been matched to old channels. Due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years.

61 Figure 2.62

Aggregate shares of channel genres in multichannel homes Audience share (%) No. of channels 24% 2004 2010 22% Entertainment 24 65 20% 18% Childrens 13 24

16% Sport 12 28 14% Movies 14 33 12% 10% Documentaries 10 21

8% Music 17 29 6% News 12 16 4% 2% Lifestyle and 10 24 Culture 0% 04 05 06 07 08 09 10 ------Dec Dec Dec Dec Dec Dec Dec Source: BARB. Note: Number of channels does not include ‘+1’ services. Due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years

62 Figure 2.63

The top channels by share in multichannel homes: 2009 to 2010

Share Rank Share Rank Channel 2010 2010 2009 Channel 2010 2010 2009 BBC One 20.2% 1 1 Film4 1.2% 11 15 ITV1 16.6% 2 2 Dave 1.2% 12 11 Channel 4 7.0% 3 3 Sky Sports 1 1.2% 13 9 BBC Two 6.6% 4 4 More 4 1.1% 14 13 Five 4.5% 5 5 BBC News 1.1% 15 19 ITV2 2.5% 6 6 ITV4 1.0% 16 16 ITV3 2.3% 7 8 Sky One 0.9% 17 14 E4 1.9% 8 7 Pick TV 0.9% 18 21 BBC Three 1.4% 9 12 Channel One 0.9% 19 18 CBeebies 1.3% 10 10 5 USA 0.9% 20 22

Source: BARB. Note: Includes channels’ +1 services. Due to a new BARB measurement panel from 2010 onwards, 2010 data are not directly comparable with previous years.

63 Figure 2.64

Age and gender profile of the 30 most-viewed channels in multichannel homes Older

Yesterday ITV3 BBC4 BBC News 5 USA BBC2 BBC1 GOLD ITV4 Sky Sports 1 ITV1 CH5 Sky News Pick TV Sky More4 Film4 Sky Living ITV2 CH4 Sports Channel One 5* News Female Dave Male BBC3 Sky 1 Comedy Cbeebies E4 Central CBBC Disney Channel

Younger

Source: BARB Note: The profile of a channel is calculated relative to the television population in multichannel homes. Includes channel’s +1 services.

64 Figure 2.65

Unique audiences to selected online film and TV sites

Unique audience (m) Growth (%) Apr10– Apr 11 2.5 -13 LOVEFiLM. com 2 -29 MSN Video 75 blinkBox 1.5 -9 Virgin Media 1 Movies n/a SeeSaw

0.5 -8 Hulu

0 -29 FindAnyFilm .com Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- 10 10 10 10 10 10 10 10 10 11 11 11 11

Source: UKOM/Nielsen, home and work panel.

65 Figure 2.66

Monthly time spent per person on selected online film and TV sites

Time per person (h:mm:ss) 0:25:00 blinkBox

0:20:00 LOVEFiLM.com

0:15:00 SeeSaw

Virgin Media 0:10:00 Movies MSN Video 0:05:00 FindAnyFilm.com 0:00:00 Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- Hulu 10 10 10 10 10 10 10 10 10 11 11 11 11

Source: UKOM/Nielsen, home and work panel.

66 Figure 2.67

Proportion of adults with home internet who watch online catch-up TV

Proportion of households (%) 50% Q1 2009 Q1 2010 Q1 2011 40%41% 40% 37%38% 38% 35% 35% 33% 34% 31% 31% 32% 29% 29% 30% 26% 23% 24% 24% 24% 24% 21% 20% 18% 14% 10% 10%

0% Total 16-24 25-34 35-54 55-64 65+ Male Female

Source: Ofcom research Q1 2011 QE12. Which, if any, of these do you or your household use the internet for whilst at home? Base: All adults who have the internet at home (n=2534 UK, 376 16-24, 462 25-34, 1039 35-54, 368 55-64, 289 65+, 1234 Male, 1300 Female)

67 Figure 2.68

Video on demand use in Virgin Media homes

VoD views per month/VoD reach

90 80 70 60 Q4 2008 50 87m Q4 2009 40 53m 30 52% 64% 33m 47% Q4 2010 20 30 35 36 10 0 Average total VoD views Average VoD views per Average VoD reach per month month per user

Source: Virgin Media company results 2008-2010.

68 Figure 2.69

Unique audiences to selected video-sharing sites Unique audience (m) Growth (%) Apr10 – Apr11 -1 30 Total Videos / Movies 12 YouTube 25 -40 Google Video 20 -26 MSN Video

15 53 Dailymotion

10 -50 Bing Videos 11 Metacafe 5 156 Vimeo 0 -53 Yahoo! Video Apr-10 Jul-10 Oct-10 Jan-11 Apr-11

Source: UKOM/Nielsen, home and work panel.

69 Figure 2.70

Monthly time spent per person on selected video-sharing sites

Time per person (h:mm:ss) Ave. Videos / Movies 1:15:00 YouTube Veoh 1:00:00 Dailymotion 0:45:00 Bing Videos

0:30:00 Metacafe

0:15:00 MSN Video Yahoo! Video 0:00:00 Google Video Apr-10 Jul-10 Oct-10 Jan-11 Apr-11

Source: UKOM/Nielsen, home and work panel.

70 Figure 2.71

Popularity of top ten most viewed UK YouTube channels Number of views (m) Subscribers to channel (000) 800 350 714 Number of views (m) Subscribers (000) 700 322 608 590 622 300 600 250 529 235 250 500 435 437 435 230 200 400 139 174 286 280 150 300 200 99 72 100 64 100 22 50 0 0 BBC UK The X The X AATW Factor HDCYT Eagle Rock Eagle Parlophone ITN Showbiz Massagevideo BBC Worldside Britain's Got Talent Source: YouTube statistics June 2011.

71 Figure 2.72

Consumer attitudes towards television programme standards, by age: 2010 % of respondents

100% 4% 8% 7% 12% 13% 17% Don't know 80% 44% 51% 60% Improved 55% 58% 59% 40% Stayed the same

48% 20% 41% 31% 28% 20% Got worse 0% All Adults 16-34 35-54 55-64 65+ (16+) Source: Ofcom 2010 Media Tracker survey. Fieldwork carried out by BDRC Continental Research. Q30 – Do you feel that over the past year, television programmes have improved, got worse or stayed about the same? Base: All adults aged 16+ (2104) (643 aged 16-34, 710 aged 35-54 ,328 aged 55-64, 423 aged 65+)

72 Figure 2.73 Reasons why viewers thought TV programme quality deteriorated, 2010 % of respondents. Base: All those who felt TV programme standards got worse over the past year All Adults (16+) 16-34 35-54 55-64 65+ 70% 67% 60% 61% 61% 60% 51% 50% 42% 42% 38% 38% 40% 37% 37% 35% 34% 31% 31% 31% 30% 27% 26% 26% 24% 20% 13% 12% 10% 8% 7% 8% 7% 8% 10% 6%6% 5% 6% 5% 5% 2% 0% More repeats Lack of variety General lack of More reality More bad More Violence More quality shows language sex/sexual content Source: Ofcom 2010 Media Tracker survey. Fieldwork carried out by BDRC Continental Research. Q32 – In what ways do you think the television programmes have got worse over the past year? Base: All adults 16+ saying programmes ‘got worse’ over past year (673) (130 aged 16-34, 204 aged 35-54 , 134 aged 55-64, 205 aged 65+).

73 Figure 2.74 PIN/password-protected TV, 2010 % of respondents. Base: All those aware of features their systems have to block certain programmes/channels 100%

Don't Know 80%

61% 60% 74% 86% No 40%

20% 37% Yes 24% 13% 0% Total Any Children in HH No children in HH

Source: Ofcom 2010 Media Tracker survey. Fieldwork carried out by BDRC Continental Research. Q52 – Have you ever used this blocking system? Base: All adults 16+ aware of a feature on their systems enabling them to block/hide access to certain programmes/channels (1,051) (479 - Any children in household, 572 No children in household)

74 3. Radio and audio

0 Figure 3.1 UK radio industry key metrics

UK radio industry 2005 2006 2007 2008 2009 2010

Weekly reach of radio (% of population) 90.0% 89.8% 89.8% 89.5% 89.8% 90.6%

Average weekly hours per head 21.6 21.2 20.6 20.1 19.8 20.1

BBC share of listening 54.5% 54.7% 55.0% 55.7% 55.3% 55.2%

Total industry revenue £1,118m £1,126m £1,174m £1,137m £1,092m £1,123m

Commercial revenue £530m £512m £522m £488m £432m £438m

BBC expenditure £588m £614m £652m £649m £660m £685m

Radio share of advertising spend 3.3% 3.0% 2.9% 2.8% 2.8% 2.7%

DAB digital radio take-up (households) 11.1% 16.0% 22.3% 29.7% 33.4% 35.8%

Source: RAJAR (all adults age 15+), Ofcom calculations based on figures in BBC Annual Report and Accounts 2010/11 note 2c (www.bbc.co.uk/annualreport), AA/Warc, broadcasters. Revenue figures are nominal. Figure 3.2

Radio industry revenue and spending 2005-2010

£ million 1174 1200 1118 1126 1137 1092 1123 1000 522 438 Total commercial 530 512 488 432 800

600

400 652 649 660 685 BBC expenditure 588 614 (estimated) 200

0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operator data / BBC Annual Report 2005-2010 Note: BBC expenditure figures are estimated by Ofcom based on figures in Note 2c of the BBC Annual Report (www.bbc.co.uk/annualreport); figures in the chart are rounded and are nominal. Figure 3.3

Commercial revenue percentage change 2009-2010

All Radio National advertising Local advertising Sponsorship 6% 4.5% 4% revenue 2% 1.4%

0% -0.4% -2%

-4%

Percentage change in in change Percentage -6% -5.4%

Source: Ofcom / operator data 2009-2010 Figure 3.4 BBC station expenditure percentage change 2009/10 – 2010/11 Annual % change of BBC radio-10% station expenditure0% 10% 20% 30%

BBC Radio 3 -6.1% BBC Radio 5 Live 1.3% BBC Asian Network 4.1% BBC Local/Regional 5.8% BBC Network average 5.8% BBC Radio 4 7.0% BBC Radio 1 9.8% BBC Radio 2 12.8% BBC Radio 4 Extra 15.5% BBC 6 Music 16.1% 1Xtra from the BBC 17.0% BBC Radio 5 Live Sports Extra 19.5% Source: BBC Annual Report 2010/11 note 2c (www.bbc.co.uk/annualreport). Note that these are financial year figures, excluding BBC-wide overheads, and are therefore not directly comparable to those set out in Section 3.2.2. Figures are nominal. It should be noted that the percentage changes are based on operating expenditure for individual stations based on financial years and they do not include BBC wide overheads; as such they are not comparable with the calendar year figures that are set out in Section 3.2.2. Figure 3.5

Digital radio’s share of radio listening, Q1 2011

30% 26.5% 24.6% 24.8% 25.0% 25% 24.0% 2.0% 1.8% 2.2% 1.8% Digital 21.1% 21.1% 20.9% 1.9% 3.6% unspecified 2.9% 2.8% 3.1% 20% 2.1% 2.0% 1.7% 2.9% 4.1% 2.2% 2.1% 4.1% 4.3% 2.2% 4.0% 4.4% Internet 15% 3.6% 3.6% 3.4%

DTV 10% 16.7% 15.1% 15.8% 15.3% 15.8% 13.1% 13.3% 13.7% 5% DAB

Digital radio platforms share of all radio hours hours radio all of share platforms radio Digital 0% Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Source: RAJAR / Ipsos MORI / RSMB Note: ‘Digital unspecified’ relates to listening to digital-only stations where the survey respondent has not 5 specified the listening platform used. Figure 3.6

Ownership of DAB set, Q1 2011

Percentage of adults who claim to own a DAB set / have a DAB set in the home

40%

30%

20% 38.2% 32.1% 34.5% 27.3% 10% 19.5% 13.6% 8.1% 0% Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011

Source: RAJAR / Ipsos MORI / RSMB Q1 2005-2011.

6 Figure 3.7 Take-up of equipment capable of receiving digital radio, Q1 2011

Year-on-year increase (pp) +2 +1 +4 Share of households 75% 93% 38%

90% Cable 11% 80% Dial-up 1% 70% 60% Terrestrial 38% 50% 40% Broadband 74% 30% 20% Satellite 43% DAB radio 38% 10% 0% Internet Digital TV DAB radio

Source: Research from: Ofcom, GfK and RAJAR Q1 2010

7 Figure 3.8 BBC iPlayer quarterly radio requests

Radio requests (millions) 120 105 100 96 94 95 84 84 28 On-demand 78 80 27 28 26 Simulcast 24 26 26 60

40 77 69 66 69 52 59 58 20

0 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011

Source: Ofcom calculates based on BBC iStats http://www.bbc.co.uk/blogs/bbcinternet/bbc_iplayer_press_pack/

8 Figure 3.9

Change in listening hours between 2009 and 2010

All Radio All BBC All Commercial BBC network BBC local Nat commercial Local commercial 2010 weekly 1036m 571m 442m 480m 92m 115m 327m hours:

Share of all 100% 55.2% 42.6% 46.3% 8.9% 11.1% 31.5% radio hours:

10%

7.0%

5% 3.7% 2.8% 2.1% 1.9% Percentage change Percentage in hours listening 1.6% 1.4%

Source: RAJAR, all adults (15+). Data based on calendar year 2009 - 2010 Figure 3.10

Changes in listening hours, 2010 vs. 2009, by age group

Share of all 100.0% 11.6% 13.9% 17.6% 18.1% 16.7% 13.9% 8.4% radio hours:

All adults 15+ 15-24 25-34 35-44 45-54 55-64 65-74 75+

8% 6.29% 6% 3.86% 4.15% 4% 2.40% 2.14% 1.67% 2% 1.51% 0%

Percentage change Percentage in hours listening -2% -4% -4.31% -6%

Source: RAJAR, all adults (15+), data based on calendar years 2009 – 2010 Figure 3.11

UK commercial radio revenue and BBC radio spending

£ million 1118 1174 1137 1,200 1126 1092 1123 Total

1,000 BBC expenditure (estimated) 800 660 685 Total commercial 588 614 652 649 600 National commercial 530 522 400 512 488 438 274 268 271 432 Local commercial 246 201 210 169 153 156 200 142 136 136 Commercial 91 96 100 89 0 87 94 sponsorship 2005 2006 2007 2008 2009 2010

Figure 3.12

UK radio advertising spend and share of display advertising, 2008 – 2010

Revenue £m Share of all advertising

£1000m 4% Radio advertising expenditure Radio share of all media advertising

£800m 2.7% 2.8% 2.7% 3%

£600m 454 404 420 2% £400m

1% £200m

£0m 0% 2008 2009 2010

Source: AA/Warc Expenditure Report. Figures are nominal. www.warc.com/expenditurereport

12 Figure 3.13

Commercial radio revenue per listener

£ per listener 20 £17.13 £16.59 £16.69 £15.70 15 £13.71 £13.33

0 2005 2006 2007 2008 2009 2010

Source: Broadcaster returns and RAJAR, 2005-2010. Figures are nominal. Figure 3.14

Number of commercial analogue licences owned, by group

Lincs FM Guardian Media 3.7% 4.7% 6-10 stations in group UTV 18.9% 5.1%

UKRD 6.7% 2-5 stations in group 9.1% Bauer Radio 13.8%

Independent 15.8% Global Radio 22.2%

Source: Ofcom, June 2011 Figure 3.15 Share of all radio listening hours, Q1 2011

Percentage share of listening hours Orion, 1.0% Other, 8.9% Absolute, 1.5% UTV, 3.2% BBC network, 46.1% GMG, 4.4%

Bauer, 10.9%

Global, 16.3%

BBC local/regional, 8.7% Source: RAJAR, all adults (15+), year ending Q1 2011, does not include community radio listening Figure 3.16 Commercial radio by weekly audience reach: Q1 2011

Weekly UK audience reach 38.2% 25.9% 10.2% 8.0% 4.3% 2.6% 1.2%

Annual change + 2.2pp + 1.7pp +0.7pp +0.9pp +0.9pp +0.2pp -0.1pp in reach

20,000 45% 40% 15,000 35% 30%

thousands) 25% ( 10,000 19,727 20% 13,349 15% 5,000 10% 5,274 4,133 5% 2,224 1,297 639 Weekly reach Weekly 0 0% Global Bauer GMG UTV Absolute Orion Lincs FM

Source: RAJAR, all adults (15+), Q1 2011. Note: pp = percentage points increase Figure 3.17 Weekly reach of BBC stations: Q1 2011

Average weekly listening (% UK adults), and year on year change

BBC Radio 2 28.2% (- 0.2%) BBC Radio 1 22.9% ( 0.0%) BBC Radio 4 21.0% (+ 1.4%) BBC Local/Regional 19.8% (+ 0.3%) BBC Radio FIVE LIVE 13.1% (+ 0.3%) BBC Radio 3 4.4% (+0.5%) BBC World Service 3.5% (+1.0%) BBC 6 Music 2.5% (+ 0.5%) BBC 7 2.2% (+ 0.2%) 1Xtra from the BBC 1.7% (+ 0.4%) BBC Asian Network UK 1.0% (+0.3%)

0% 10% 20% 30%

Source: RAJAR, all adults (15+), Q1 2011 Figure 3.18

BBC radio stations: spend on radio content, 2010/11

Cost (£m), (and % change year on year)

BBC English Local Radio 114.8 (+4.2%) BBC Radio 4 92.8 (+7.0%) BBC Radio 5 Live 55.4 (+0.7%) BBC Radio 2 46.7 (+15.6%) BBC Radio 3 37.3 (-8.6%) BBC Radio 1 36.7 (+14.0%) BBC Radio Scotland 23.8 (-4.4%) BBC Radio Ulster / Foyle 16.2 (+12.5%) BBC Radio Wales 13.0 (-0.8%) BBC Radio Cymru 11.8 (-4.1%) BBC Asian Network 8.6 (-3.4%) BBC 1 Xtra 7.4 (+13.8%) BBC Radio 6 Music 7.3 (+12.3%) BBC Radio 4 Extra 5.3 (+6.0%) BBC Radio nan Gàidheal 3.8 (-9.5%) BBC Radio 5 Live Sports Extra 2.5 (no change) 0123456781091112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979810099101102103104105106107108109110111112113114115116117118119120121122123124125126127128129130131132133134135136137138139140141142143144145146147148149150

Source: BBC Annual Report 2010/11 Part 2 (www.bbc.co.uk/annualreport). Figure 3.19

BBC radio stations: cost per listener hour of programmes, 2010/11

Cost (pence) per listener hour, (and change year on year)

BBC Radio nan Gàidheal 13.7 (-3.0p) BBC Radio Cymru 12.9 (-0.8p) BBC Radio Scotland 6.8 (-1.0p) BBC Asian Network 6.7 (-1.8p) BBC Radio 3 5.9 (-0.4p) BBC Radio Wales 5.7 (-0.2p) BBC Radio Ulster / Foyle 4.8 (+0.5p) BBC 1 Xtra 3.9 (+0.3p) BBC English Local Radio 3.2 (no change) BBC Radio 5 Live Sports Extra 2.6 (+0.4p) BBC Radio 5 Live 2.1 (-0.2p) BBC Radio 4 Extra 1.7 (-no change) BBC Radio 4 1.4 (+0.1p) BBC Radio 6 Music 1.4 (-1.3p) BBC Radio 1 0.7 (+0.1p) BBC Radio 2 0.5 (no change) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Source: BBC Annual Report 2010/11 Part 2 (www.bbc.co.uk/annualreport). Figure 3.20 UK radio stations broadcasting on analogue, DAB digital radio, and community radio, July 2010

Type of station AM FM AM/FM total

Local commercial 53 245 298

UK-wide commercial 2 1 3

BBC UK-wide networks 1 4 5

BBC local and nations 36 46 46

Community radio 4 188 193

TOTAL 96 484 545

Source: Ofcom, July 2011 Note: the conditions of each licence will determine the amount of programming that may be shared between these licensed services. Here we have taken the view that a service providing at least four hours a day of separate programming (even if the same brand has other services) equals one service. Figure 3.21 Community radio income, by source Community radio stations’ income 2009/10

Income by type The average community radio station income was around £74,500 Other 20% (£14,500) On-air advertising and sponsorship 22% (£16,500)

Donations 14% (£10,500)

Grants 35% (£26,000) SLAs 9% (£7,000)

Source: Ofcom, community station revenues 2009/10 Figure 3.22

Recorded music retail revenues: 2007-2010

Revenues (£bn)

1.75 CAGR(%) 1yr 3yr 1.5 1.38 1.32 1.31 0.06 1.25 0.08 0.05 0.06 1.20 -8.6 -4.5 Total 0.10 0.13 0.05 0.14 1 -10.7 -6.2 Music videos 0.75 9.4 18.6 Singles 1.23 1.17 1.13 0.5 1.01 -10.6 -6.5 Albums 0.25 0 2007 2008 2009 2010

Source: Entertainment Retailers’ Association yearbook, 2011. Figures are nominal.

22 Figure 3.23

Distribution of recorded music retail revenues: 2007-2010

Total recorded music revenues £1.32bn £1.27bn £1.26bn £1.15bn 100% 8% 13% 19% 24% Albums Albums 80% 47% 60% Singles 92% 87% 81% Digital share 40% 76% Singles 53% 20% Physical share Revenue share (%) Revenue 0% 2007 2008 2009 2010 Single/album split in 2010

Source: Entertainment Retailers’ Association yearbook 2011 Note: This chart does not include revenues from music videos.

23 Figure 3.24

Recorded music sales by volume: 2007-2010

Sales volumes (million units)

175 161.8 152.8 150 144.7 139.8 6.2 134.6 10.3 124.8 125 16.1 115.2 21.0 100 86.6 159.7 Digital 75 149.7 138.5 Physical 129.5 118.5 110.3 50 103.8 78.0 25 0 8.6 4.9 3.1 2.1 2007 2008 2009 2010 2007 2008 2009 2010 Albums Singles

Source: Entertainment Retailers’ Association yearbook 2011

24 Figure 3.25

Digital music revenues, by business model: 2005-2010

Revenues (£m) CAGR(%) 300 1yr 5yr £259.7 5.9 250 £225.9 18.5 15 35 Total 6.6 200 19.6 £169.8 -11 -15 Mobile sub- 10.9 scription 150 19.4 £112.4 -6 7 Mobile DTO £89.7 10.7 226.0 100 21.4 189.7 £56.9 14.1 -7 15 Online sub- 22.7 130.0 scription 50 13.5 72.1 46.9 19 54 Online DTO 0 2005 2006 2007 2008 2009 2010

Source: Screen Digest Note: excludes revenue from ad-supported services. Due to different data sources this chart is not directly comparable with previous charts. Figures are nominal.

25 Figure 3.26

Reach of radio, by sector

Percent of population

100% 91.6% 89.7% 90.0% 90.4% 89.3% 89.7% 89.6% 90.6% All radio 66.5% 66.8% 65.9% 67.9% 80% 65.8% 66.1% 64.9% 67.1% All BBC 63.8% 62.6% 62.9% 61.0% 61.5% 61.2% 63.7% 66.0% All commercial 60% 58.2% 60.6% 61.8% 58.3% 57.6% 58.1% 59.0% 58.5% BBC network 52.0% 50.8% 51.7% 48.9% 49.5% 49.3% 51.5% 52.9% 40% 28.5% 30.9% Local commercial 26.6% 26.0% 26.7% 27.1% 26.9% 25.4% 20% National commercial 21.0% 21.1% 20.6% 19.5% 18.7% 17.3% 18.4% 19.8% BBC nations / local 6.1% 0% 5.2% 5.7% 6.0% 6.2% 5.9% 6.3% 6.3% 2004 2005 2006 2007 2008 2009 2010 Q1 2011 Other

Source: RAJAR, all adults (15+), 2004-2010 calendar years and Q1 2011 Figure 3.27

Share of listening hours, by sector

Percent of listening hours

60% 55.1% 54.4% 55.4% 55.7% 55.2% 55.2% 55.0% 54.0% All BBC 43.0% 44.0% 43.2% 45.4% 46.4% 46.7% 46.3% 46.2% BBC Network 44.2% 40% 42.8% 43.2% 42.4% 42.2% 42.6% 43.4% 42.6% BBC local / nations 34.2% 32.7% 32.8% 31.1% 31.6% 32.2% 31.5% 31.0% All commercial 20% 11.0% 11.1% 10.4% 11.3% 10.6% 10.4% 11.1% 11.7% National commercial

8.9% 10.0% 10.1% 10.5% 10.0% 9.3% 8.5% 8.8% Local commercial 0% 2.2% 2.2% 1.8% 2.1% 2.3% 2.1% 2.2% 2.4% Other 2004 2005 2006 2007 2008 2009 2010 Q1 2011

Source: RAJAR, all adults (15+), 2004-2010 calendar years and Q1 2011 Figure 3.28

Changes in listening hours by sector: 2005 - 2010

Percentage change in listening hours

All Radio All BBC All Commercial BBC network radio BBC local / national National commercial Local commercial

20%

10% 5.2% 2.5% 0% - 2.2% -2.9% -4.3% -10% -7.3%

-20% -21.0% -30%

Source: RAJAR, all adults (15+), data based on calendar years 2005 and 2010 Figure 3.29 Average weekly listening by demographic, year ending Q1 2011

Weekly listening hours 25 Average listening per week 20.3 hours 20

15 23.9 23.3 21.4

22.2 21.4 21.0 10 20.7 19.2 19.7 17.5 14.6 5

0 15-24 25-34 35-44 45-54 55-64 65-74 75+ Adult Adult ABC1 C2DE Men Women Adults Adults

Source: RAJAR, all adults (15+), year ending Q1 2011, average weekly listening hours per head of population Figure 3.30 Changes in listening hours by age: 2005-2010

Percentage change in listening hours

All 15+ 15-24 25-34 35-44 45-54 55-64 65-74 75+

10% 6.9%

5% 3.6% 2.6%

0% -0.6%

-5% -2.9% -5.8% -8.2% -10%

-15% -14.5%

Source: RAJAR, all adults (15+), data based on calendar years 2005 and 2010 Figure 3.31 Most listened-to radio stations, year ending Q1 2011

Average weekly reach (millions) % change year on year

15 +1.7% Radio group

+3.9% BBC 12 +4.7% +3.9% Global 9 +5.5% 14.0 +6.7% UTV 6 11.7 10.5 9.5 +7.2% Bauer +4.6% +6.5% 6.8 +4.6% +9.4% +11.2% + 66.3% +11.6% 3 5.8 +11.0% -3.4% +1.9% 2.9 Absolute 2.1 2.1 2.0 2.0 1.8 1.5 1.5 0 1.2 1.1 1.0 The Hits The Classic FM Classic talkSPORT Magic 105.4 Magic Kiss 100 Kiss FM BBC Radio2 BBC Radio1 BBC Radio4 BBC Radio3 BBC Radio7 BBC BBC6 Music Heart London Heart Capital London Capital Absolute Radio Absolute SportsExtra) BBC World Service World BBC All Local BBC Radio Radio BBC Local All BBC Radio Five Live (inc RadioFive BBC

Source: RAJAR, all adults (15+), year ending Q1 2011.

31 Figure 3.32

Share of listening hours across analogue and digital platforms

Radio listening share by digital and analogue listening 100% 17.8% 20.1% 24.0% 26.5% 80% 9.5% Digital 12.5% 9.3% 8.1% 60% Unspecified 40% 72.7% 67.5% 66.7% 65.4% Analogue 20%

0% Q1 2008 Q1 2009 Q1 2010 Q1 2011

Source: RAJAR Ipsos MORI/ RSMB. All adults (15+), data relates to corresponding year ending each date shown Note: Unspecified relates to listening where the radio platform was not confirmed by the listener. Figure 3.33

Digital radio monthly listening by age group

Digital radio listening by age group (at least monthly)

60%

40%

58% 53% 50% 53% 50% 20% 42% 25%

0% All 16+ 16-24 25-34 35-54 55-64 65-74 75+

Source: Ofcom research, Q1 2011 Base: All who listen to the radio (n=2811) Q: Use digital radio at least monthly

33 Figure 3.34 Audience profiles and platform split, by sector and station, year ending Q1 2011

Share All Radio / BBC / commercial National commercial BBC stations of radio listening 100% 46% 9% 11% 32% 4% 2% 1% 9% 16% 1% 12% 5% 1% 100% 8 7 9 8 9 10 10 7 8 8 7 7 8 14 16 18 80% 25 28 26 21 29 28 Not Stated 26 38 48 55 60% 100 Digital 40% 78 75 73 67 65 64 63 70 64 66 54 20% 44 39 Analogue 0%

Source: RAJAR, Q1 2011, UK Adults aged 15+ Figure 3.35 Most listened-to digital-only stations, Q1 2011

Average weekly reach Q1 2011 (millions) % change year on year

1.5 +27% +10% +8% +28% +35% +17% +15% +40% +136% +5% +12% new +26% -16% +14% new

Radio group

1.0 Bauer BBC 1.3 1.2 1.1 1.1 Independent / other 0.5 0.9 Absolute 0.8 0.8 0.6 0.6 Global 0.5 0.3 0.3 0.3 0.2 0.2 0.2 0.0 Q Chill Heat The Hits The Jazz FM Jazz NMERadio Planet Rock Planet BBC6 Music BBC Radio7 BBC Absolute 80s Absolute Classic Rock Classic Absolute Radio Absolute Smash Hits Hits Radio Smash 1Xtrafrom the BBC Absolute Radio 90s Absolute Absolute Radio 00s Absolute Five Live Extra Live Sports Five Source: RAJAR, Q1 2011, UK adults aged 15+ Figure 3.36 Share of listening hours, by nation England Scotland Wales N Ireland UK Listening hours share for BBC and commercial stations, local/national 100% 2% 2% 1% 9% 2% Other 26% 31% 32% 80% 40% 34% Local 11% Commercial 60% 11% 11% 12% 8% National 8% 13% 9% Commercial 40% 8% 22% BBC Local/National 47% 50% 20% 46% 37% BBC Network 27%

0% England Scotland Wales Northern UK TOTAL Ireland

Audience share by Average weekly category listening 22.3 hours 21.8 hours 23.3 hours 22.2 hours 22.3 hours (Year to Q1 2011) % share BBC & Reach 90.9% 88.1% 92.9% 92% 90.8% commercial, local & Source: RAJAR, All adults (15+), year ending Q1 2011 Note: Audience share by category national (year to Q1 2011) % share BBC & commercial, local & national

36 Figure 3.37

Location of listening – year to Q1 2011

Work/Elsewhere 15% In-vehicle 20%

Home 65%

Source: RAJAR, year ending Q1 2011, UK adults 15+ Figure 3.38

Number of analogue and digital radio sets sold

Total annual sales 9.4 million 10.4 million 9.3 million 9.2 million 8.5 million

Share of sales 81.5% 18.5% 79.9% 20.1% 77.5% 22.5% 79.1% 20.9% 77.7% 22.3%

10 8.3 7.7 7.2 7.3 8 6.6 Analogue sets 6 DAB sets 4 1.7 2.1 2.1 1.9 1.9 2 0 Year to Q1 Year to Q1 Year to Q1 Year to Q1 Year to Q1 Radio set sales (millions) set (millions) sales Radio 2007 2008 2009 2010 2011

Source: GfK sales data, 2006-2011. Note: Figures cover GB only, GfK Panelmarket data represents over 90% of the market. Categories of device included are; portable radios, personal media players, car audio systems, home audio systems, clock radios, radio recorders, headphone stereos, tuners and receivers. Figure 3.39

Have you heard of the term ‘DAB’ or ‘digital radio’?

Don't know 3% No 14%

Yes 83%

Source: Ofcom research 2011

39 Figure 3.40

Likelihood of buying a DAB radio within the next 12 months

Percentage of respondents who listen to the radio and have any active radio sets at home but have no DAB set in the home 60% 51% 50%

40%

30% 28% 21% 20%

10%

0% Likely to buy Unlikely to buy Don't know

Source: Ofcom research, Q1 2011 Base: Those who listen to the radio and have any active radio sets but have no DAB sets in the home (n=1304) QP12: How likely is it that your household will get a DAB radio in the next 12 months?

40 Figure 3.41

Unique audience of selected music streaming sites

Unique audience (m) Growth (%) Apr 10– Apr 11 1.75 7 Spotify 1.5 -27 Last.fm 1.25 1 -18 We7.com

0.75 49 Grooveshark 0.5 -100 music.myspace. 0.25 com -99 songs.sky.com 0 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11

Source: UKOM / Nielsen. Month of April 2011, home and work panel. Applications included.

41 Figure 3.42 Audio internet usage

% of respondents 2010 2011 19% 20% 18% 16%

12% 8% 8% 7% 3% 4% 2% 0% Listening to radio Streamed audio services Streamed audio services (free) (subscription based)

QE10A. Which, if any, of these do you or members of your household use the internet for whilst at home? Source: Ofcom research, Q1 2011 Base: Those with access to the internet at home (n= 2534)

42 Figure 3.43

Time spent using selected music services and media players

Time per person (hours) 3:00:00 Spotify (App) iTunes (App)

Windows Media 2:00:00 Player (App) We7.com

Grooveshark 1:00:00 Napster

Last.fm

0:00:00 music.myspace.c Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 om

Source: UKOM/Nielsen. Month of April 2011. Home and work panel. Applications included.

43 Figure 3.44 MP3 player/iPod ownership and personal use

% of respondents Personal use Ownership 50% 45% 39% 40% 40% 33% 32% 30% 30% 26% 27% 20% 20% 18%

10%

0% UK England Scotland Wales Northern Ireland QB1: Which of the following do you, or does anyone in your household, have in your home at the moment? QB2. Do you personally use: MP3 player/ iPod? Source: Ofcom research, Q1 2011 Base: All adults aged 16+ (n = 3474 UK, 1983 England, 487 Scotland, 493 Wales, 511 Northern Ireland)

44 4. Internet and web-based content

Communications market report, August 2011 4.1 Key market developments in internet and web-based content

2 Figure 4.1 UK internet and web-based content market: key statistics

UK internet & web-based content 2006 2007 2008 2009 2010 2011 market

1PC / laptop take-up (%) 67 71 72 74 76 78

1Internet take-up (%) 60 64 67 70 73 77

1Total broadband take-up (%) 41 52 58 68 71 74

1Fixed broadband take-up (%) n/a n/a n/a 65 65 67

1Mobile broadband take-up (%) n/a n/a n/a 12 15 17

1Internet on mobile phone take-up (%) n/a n/a n/a 20 22 28

1Social networking on internet take-up (%) n/a n/a 20 30 40 46

2Internet advertising expenditure £2.0bn £2.8bn £3.4bn £3.5bn £4.1bn n/a

3Mobile advertising revenue n/a n/a n/a £37.6m £83.0m n/a

Sources: 1Ofcom consumer research (Q1 each year), 2IABUK /PwC, 3IAB 3 Figure 4.2 Use of mobile data services

Proportion of mobile users using service (%) 35 32 2009 Q1 2010 Q1 2011 Q1 28 30 26 25 22 20 18 17 15 13 12 10 11 10 8 5 0 Internet-enabled Web access Emailing Instant messaging Downloading services programs

QD9A: Which if any of the following activities, other than making and receiving voice calls, do you use your mobile for? Source: Ofcom technology tracker, Q1 2011 Base: All mobile users aged 16+ (n=3091); Note: ‘Internet-enabled services” data shows the proportion of adults who use a mobile phone for any of the following activities: instant messaging, downloading apps or programs, email, internet access, downloading video, video streaming, visiting social networking sites.

4 Figure 4.3 Browsing news and information on mobile phones

Proportion of mobile users browsing news and information 40% 40%

30% 22% 23% 20% 16% 12% 10% 10% 5% 3% 0%

Monthly Daily

Source: Enders Analysis/TNS-RI survey, April 2011

5 Figure 4.4 Proportion of pay-monthly customers using data and paying for it outside a bundle

80% 73% 72% 73% 70% 70% 71% 71% 72% 71% 71% 71% 68% 69% 66% 67% 63% 60%

% using data 40% % paying for data 21% 21% 19% 18% 17% 20% 16% 14% 14% 13% 13% 12% 12% 12% 13% 12% 12%

Source: Bill Monitor

6 Figure 4.5 Use of internet on mobile phones by demographic

Take-up (%) 60 57 53 2009 2010 2011 46 41 39 38 36 40 35 34 34 32 30 31 30 27 28 27 28 26 25 24 23 23 22 21 19 19 20 20 18 18 13 9 6 4 2 2 0 Total 15-24 25-34 35-54 55-64 65+ AB C1 C2 DE Male Female

QD28A: Which if any, of the following activities, other than making and receiving voice calls, do you use your mobile for? Source: Ofcom technology tracker, Q1 2011 Base: All adults 16+ (n = 3474 UK, 460 16-24, 540 25-34, 1204 35-54, 535 55-64, 735 65+, 784 AB, 1014 C1, 701 C2, 975 DE, 1679 male, 1795 female) Note: Data shows the proportion of adults who use a mobile phone for any of the following activities: Instant messaging, Downloading Apps or programs, Email, Internet access, downloading video, video streaming, visiting social networking sites.

7 Figure 4.6 Comparative use of internet by PC and mobile users

Using search engines 42 95 Sending/receiving emails 53 94 Reading/browsing News/info websites 35 82 Finding info for work/job/studies 27 72 Booking travel/other leisure 16 71 Shopping for groceries/other items 14 67 Buying/selling online 18 67 66 Banking/paying bills online 13 PC internet Looking at social networking sites 5762 users Watching TV, video or listening to music online 25 59 Mobile phone internet users Playing online games 8 26 None of the above 10 0 20 40 60 80 100 Proportion of users using service (%) Q12. Which of the following type of activities do you use the internet for? Base: All respondents (1022) Q13. And which of these do you ever use the internet on your mobile phone for? Base: Those who access the internet via mobile phone (212) Source: Monetisation of data research, conducted on behalf of the Communications Consumer Panel by Accent, fieldwork in February 2011 8 Figure 4.7 Unique UK mobile phones accessing social networking services

14,652 15,000

10,056 10,000 7,877 Almost every day Ever in month 5,000 4,410

March 2010 March 2011

Source: comScore mobiLens, three month average ending Mar-10 vs Mar-11, http://www.comscoredatamine.com/2011/05/mobile-social-media-usage-up-80-percent-in-the-uk/ 9 Figure 4.8

Top 10 UK mobile internet sites, December 2010

Total time spent (million minutes)

Facebook 2523 Google sites 702 Yahoo! sites 373 AccuWeather sites 240 Microsoft sites 127 BBC sites 127 Vodafone Group 79 Samsung Group 64 Orange sites 57 Ebay 48 0 500 1000 1500 2000 2500

Source: ComScore, Mobile Year in Review 2010 (February 2011), http://www.comscore.com/Press_Events/Presentations_Whitepapers/2011/2010_Mobile_Year_in_Review

10 Figure 4.9 UK advertising expenditure, by sector

Internet share of total advertising expenditure Advertising 8% 12% 16% 20% 24% 26% CAGR expenditure 1yr 5yr (£000) 17,081 16,333 16,589 8% -1% 16,207 15,675 Total 14,503 Cinema 2% 3% 15,000 1,758 1,584 1,892 1,828 1,074 Radio 4% -4% 2,171 2,040 1,141 1,712 2,371 2,322 1,686 Outdoor 12% 0% 10,000 4,129 3,227 -6% -11% 4,680 3,244 Magazine 4,906 4,695 Direct Mail 2% -6% 4,083 5,000 4,016 3,922 3,525 Newspaper -1% -8% 3,905 4,097 Television 16% 0% 3,350 3,541 4,097 2,016 2,813 Internet 16% 25% 0 1,367 2005 2006 2007 2008 2009 2010 Source: AA/Warc Expenditure Report Notes: All figures are nominal; CAGR = compound annual growth

11 Figure 4.10

Distribution of UK internet advertising expenditure by category

Expenditure share (%) 100% 19% 19% 21% 21% 19% 18% 80% 25% 23% 21% 19% 20% 23% 60% Other Classified 40% Display 56% 58% 58% 59% 61% 57% Paid-for search 20%

0% 2005 2006 2007 2008 2009 2010

Source: IABUK/PwC .

12 Figure 4.11 UK internet display advertising

Share of total display ads, December 2010 Total display ad impressions (billions)

50% 80 41.3% Annual 71.40 40% 63.18 change 60 30% -2.7% 41.91 40 43.08 Other 20% 18.6% 11.3% 10% 20 Social +46.6% 29.49 networking 20.11 0% 0 Social Services Portals December 2009 December 2010 networking Source: comScore Ad matrix, cited in The 2010 Europe Digital year in Review, http://www.comscore.com/Press_Events/Presentations_Whitepapers/2011/2010_Europe_Digital_Year_in_Review

13 Figure 4.12 Mobile advertising spend

Mobile phone advertising spend (£million) 83.000 Annual change 80 4.4 +116% Total 23.7 60 +57% Other formats 40 37.600 2.8 +62% Display (banner and text) 14.6 54.9 20 +172% Search 20.2 0 2009 2010

Source: IAB, referenced at http://www.digitalstrategyconsulting.com/intelligence/2011/03/smartphones_helped_double_uk_m.php#

14 Figure 4.13

Top 5 mobile advertising categories, 2009 and 2010

Proportion of advertising spend 62% 2009 2010 60%

40% 33%

19% 20% 15% 14% 12% 8% 7% 3% 3% 0%

Source: IAB, referenced at http://www.digitalstrategyconsulting.com/intelligence/2011/03/smartphones_helped_double_uk_m.php#

15 Figure 4.14 Household PC and internet take-up, 2005-2010

Proportion of adults (%) 100 PC / laptop 78 74 76 80 71 72 77 68 67 73 75 Internet 71 64 67 68 74 60 60 60 67 65 65 Total 58 broadband 52 40 Fixed 41 28 20 22 broadband 31 20 Internet on 17 mobile 12 15 0 Mobile broadband 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1

QE1: Does your household have a PC or laptop computer? / QE2: Do you or does anyone in your household have access to the Internet/Worldwide Web at HOME (via any device, e.g. PC, mobile phone etc)? / QE6: Which of these methods does your household use to connect to the Internet at home? Source: Ofcom technology tracker, Q1 2011. Base: All adults aged 16+ (n=3474) Note 1: “Internet on mobile” is the % of adults who use a mobile phone for any of the following activities: Instant messaging, Downloading Apps or programs, Email, Internet access, downloading video, video streaming, visiting social networking sites. Note 2: From,Q1 2009 the ‘Internet’ figure includes those who access the internet on mobile phones.

16 Figure 4.15

Use of wireless router vs. broadband take-up, 2007-2011

Wireless router take-up Broadband take-up 100% 80% 74 71 68 80% Currently 61 60% 57 use wireless 52 53 router 60% 40%

40% 75 Total 66 broadband 57 52 20% 41 44 penetration 20% 34

0% 0% Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q1 2010 Q1 2011 Source: Ofcom research, Quarter 1 2011 Base: Adults aged 16+ with a broadband connection at home (from 2009 this is based on fixed broadband connections only) Note: Total broadband penetration (fixed and mobile) based on all adults aged 16+ 17 Figure 4.16 Devices used to visit internet websites in 2010, by age

All aged 16+ 16-24 25-34 35-44 45-54 55-64 65+ 100% 88% 86% 85% 81% 82% 81% 80% 74% 71% 72% 69% 63% 63%

60% 55% 49%

40% 35% 31% 28% 27% 23% 20% 20% 15% 16% 12% 11% 9% 9%8% 6% 7% 5% 4%5% 4%4%5% 5% 3%3% 4% 2%2%2%2% 0% 1% 1% 2% 2%0% 0% ANY OF THESE PC or laptop at Mobile phone Games console/ Portable media E-reader Tablet home player player IN1/ IN2 – Do you or does anyone in your household have access to the internet at home through a laptop or computer? And do you personally use the internet at home?/ Do you own and use any of the items shown on this card to visit internet websites? (Prompted responses, single coded) Base: All adults aged 16+ (2117 aged 16+, 295 aged 16-24, 328 aged 25-34, 409 aged 35-44, 314 aged 45-54, 336 aged 55-64, 434 aged 65+) Significance testing shows any difference between any age group and all adults aged 16+ Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010

18 Figure 4.17

Home internet access, by age, socio-economic group and gender

Home internet access (%) 100 2009 2010 2011 88 8890 858587 85 81 83 82 7880 80 7980 76 76 7577 76 80 73 73 71 71 72 70 69 68 69 63 60 55 5456 51 49 44 40 26 23 20 20

0 UK 16-24 25-34 35-54 55-64 65-74 75+ AB C1 C2 DE Male Female Age Socio-economic group Gender QE2: Do you or does anyone in your household have access to the internet/ Worldwide Web at home? Source: Ofcom technology tracker, Q1 2011. Base: all adults 16+ (n = 3474 UK, 460 16-24, 540 25-34, 1204 35-54, 535 55-64, 407 65-74, 328 75+, 784 AB, 1014 C1, 701 C2, 975 DE, 1679 male, 1795 female) 19 Figure 4.18 Reasons for using the internet, by age, gender and SEG To keep up to date with sports 26% 22% 52% 33% 26% To pass the time 21% 42% 21% 20% 38% 34% 17% 33% 18% 9% 33% 17% 36% 29% 20% 43% 30% 34% 44% 29% 42% 48% 34% To keep up to 37% 38% 53% 36% 31% date with news 44% 33% 14% 26% 27% 45% 45% 40% 41% 40% 38% 22% 35% 29% 37% 41% To relax 35% 25% 74% 45% 49% 61% 43% 36% 51% 47% 49% 36% 24% 49% 56% 20% For fun 61% 67% 65% 63% 67% 67% 66% 56% 62% 64% 58% 51% 59%

For contact with 79% 81% 73% 72% 68% 74% 76% 72% 76% 71% 77% 70% 60% other people

All 16-24 25-34 35-44 45-54 55-64 65+ Male Female AB C1 C2 DE To find out or Adults learn things IN42 – Which, if any of these are reasons why you use the internet? (prompted responses, multi-coded) Base: All adults aged 16+ who use the internet at home or elsewhere (1489 aged 16+ in 2010, 271 aged 16-24, 287 aged 25-34, 338 aged 35-44, 245 aged 45-54, 214 aged 55-64, 134 aged 65+, 752 male, 737 female, 433 AB, 478 C1, 278 C2, 300 DE) Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010

20 Figure 4.19

Average time spent on the internet by age and gender

Average monthly hours online per internet user 80 65 56 56 60 53 53 53 52 52 48 46 48 39 40 Male Female 21 20 17

Source: UKOM/Nielsen, April 2011

21 Figure 4.20

Internet usage by gender (total time spent online)

100% 12+ 32% 80% 46% 48% 51% 49% 55% 50% 60% Female

40% 68% Male 52% 49% 51% 50% 54% 20% 45%

Proportion of of Proportion internet users 0% All 12 to 17 18 to 24 25 to 34 35 to 49 50 to 64 65+ (>12yrs)

Source: UKOM/Nielsen, April 2011 Figure 4.21

Monthly internet-enabled PC time per user, by region

Time per person (hrs) 75

52.6 51.3 50.5 49.0 48.1 46.7 46.7 45.9 50 43.7 43.6 42.6 41.2 41.0

Source: UKOM/Nielsen, home and work panel, applications included. Month of April 2011. Regions based on ISBA regions. Note: active online universe = number of users aged 2+ who use an internet-enabled computer.

23 Figure 4.22

Increase Claimed use of the internet for selected activities Since Q1 2010 (%-age points)

Any 96 2 98 Sending and receiving email 77 12 89 +2 General surfing/browsing 76 12 88 +2 Purchasing goods/services 37 35 72 +/-0 Banking 46 15 61 +2 Using social networking sites 49 11 60 +4 Finding/ downloading info for personal use 37 22 59 +3 TV/ Video viewing 32 23 55 +2 Finding/ downloading info for work 29 16 45 -1 Watching video clips/ webcasts 24 17 41 +5 Using local council/ Government websites 16 24 40 +3 Used in the past week Playing games 23 16 39 +/-0 Use less often Downloading music/films/video clips 19 19 38 -1 Find health information 14 22 36 -1 Finding/ downloading info for college 23 13 36 -1 Instant messaging 21 13 34 +1 Realtime gambling/auctions 8 13 21 +/-0 Listening to radio 10 9 19 -1 Uploading/ adding content to internet 8 9 17 +1 Streamed audio services 4 3 7 -1

0% 20% 40% 60% 80% 100% QE5. Which, if any, of these do you or members of your household use the internet for whilst at home? Source: Ofcom research, Quarter 1 2011 Base: Adults aged 16+ with a broadband connection at home (n= 2481 UK)

24 Figure 4.23

Breadth of internet use (number of internet activities undertaken)

Proportion of internet users (%) 100 All UK 16+ 16-24 25-34 35-44 45-54 55-64 65-74 75+

82 80

60 60 45 36 40 35 35 33 26 28 26 27 28 27 18 20 9 1 0 0-5 activities 11-17 activities Q10A: Which, if any, of these do you or members of your household use the internet for whilst at home? Source: Ofcom Technology Tracker digital participation research, Q1 2011 Base: All home internet users (n=2534) 25 Figure 4.24

Percentage Confidence as an internet user by age, gender and SEG point change in confident Confident Neither/ nor Not confident Don't know since 2009 All… 93% 3% 3% +5 16-24 97% 2% +2 25-34 95% 3%2% +2 35-44 92% 4% 3% +4 45-54 92% 5% 2% +10 55-64 91% 3% 5% +10 65+ 78% 10% 10% +4 Male 94% 3%2% +3 Fem… 91% 4% 4% +7 AB 98% +8 C1 93% 4% 3% +3 C2 89% 6% 5% +4 DE 88% 5% 6% +11

0% 20% 40% 60% 80% 100% IN10D – Overall then, how confident are you as an internet user? (Prompted responses, single coded) Base: All adults aged 16+ who use the internet at home or elsewhere (1489 aged 16+ in 2010, 271 aged 16-24, 287 aged 25-34, 338 aged 35-44, 245 aged 45-54, 214 aged 55-64, 134 aged 65+, 752 male, 737 female, 433 AB, 478 C1, 278 C2, 300 DE) Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010

26 20% 40% 60% 80% 0% % point change since 2007 pointchange since % % point change since 2009 since % change point Concerns about the internet among users, by age by users, among internet the about Concerns Source:SavilleRossiter Ofcomresearch, fieldwork byout carried 54, Base: Adults aged 16+ who use the internet at home or elsewhereBase: Adults internettheuse or agedwho home 16+ at IN30 Figure 4.25 Figure -14 -19 214 -19 Any concerns – 54% -7 Can you tell me if you have any concernshaveinternet?the anyyou on about (Spontaneousifis what me tellyou Can responses, multi -18 -5 aged 55- 34% -23

51% -6 -13 59% +1 64, 64, -13 65% -13 134 61% -14 66% +1 aged 65+) Offensive/ illegal 40%

content 21% 39% 45% 52% 43% 50%

Security/ fraud 21% 14% 22% 22% -

Base in April to May and SeptemberMayOctober to toBase April in 28% (1489 22% 23% aged 16+,

Risks to others/ others/ to Risks 18% 9% society

271 18% 18% aged 16- 26% 20% 22% 24, 24, Personal Privacy Personal 287 10%

aged 25- 6% 8% -

coded) 12% 2010 34, 34, 12% 13% 338 10% 65+ 55 45 35 25 16 All adults aged 35------

7% 64 54 44 34 24 Advertising 4% 44, 44, 4%

245 8% 12% aged 45- 6%

27 4% Figure 4.26 Concerns about privacy online

How concerned are you about your privacy on line? Are you more or less concerned about privacy issues using a mobile phone compared to a PC?

100% 100% 18% 26% 80% 80% Very concerned More 40% concerned 60% Fairly 60% concerned No 58% difference 40% Not very 40% concerned Less concerned 31% Not at all 20% 20% concerned 16% 12% 0% 0% Q10. Generally speaking, when you use the internet, how concerned are you about your privacy on line? Base: All respondents (1022) Q11. Are you more or less concerned about privacy issues when you use your mobile phone to access the internet compared to when you use a PC, laptop or tablet? Base: Those who access the internet via mobile phone (212) Source: Monetisation of data research, conducted on behalf of the Communications Consumer Panel by Accent, fieldwork in February 2011 28 Figure 4.27 UK internet sectors’ share of total PC internet time Share of total internet time Change in share of time spent, April 2010-April 2011

100% +13% Other

-13% Adult 80% 37% 41% -33% News

+6% Software Info/Products 60% -13% Search 4% 3% 5% 4% -15% Portals 40% 5% 4% 7% 8% -19% Classifieds/Auctions 7% 5% 20% -15% Instant Messaging 23% 22% +23% Games

0% -28% E-mail April 2010 April 2011 -2% Social Networks/Blogs

Source: UKOM/Nielsen. Note: Home and work panel, applications included. Email excludes work-related email.

29 Figure 4.28

Most popular site categories, by active reach

Active reach (%) Time per person (hrs) 100 93 7 87 83 Active reach (LHS) Time per person (RHS) 6 80 74 73 72 63 61 59 5 60 53 4 40 3 2 20 1 0 0 Search Telecoms Enter- News & PCs & Multi- Travel Finance Home & Family & & Comm- Internet tainment Info Electr- category Fashion Life- unities onics commerce styles

Source: UKOM/Nielsen home and work panel, applications included, month of April 2011. Note: “active reach” = the percentage of all active 2+ unique persons who visited the site or used the application. ‘Active’ is defined as anyone who used an internet-enabled computer within the time period.

30 Figure 4.29 PC-time per user per month spent on internet activities Growth Apr-09 to Apr-10 to Time spent per person (hours) Apr-11 Apr-11

+24% +5% Social networks/blogs 8 +11% +32% Games 7 +15% -7% Adult 6 -37% -3% Instant Messaging 5 +10% -11% Classifieds/Auctions 4 -1% -21% E-mail 3 -2% +17% Software info/products

2 +13% -20% News

1 +11% +9% General interest portals

0 -5% -4% Search Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 +5% +2% Targeted portals

Source: UKOM/Nielsen Notes: Home and work panel, applications included; Email excludes work-related email

31 Figure 4.30 Top 20 UK websites by time spent on PCs online, April 2011

Average hours per user

6.4 1.8 0.9 1.1 1.1 1.0 0.7 0.5 2.4 0.3 0.3 11.7 0.4 0.7 0.2 0.9 10.6 16.5 0.5 2.9

169.3 30 150 25

100 20 15

50 10 30.0 28.8 22.0 17.1 15.2 15.1 5 10.8 Uniquevisitors (millions) 9.1 5.1 4.0 3.9 3.8 3.3 3.0 3.0 3.0 2.7 2.6 2.5 0 0 Total time online (millions of hours) Total aol.com live.com sky.com bbc.co.uk msn.co.uk zynga.com ebay.co.uk yahoo.com games.com google.com yahoo.co.uk google.co.uk youtube.com wikipedia.org slashkey.com facebook.com amazon.co.uk dailymail.co.uk

Total hours online Unique users moshimonsters.com kingdomsofcamelot.com Source: UKOM/Nielsen, April 2011; ‘At home’ data excluding internet applications Figure 4.31 Top 10 sites by unique audience, split by age

Rank 2-17 18-24 25-34 35-49 50-64 65+

1 Google Google Google Google Google Google

2 Google Search Google Search Google Search Google Search Google Search Google Search Key

3 Facebook Facebook Facebook MSN/WindowsLi MSN/WindowsLi MSN/WindowsLi Google (ex. YouTube) ve/Bing ve/Bing ve/Bing Microsoft MSN/WindowsLi MSN/WindowsLi MSN/Windows Facebook 4 Facebook BBC Facebook ve/Bing ve/Bing Live/Bing Yahoo! 5 Yahoo! Facebook BBC YouTube YouTube Yahoo! BBC YouTube eBay Windows Live 6 BBC YouTube Yahoo! BBC Yahoo! Messenger Amazon Wikipedia YouTube YouTube 7 BBC Google Maps Amazon Amazon Homepage Homepage

8 Yahoo! Google Maps Google Maps Amazon Google Maps Microsoft

9 Windows Live Yahoo! eBay YouTube Microsoft Google Maps Messenger

Google Image 10 BBC Microsoft eBay eBay YouTube Search

Source: UKOM/Nielsen home and work panel, applications included, month of April 2011 Note: “Unique audience” = the total number of unique persons that have visited a website or used an application at least once in the specified reporting period. Persons visiting the same website or using the same application more than one time in the reporting period are only counted once.

33 Figure 4.32 Engagement with online media content, by age

% of households who use the internet for the following Increase in activities since Q1 2010 (percentage points) activities -1 -7 1 1 1 -1 -2 -2 0 0 1 1 1 1 2 -1 0 -4 2 0 4 4 7 2 2 0 3 1 -1 1 57% 60% 53% 48% 50% 44% 46% 41% 40% 40% 38% 37% 32% 31% 32% 32% 30% 26% 24% 23% 21% 21% 19% 18% 18% 19% 20% 15% 16% 12% 12% 12% 10% 9% 10% 5% 0% Playing games Downloading Watching TV Listening to the Watching video Uploading/ adding online/interactively music files, movies programmes radio clips/webcasts content or video clips All 16-24 25-44 45-64 65+ QE5A: Which, if any, of these do you or members of your household use the internet for while at home? Source: Ofcom research, Q1 2011 Base: All adults who have the internet at home (n= 2534) 34 Figure 4.33

Most popular internet applications, by active reach Active reach (%) Time per person (hh:mm) 40 2:30 Active Reach (LHS) Time per Person (RHS) 35 32.4 31.1 2:00 30 25 19.8 1:30 20 14.9 15 1:00 10 6.4 5.0 5.0 5.0 4.8 4.6 3.9 3.3 3.3 0:30 5 2.0 1.6 0 0:00 Win. Win. iTunes Skype Apple Win Real Google VLC U- Picasa Yahoo Spotify Steam Div X Live Media Quick- Live Player Earth media Torrent M'sger plus M'sger Player Time photo player player g'lly

Source: UKOM /Nielsen home and work panel, applications included, month of April 2011 Note: “active reach” = the percentage of all active 2+ unique persons who visited the site or used the application. ‘Active’ is defined as anyone who used an internet-enabled computer within the time period.

35 Figure 4.34 Proportion of adults who access social networking sites on the internet at home Q1 2008 Q1 2009 Q1 2010 Q1 2011 100%

80% 69 64 61 61

60% 54 53 52 50 48 47 46 46 46 46 46 45 42 40 39 39 38 36 35 40% 35 33 31 31 30 30 29 28 28 24 22 21 20 20 20 19 19 19

20% 14 13 12 9 7 5 3 3 3 1 1 0% UK 15-24 25-34 35-54 55-64 65-74 75+ AB C1 C2 DE Male Female QE12: Which, if any, of these do you or members of your household use the internet for while at home? Source: Ofcom technology tracker, Q1 2011 Base: All adults aged 16+ (n = 5812 Q1 2008, 1581 Q3 2008, 6090 Q1 2009, 9013 Q1 2010, 3474 Q1 2011) Note: Q1 2008 data in this chart are not directly comparable to data published in the 2009 Communications Market Report due to updated data provided to Ofcom. 36 Figure 4.35

Unique audience of selected social networking sites Growth (%) Unique audience (m) Apr 10– Apr 11 -3 Member Communities 30 6 Facebook

6 Twitter.com 20 11 LinkedIn

-35 10 BBC Communities -40 Myspace.com 227 0 Tumblr -36 Friends Reunited Source: UKOM/Nielsen. Note: Home and work panel, applications included. ’Member communities’ is the UKOM category that primarily consists of social networking sites. “Unique audience” = the total number of unique persons that have visited a website or used an application at least once in the specified reporting period. Persons visiting the same website or using the same application more than one time in the reporting period are only counted once. 37 Figure 4.36

Time per user per month spent on selected social networking sites

Time per person (hrs) 9 8 Facebook 7 Twitter

6 LinkedIn 5 BBC Communities 4 3 Myspace.com 2 Tumblr 1 Friends Reunited 0 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11

Source: UKOM/Nielsen. Note: home and work panel, applications included.

38 Figure 4.37 Total time spent on social networking and blogging sites

Millions of hours per month

250

200

150 Others Facebook 100

0 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11

Source: UKOM/Nielsen. Note: Includes all sites in the UKOM/Nielsen category of ‘Member Communities’ Figure 4.38 Total time spent on selected social networking sites (excluding Facebook) Millions of hours per month

6 Friends Reunited Tumblr 4 Myspace.com BBC Communities LinkedIn 2 Twitter.com

0 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11

Source: UKOM/Nielsen. Figure 4.39

Unique audience of leading search sites Unique audience (m) Growth (%) (Apr 10– Apr11) -6 Total search 40 -6 Google Search 30 -7 Google Image 20 Search 7 Bing Web 10 -11 Yahoo! Search 0 -18 Ask.com 11 09 10 08 08 09 10 08 09 10 08 09 10 ------MSN/Windows Jun Jun Jun Mar Mar Mar Mar Dec Dec Dec Sep Sep Sep Live Search

Source: UKOM /Nielsen home and work panel, applications included, month of Apr 11 Note: “Unique audience” = the total number of unique persons that have visited a website or used an application at least once in the specified reporting period. Persons visiting the same website or using the same application more than one time in the reporting period are only counted once. 41 Figure 4.40 User attitudes towards accuracy or bias of search engine results

4% 7% 7% 6% 9% 9% 6% 7% 8% 7% Don't know

15% 20% 18% 17% 18% 20% 15% 17% 18% 16%

20% I don't really think about whether or 20% 24% 21% 26% 33% 29% 23% 30% not they have accurate or unbiased 38% information, I just use the sites I like the look of

I think that if they have been listed by the search engine, these websites will have accurate and 57% 54% 52% 50% 53% unbiased information 50% 46% 47% 46% 38% I think that some websites will be accurate or unbiased and some won't be

All adults 16-24 25-34 35-44 45-54 55+ AB C1 C2 DE NIN46 – When you use a search engine to find information, you enter a query in the search box and the search engine will then show some links to websites in the results pages. Which one of these is closest to your opinion about the level of accuracy or bias of the information detailed in the websites that appear in the results pages? (Prompted responses, single coded) Base: All adults aged 16+ who ever use search engine websites (1090 aged 16+, 205 aged 16-24, 227 aged 25-34, 235 aged 35-44, 183 aged 45-54,240 aged 55+, 329 AB, 353 C1, 199 C2, 209 DE) Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010

42 Experience of, and interest in, content creation Figure 4.41 Done this Interested in doing this Not interested Don't know 2007 22% 10% 67% 2% Set up your own social 2009 44% 5% 49% 2% networking page or profile 2010 54% 3% 43% 2007 43% 18% 39% 1% Uploaded photos to a website 2009 49% 9% 41% 1% 2010 53% 9% 37% 1% 2007 19% 10% 69% 2% Contributed comments to 2009 27% 7% 64% 2% someone else’s weblog or blog 2010 29% 6% 63% 2% 2007 15% 17% 67% 2% Set up your own website 2009 15% 12% 71% 2% 2010 18% 12% 68% 2% 2007 10% 11% 77% 2% Made a short video and 2009 11% 8% 79% 2% uploaded it to a website 2010 17% 9% 73% 1% 2007 10% 10% 76% 3% Set up your own weblog/ blog 2009 12% 9% 77% 2% 2010 12% 9% 76% 3% 2007 8% 11% 77% 4% Contributed to a collaborative 2009 10% 10% 77% 3% website such as Wikipedia 2010 11% 9% 77% 2%

0% 20% 40% 60% 80% 100% IN23A-I – I’m going to read out a number of things people might do online. Please tell me for each one I read out if you’ve done it, or you’d be interested in doing it, or not interested. (prompted responses, single coded) Base: All who use the internet at home or elsewhere (1723 in 2007,1282 in 2009, 1489 in 2010) Significance testing shows any change between 2009 and 2010 Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010 43 Figure 4.42

Experience of creative activities, by age

86% 70% Set up your own SNS page or profile 58% 32% 21% 79% 64% Uploaded photos to the internet 52% 41% 28% 51% 16-24 30% Contributed comments to someone else's weblog/ blog 28% 21% 14% 27% 25-34 16% Set up your own website 22% 15% 11% 37% 35-44 22% Made a short video and uploaded it to a website 16% 8% 6% 24% 45-54 10% Set up your own weblog/ blog 13% 8% 7% 15% 55+ 12% Contributed to a collaborative website such as Wikipedia 12% 8% 8%

0% 20% 40% 60% 80% 100%

IN23A-I – I’m going to read out a number of things people might do online. Please tell me for each one I read out if you’ve done it, or you’d be interested in doing it, or not interested. All who use the internet at home or elsewhere (271 aged 16-24, 287 aged 25-34, 338 aged 35-44, 245 aged 45-54, 348 aged 55+) Source: Ofcom research, fieldwork carried out by Saville Rossiter-Base in April to May and September to October 2010 44 Figure 4.43

Unique audience of selected user-generated content sites

Growth Unique audience (m) Apr 10 – Apr11 20 +11% YouTube

-6% Wikipedia 15 +2% Blogger WordPress.com 10 +8% +5% Flickr

5 -4% Photobucket

+35% Dailymotion 0 -3% PhotoBox

Source: UKOM /Nielsen home and work panel, applications included, Note: “Unique audience” = the total number of unique persons that have visited a website or used an application at least once in the specified reporting period. Persons visiting the same website or using the same application more than one time in the reporting period are only counted once. Flickr due to UKOM changes no data available pre May10.

45 Figure 4.44

Time spent on selected user-generated content sites

Time spent per person (h:mm) YouTube 1:15 Wikipedia 1:00 PhotoBox Flickr 0:45 Blogger 0:30 Photobucket Dailymotion 0:15 WordPress.com 0:00 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11

Source: UKOM/Nielsen, home and work panel, .

46 Figure 4.45

Mass Merchandising by active reach

Active reach (%) Time per person (hh:mm) 41.9 0:43 40 Active Reach Time per Person 35 30 0:27 25 20 18.2 17.0 15 0:12 10.0 8.7 10 7.6 6.9 6.6 5.7 5.2 5 3.9 3.6 3.5 3.4 3.2 0 Amazon Tesco Argos ASDAMarks & Play Tesco John Sains ASDA The Little Currys Comet Very Spencer .com Direct Lewis burys Direct Co-Op woods

Source: UKOM/Nielsen home and work panel, month of April 2011 Note: “active reach” = the percentage of all active 2+ unique persons who visited the site or used the application. ‘Active’ is defined as anyone who used an internet-enabled computer within the time period.

47 Figure 4.46

Unique audience of selected Mass merchandising sites Growth (%) Unique audience (m) Apr 10– Apr 11 -5 Mass Merchandiser 30 5 Amazon

-3 Tesco

20 3 Argos

2 ASDA 10 Marks & -18 Spencer Play.com -22 0 Tesco Direct -16 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Source: UKOM/Nielsen. Note: Home and work panel,’ “Unique audience” = the total number of unique persons that have visited a website or used an application at least once in the specified reporting period. Persons visiting the same website or using the same application more than one time in the reporting period are only counted once.

48 Figure 4.47

Mass Merchandising usage by gender

100% 18+

80% 32% 49% 50% 52% 57% 52% 60% Female

40% 68% Male 50% 51% 20% 48% 43% 48%

Proportion of of Proportion internet users 0% 18+ 18 to 24 25 to 34 35 to 49 50 to 64 65+

Source: UKOM /Nielsen April 2011 Figure 4.48 Selected Reach and time spent on selected price comparison sites, April 2011

Active reach (%) Time per person (hh:mm) 15.8 Active Reach Time per Person 15 0:24

10 6.6 0:12 5 4.0 3.7 3.6 2.6 2.4 2.3 2.3

0 0:00 Money my Confused Gocompare Compare uSwitch.com Kelkoo PriceRunner simplify Supermarket Super .com .com theMarket digital .com market .com .co.uk

50 Figure 4.49

Unique audience of Selected Price Comparison Sites Growth (%) Unique audience (m) Apr 10– Apr 11 4 -17 MoneySuperm arket.com -31 Kelkoo 3 2 Confused.com

12 PriceRunner 2 -22 Gocompare.co m uSwitch.com 1 10 ComparetheM -16 arket.com 0 mySupermark (-) Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 et Source: UKOM/Nielsen. Note: Home and work panel,’ “Unique audience” = the total number of unique persons that have visited a website or used an application at least once in the specified reporting period. Persons visiting the same website or using the same application more than one time in the reporting period are only counted once.

51 Figure 4.50

Coupon Sites active reach

Active reach (%) Time per person (hh:mm) 16 15.8 0:43 Active Reach Time per Person 14 12 0:27 10

8 6.6 6 4.0 3.7 3.6 0:12 4 2.6 2.4 2.3 2.3 2.2 2.2 2.1 2.0 1.9 2 1.6 0 Grou Nectar Tesco My Voucher Maxi HotUK Perks Magic Top Quidco Living Disc KGB Awards pon Club Voucher Codes miles Deals .com Freebies Cash Social ount Deals HQ card Codes UK Back Vouchers Source: UKOM/Nielsen home and work panel, month of April 2011 Note: “active reach” = the percentage of all active 2+ unique persons who visited the site or used the application. ‘Active’ is defined as anyone who used an internet-enabled computer within the time period.

52 Figure 4.51

Selected coupon and rewards sites: active reach Growth (%) Unique audience (m) Apr 10– Apr 11 20 26 Coupons/Rew ards 6959 Groupon 15 -13 Nectar

109 Tesco 10 Clubcard -16 MyVoucherCo des VoucherCodes 5 16 Maximiles (-) 0 HotUKDeals -3 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Source: UKOM/Nielsen. Note: Home and work panel,’ “Unique audience” = the total number of unique persons that have visited a website or used an application at least once in the specified reporting period. Persons visiting the same website or using the same application more than one time in the reporting period are only counted once. Maximiles data unavailable for some months Groupon not available pre Feb10. 53 Figure 4.52

Coupon Sites: reach by gender

100% 12+

80% 32% 48% 50% 52% 51% 56% 52% 60% Female

40% 68% Male 50% 49% 52% 20% 48% 44% 48%

Proportion of of Proportion internet users 0% All 12 to 17 18 to 24 25 to 34 35 to 49 50 to 64 65+ (>12yrs)

Source: UKOM /Nielsen April 2011 CMR 2011 telecoms slides

July 2011 UK Communications Market 2011: telecoms charts

• Key market developments

• The telecoms industry

• The telecoms user

Rollout of super-fast broadband services

3 Figure 5.2 UK super-fast broadband rollout timeline to80Mbit/s 5m homes 100Mbit/s (in bursts) FTTB FTTC 40Mbit/s FTTC 40Mbit/s FTTC 40Mbit/s FTTC 40Mbit/s Upgrade upgrade 80Mbit/s FTTC Complete 80/100Mbit/s FTTC/FTTB 10m homes 100Mbit/sFTTB 80/100Mbit/s FTTC/FTTB 2/3rds homes Service trialled Service launched 2008 2009 2010 2011 2012 2013 2014 2015 Rollout milestone Rollout completed 50Mbit/s cable 50Mbit/s cable 100Mbit/scable 200Mbit/scable 100Mbit/scable 100Mbit/scable 100Mbit/scable 4m homes

Source: Ofcom

4 Figure 5.3 Comparison of broadband costs

Virgin Virgin Virgin Virgin Media ‘up BT ‘up to’ Media ‘up BT ‘up to’ Media ‘up Media ‘up to’ 20Mbit/s to’ 40Mbit/s to’ to’ 10Mbit/s ADSL 30Mbit/s FTTC 50Mbit/s 100Mbit/s cable cable cable cable ‘Up to’ upload speed 1Mbit/s 1Mbit/s 3Mbit/s 2Mbit/s 5Mbit/s 10Mbit/s

Data cap Unlimited 10GB Unlimited 40GB Unlimited Unlimited

Standalone monthly cost £21.00 n/a £28.50 n/a £35.00 £45.00 Monthly cost when bundled with landline £13.50 £13.00 £18.50 £18.00 £25.00 £35.00 (excluding line rental) Average download 9.5Mbit/s 8.2Mbit/s 31.0Mbit/s 33.8Mbit/s 48.4Mbit/s No data speed, May 2011

Source: Ofcom / PurePricing Broadband Pricing Factbook, June 2011 Note: BT also offer a more expensive FTTC service with upload speeds of ‘up to’ 10Mbit/s and unlimited monthly usage which is available on a standalone basis

5 The purchasing and usage patterns among super-fast broadband users

6 Figure 5.4 Headline download speed, by provider Q1 – What is the maximum download speed you have been told you would get from your home broadband service?

100% 6% 6%

80% 'Up to' 100Mbit/s 52% 60% 60% 'Up to' 50Mbit/s 100% 40% 'Up to' 40Mbit/s 13% 'Up to' 30Mbit/s 20% 29% 33% 0% Total BT Virgin Media

Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with super-fast broadband (1008; Virgin Media 874, BT Infinity 134) Note: Only respondents citing available suppliers and speeds were included in the survey

7 Figure 5.5 Previous broadband package, by current provider Q6 – What type of broadband package did your household have before subscribing to the (current) broadband service?

100% 2% 1% 2% 5%1% 5% 1%5% 80% Don’t know 60% 65% No broadband 74% 93% Mobile broadband 40% Cable broadband

20% ADSL Broadband 27% 17% 0% Total BT Virgin Media

Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with super-fast broadband (1008; Virgin Media 874, BT Infinity 134)

8 Figure 5.6 Previous Internet Service Provider, by current provider Q6a – And which Internet Service Provider did your household use before you subscribed to your (current) service?

80% 75% 66% 60% BT 40% Virgin Media 20% 8% 8% 5% 6% 4% 7% 5% 4% 2% 3% 3% 1% 0% 3% 0% BT Virgin TalkTalk/ Sky O2/Be Orange Other Don't know Media AOL

Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with broadband before (943; Virgin Media 809, BT Infinity 134)

9 Figure 5.7 Reasons for choosing current broadband service Q3/4 – Why did you choose a broadband service? And which of these was the single most important reason?

52% The deal I was offered provided good value for money 26% 47% Good simultaneous performance on different devices 22% 47% I want the fastest possible download speeds 16% 38% Connect to online services without experiencing delays 8% 30% So that I can quickly download large files, such as films 5% 25% I want the fastest possible upload speeds 2% 24% So that I can quickly upload or send large files 2% 24% Previous service slow so wanted to get faster speeds 10% 15% For my work or business needs 5% 14% Capacity limits or traffic management policy 2% 4% Other 2% Don’t know 0%

0% 10% 20% 30% 40% 50% All reasons Main reason Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with super-fast broadband (1008; Virgin Media 874, BT Infinity 134)

10 Figure 5.8 Most important reason for choosing broadband service, by current provider Q3/4 – Why did you choose a broadband service? And which of these was the single most important reason?

18% The deal I was offered provided good value for money 27% 13% Good simultaneous performance on different devices 23% 21% I want the fastest possible download speeds 15% 16% Previous service slow so wanted to get faster speeds 9% 9% Connect to online services without experiencing delays 8% 3% So that I can quickly download large files, such as films 5% 8% For my work or business needs 4% 4% I want the fastest possible upload speeds 2% 1% Capacity limits or traffic management policy 2% 5% So that I can quickly upload or send large files 1% 2% Other 2% 1% Don't know 0%

0% 10% 20% 30% BT Virgin Media Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with super-fast broadband (1008; Virgin Media 874, BT Infinity 134)

11 Figure 5.9 Price of current broadband service compared to previous service Q9 – How does the price of your current broadband service compare to the broadband service that you used to have?

2% 4%

16% Much more expensive 10% A little more expensive About the same price as my previous service 23% A little less expensive Much less expensive 46% Don’t know

Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with broadband before (943)

12 Figure 5.10 Speed of broadband service compared to initial expectations Q10/11 – How does the download/upload speed of your current broadband service compare with what you expected when you signed up for it?

0% 20% 40% 60% 80% 100%

Much faster than expected Download 16% 17% 50% 11% 5%1% speed A bit faster than expected As I expected A bit slower than I expected Much slower than I expected Upload 13% 17% 51% 11% 3%5% speed Don’t know

Base: All with super-fast broadband (1008) Source: Ofcom research, fieldwork carried out by YouGov in April 2011

13 Figure 5.11 Satisfaction with aspects of current broadband service Q7/8 – To what extent are you satisfied or dissatisfied with the following aspects of your home broadband service?/Thinking about the broadband service that you used to have, to what extent were you satisfied or dissatisfied with the following aspects of that service? Previous 12% 33% 21% 18% 14% 3% Upload speeds Current 39% 40% 11% 7% 3%1%

Previous 12% 35% 19% 19% 13% 1% Download speeds Current 45% 39% 6% 6% 3%0%

Previous 15% 34% 23% 16% 10% 2% Value for money Current 24% 40% 20% 12% 4%1%

Previous Reliability of 25% 36% 15% 12% 11% 2% connection Current 43% 38% 7% 8% 4%0%

Previous 20% 37% 19% 14% 10% 1% Overall service Current 35% 45% 9% 7% 3%0%

0% 20% 40% 60% 80% 100% Very satisfied Fairly satisfied Neither satisfied nor dissatisfied Fairly dissatisfied Very dissatisfied Don't know Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with super-fast broadband (1008), all with broadband before (943) 14 Figure 5.12 Services current broadband connection used for

Sending/ receiving email 96% Purchasing goods/ services/ tickets etc 91% Web browsing 90% Banking 84% Watching short video clips (for example YouTube) 76% Uploading photographs 64% Accessing social networking sites (for example Facebook, LinkedIn) 60% Listening to radio/ streamed audio services 52% Downloading large files 47% Streaming standard-definition TV programmes or full-length films 43% Working from home 41% Streaming music 37% Downloading large software files 37% Streaming high-definition TV programmes or full-length films 32% Video calling or video communications 29% Online gaming 28% Uploading large files 28% Peer-to-peer file sharing (for example BitTorrent or eDonkey) 15% Non peer-to-peer file sharing (For example, Rapidshare or Megaupload) 8% Other 6% Don’t know 0%

0% 20% 40% 60% 80% 100% Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with super-fast broadband (1008)

15 Figure 5.13 Change in usage compared to previous broadband connection Q13 – How has the amount you use this service(s) changed compared to when you had your previous broadband connection?

Streaming high-definition TV programmes or full-length films 29% 34% 63% Streaming standard-definition TV programmes or full-length films 24% 30% 54% Downloading large files 16% 28% 43% Streaming music 13% 27% 40% Uploading large files 14% 26% 40% Non peer-to-peer file sharing (For example, Rapidshare or Megaupload)' 13% 27% 40% Video calling or video communications 17% 22% 40% Downloading large software files 14% 25% 39% Online gaming 17% 20% 37% Watching short video clips (for example YouTube) 11% 24% 36% Peer-to-peer file sharing (for example BitTorrent or eDonkey) 16% 18% 34% Listening to radio/ streamed audio services 11% 21% 32% Uploading photographs 8% 21% 30% Web browsing 9% 19% 29% Accessing social networking sites (for example Facebook, LinkedIn)' 10% 19% 29% Working from home 12% 16% 27% Sending/ receiving email 6% 12% 19% Purchasing goods/ services/ tickets etc 6% 13% 19% Banking 7% 12% 19%

0% 20% 40% 60% Much increased use Slightly increased use Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with broadband before and using specified service (943)

16 Figure 5.14 Experience of using these services compared to previous broadband connection Q14 – And how would you describe your experience of these services using your current connection compared to your previous connection?

Streaming high-definition TV programmes or full-length films 61% 25% 86% Downloading large files 57% 29% 86% Downloading large software files 55% 30% 85% Streaming standard-definition TV programmes or full-length films 54% 28% 82% Uploading large files 50% 29% 80% Non peer-to-peer file sharing (For example, Rapidshare or Megaupload)' 49% 28% 77% Peer-to-peer file sharing (for example BitTorrent or eDonkey) 51% 24% 75% Watching short video clips (for example YouTube) 35% 35% 70% Video calling or video communications 40% 30% 70% Uploading photographs 38% 32% 69% Online gaming 40% 29% 69% Web browsing 34% 34% 68% Streaming music 36% 31% 67% Listening to radio/ streamed audio services 36% 30% 66% Working from home 31% 30% 61% Sending/ receiving email 25% 29% 53% Accessing social networking sites (for example Facebook, LinkedIn)' 24% 26% 49% Purchasing goods/ services/ tickets etc 22% 27% 49% Banking 22% 24% 46%

0% 20% 40% 60% 80% Much better Slightly better Source: Ofcom research, fieldwork carried out by YouGov in April 2011 Base: All with broadband before and using specified service (943)

17 Figure 5.15 Super-fast broadband research sample profile

Respondents % of sample % of population Total 1008

Age 18 to 24 72 7 14 25 to 34 146 14 18 35 to 44 181 18 19 45 to 54 228 23 15 55+ 381 38 33

Gender Male 728 72 48 Female 280 28 52

Social group ABC1 631 63 55 C2DE 377 37 45

Children at home No 756 75 60 Yes 236 23 40 Source: Ofcom

18 Mobile customers flock to pay-monthly contracts

19 Figure 5.16

Pre-pay and contract mobile connections

Subscriptions (millions) Proportion contract (%) 150 48.7% 50% 41.1% 2010 5 year 39.0% growth CAGR 34.4% 34.7% 36.3% 40% 100 80.3 81.1 30% Contract 19.6% 11.8% 73.8 76.7 65.8 70.1 24.3 26.8 29.9 33.0 39.5 20% 50 22.6 Pre-pay -11.9% -0.7% 10% 43.2 45.8 47.0 46.8 47.3 41.6 Contract as % of total 0 0% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Notes: Based on network operator reported figures; includes estimates where Ofcom does not receive data from the operators

20 Figure 5.17

Monthly line rental prices for new mobile contract connections

Proportion of sales (%)

100% £45+ 80% £40-44.99 £35-39.99 60% £30-34.99 40% £25-29.99 20% £20-24,99 £15-19.99 0% £0-14.99 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 2011 Q1 2011 2005 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010

Source: GfK Retail and Technology UK Ltd, Contract Handset Acquisitions: price segments. Notes: England, Scotland and Wales only (excludes Northern Ireland); based on GfK’s coverage of 94% of the consumer market; based on new post-pay connections; excludes contract renewals; only represents sales through consumer channels (i.e. most business connections are excluded)

Figure 5.19

Monthly line rental for new mobile contract connections

Proportion of sales (%)

100 1 1 1 1 1 1 1 4 3 5 1 1 1 1 0 0 0 12 12 2 7 13 Other 24 27 26 80 41 41 47 55 50 24 months 66 63 69 68 74 68 67 63 70 60 80 84 82 75 72 60 50 18 months 88 88 35 40 76 72 28 24 12 3 12 months 58 5 3 6 4 44 12 8 3 3 3 4 7 8 8 10 20 33 11 13 25 24 19 15 19 24 21 20 21 21 18 17 19 1 month 16 13 10 15 17 0 2 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q1 2011 Q1 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1

Source: GfK Retail and Technology UK Ltd, Contract Length Sales of new Mobile Connections, Q1 2005-Q1 2011. Notes: England, Scotland and Wales only (excludes Northern Ireland); based on GfK’s coverage of 94% of the consumer market; based on new post-pay connections; excludes contract renewals; only represents sales through consumer channels (i.e. most business connections are excluded)

23 Figure 5.20 UK smartphone sales

Sales (millions) Smartphone sales as a % of sales 5 48 50 41 41 4 34 40 Smartphone 28 sales 3 30 (millions) 21 18 20 2 15 16 20 12 12 3.7 12 11 3.3 9 9 10 3.2 6 7 6 7 7 7 6 2.5 Smartphone

1 2.0 10

4 1.8 1.6 sales as a 1.3 1.2 1.2 1.2 0.2 0.3 0.5 0.6 0.5 0.5 0.5 0.6 0.6 0.8 0.8 0.9 1.0 0.8 0 0 proportion of all mobile

Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 phones sales 2011 Q1 2011 2005 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010

Source: GfK Retail and Technology Ltd, based on factual point-of-sale information (1) Smartphones are defined as any handset running an open operating system, including Symbian (6.1 and above), Android, BlackBerry, iPhone, Palm, Windows Mobile or Linux operating systems; (2) England, Scotland and Wales only (excludes Northern Ireland); (3) Based on GfK ‘s coverage of 95% of the market – data have been extrapolated to represent whole market (4) Only represents sales through consumer channels, i.e. most business connections are excluded 24 Figure 5.21 Mobile data volume and revenue growth

Indices (2007 Q4 = 100) 4,000 3,902 3,448 3,086 3,000 2,724 2,334 Revenues 2,000 1,773 1,290 1,106 758 Volumes 1,000 551 380 220 133 129 137 140 140 145 153 146 100 105 113 121 124 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators.

25 Figure 5.22

Average monthly data use for pay-monthly mobile phone users

MB per data user per month Proportion of mobile users using data

200 71 71 72 71 71 71 73 72 73 80 67 68 69 70 70 63 66 150 60 Megabytes per month 100 186 40 168 177 178 166 176 148 156 154 164 163 130 133 50 109 20 % using 86 85 data

0 0 11 11 11 11 11 11 10 10 10 10 10 10 10 10 10 10 ------Jul Apr Jan Jun Apr Oct Jun Mar Feb Mar Nov Dec Aug Sep May May

Source: Bill Monitor

26 Overview of recent trends in residential fixed telecoms pricing

27 Figure 5.23

Cost of a basket of residential fixed voice services

£ per month (2010 prices)

25 22.87 22.10 21.91 21.62 21.27 21.23 2.92 Calls to mobiles 20 2.82 3.17 3.36 2.56 3.42 3.48 2.31 1.90 1.56 1.32 1.20 15 International 10 calls 17.39 16.97 16.84 16.70 16.54 16.54 5 Fixed access & UK geographic 0 calls 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; excludes non-geographic voice calls; adjusted for RPI; includes VAT

28 Figure 5.24

Rental cost of a basic residential line by supplier

£ per month (2010 prices) 15 BT

10 TalkTalk

5 Virgin Media

0 BSkyB Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q1 2011 Q1 Q1 2009 Q1 2010 Q1

Source: Ofcom / PurePricing Notes: Figures include VAT and are adjusted for RPI

29 Figure 5.25 Estimated average service call costs for basic fixed line services

Average Average UK fixed international mobile UK call set-up daytime call Monthly line daytime call daytime call charge cost per rental (£) cost per cost per (pence) minute minute minute (pence) (pence) (pence) BT 2008 11.75 6.0 4.0 20.1 12.5 2009 12.50 8.0 4.5 19.6 12.2 2010 12.79 9.9 5.9 20.0 12.5

Virgin Media 2008 12.00 7.0 4.0 24.8 15.0 2009 12.25 8.8 5.4 32.9 15.7 2010 13.24 11.0 8.5 38.8 19.0

TalkTalk 2008 11.75 6.0 3.9 14.7 12.0 2009 12.50 8.0 4.5 14.7 11.7 Source:2010 Ofcom / Teligen 14.44 9.9 5.8 14.7 12.0 Notes: Figures include VAT, data as at July of each year; TalkTalk tariff changed in 2010 and included bundled evening calls in addition to weekend calls

30 Figure 5.26

Average residential fixed voice call costs, 2005 to 2010

Pence per minute 20 Calls to mobiles

15 All of these call types 10 8.0 7.8 8.3 8.2 8.1 8.0 Rental and UK geographic 5 calls International 0 calls 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; calculation of total and UK geographic calls costs include line rental revenues; excludes non-geographic voice calls; adjusted for RPI; includes VAT 31 Figure 5.27

Real cost of a bundled basic landline and broadband service by supplier

£ per month (2010 prices) BT 30 TalkTalk 20 Virgin Media 10 BSkyB (with TV 0 subscription)

Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 BSkyB (without TV subscription) Q1 2011 Q1 Q1 2009 Q1 2010 Q1

Source: Ofcom / PurePricing

32 UK Communications Market 2011: telecoms charts

• Key market developments

• The telecoms industry

• The telecoms user

33 Industry overview

Figure 5. 30

Change in UK telecoms industry retail revenue, 2010

Retail revenue (£m) 400

200 156 86 -323 0 11

184 -254 -200

-400 Mobile voice & Mobile data Corporate data Fixed calls & Fixed internet Total access services access

Source: Ofcom / operator data / IDC

0 Figure 5.31

Voice and data revenue as a proportion of total telecoms revenue

Per cent %age point change 100 1 year 5years 29.4 80 31.3 32.3 33.9 35.3 35.7 Data 0.4 6.3 60

40 70.6 68.7 67.7 66.1 64.7 64.3 Voice -0.4 -6.3 20

0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: The bundling of messaging and data services in with monthly rental tariffs means voice revenue will include an element of mobile data revenue

38 Figure 5.32

Total telecoms connections

2010 5 year Growth CAGR Mobile subscriptions/connections (m) Mobile voice 0.2% 3.0% 73.8 74.2 76.2 76.3 subscribers 80 70.1 65.8 Fixed lines -2.3% -0.9% 60

Fixed internet 6.7% 4.4% 4034.9 34.5 34.5 34.2 34.2 33.4 connections 20.5 16.6 17.1 18.3 18.6 19.2 Fixed 7.2% 14.6% 20 broadband 17.3 18.3 19.6 connections 13.0 15.6 0 9.9 Mobile 16.8% n/a 2.6 4.1 4.8 broadband 2005 2006 2007 2008 2009 2010 subscribers

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; broadband excludes corporate connections; fixed-line connections includes PSTN lines and ISDN channels along with lines reported as ‘other’ which were previously excluded from the analysis

39 Figure 5.33

Fixed and mobile telecoms connections

2010 5 year Connections / subscribers growth CAGR 80 2G mobile -9.9% -4.8% 61.2 62.1 60.7 57.3 60 53.3 3G mobile 22.8% 48.4% 48.0 Analogue -1.1% -0.4% 40 fixed lines 33.1 30.2 29.8 29.8 29.6 27.030.0 29.7 DSL 7.3% 16.4% 20 19.5 13.112.2 13.6 14.4 15.4 ISDN -10.9% -4.5% 7.2 8.09.9 4.64.7 4.7 4.7 4.6 4.2 3.7 channels 0 2.7 3.1 3.4 3.7 3.8 4.0 Cable 4.8% 8.6% 2005 2006 2007 2008 2009 2010 modem

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; broadband excludes corporate connections

40 Figure 5.34

Share of total UK fixed and mobile telecoms connections

%age point change Proportion of connections (%) 1 year 5years 100% 3.5 3.6 3.7 4.1 4.3 4.9 3UK mobile 0.5 1.4 14.8 14.7 14.5 14.8 14.8 Everything Everywhere 80% 27.2 mobile (inc. Virgin) 15.2 16.2 16.0 15.1 15.0 Orange mobile -2.5 -2.7 60% 16.9 18.2 18.5 19.3 19.6 21.2 T-Mobile mobile (inc. Virgin) O2 mobile (inc. Tesco) } 1.6 4.3 15.1 40% 14.3 15.5 15.9 16.5 17.5 3.6 1.1 2.2 4.9 5.4 6.4 Vodafone mobile 4.5 4.2 7.3 9.2 10.0 20% 4.3 4.2 Other fixed 0.8 6.4 26.2 23.1 21.2 4.3 19.2 16.5 14.9 Virgin Media fixed 0.1 -0.6 0% BT fixed -1.6 -11.3 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; ‘Other’ includes carrier pre-selection and wholesale line rental in additional to fixed other licensed operators. MVNOs and mobile service provider connections are included within the network operator figures

41 Figure 5.35

Fixed and mobile voice call volumes

Minutes (billions) 300 249.7 252.0 250.3 253.5 2010 5 year 234.6 237.0 growth CAGR

200 71.4 82.5 99.9 110.9 118.3 124.6 Total 1.3% 1.6%

100 Mobile 5.3% 11.8% 163.2 154.5 149.8 141.1 132.0 128.8 Fixed -2.4% -4.6% 0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators

42 Figure 5.36

Share of total UK voice call volumes

Proportion of call minutes (%) %age point change 100% 1 year 5years 30.4 80% 34.8 40.0 44.0 47.3 49.2 Mobile 1.9 18.7 60% 35.0 33.9 31.0 Other fixed 0.8 -3.5 40% 30.6 30.6 31.5 providers

20% 34.6 31.3 29.0 BT -2.8 -15.2 25.5 22.1 19.4 0% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes non-geographic voice call volumes

43 Local loop unbundling

44 Figure 5.37

Proportion of unbundled exchanges and connected premises

Per cent %age point change 100 89.0 One year Five year 84.2 84.5 80.2 Proportion of 4.5 49.4 80 66.6 premises connected to unbundled BT 60 exchange 41.5 Proportion of BT 5.6 29.1 39.6 36.0 40 31.0 34.7 exchanges that have 25.5 23.3 19.9 22.6 been unbundled 2012.4 13.4 4.7 Proportion of total 3.0 24.8 0.7 lines that have been 0 unbundled 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

45 Figure 5.38

Fully and partially unbundled lines

Lines (millions) 8 7.5 6.4 6 5.5

4 3.7

2 1.3 0.2 0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

46 Fixed voice services

47 Figure 5.39

Retail fixed voice telephony revenues

Revenue (£bn) 2010 5 year 12 growth CAGR 10.6 10.5 10.3 10.0 Total -3.4% -2.6% 10 9.6 9.3 1.4 1.4 1.3 1.2 1.1 1.1 8 1.8 1.8 1.8 1.7 Other calls -4.6% -5.8% 1.6 1.5 0.7 0.7 0.6 0.6 0.5 6 0.5 Calls to -6.8% -3.4% 1.7 1.6 1.5 1.4 1.4 1.4 mobiles 4 International -5.5% -6.8% 5.0 5.1 5.2 calls 2 4.9 5.0 4.8 UK geographic -0.4% -4.5% calls 0 Access -2.5% -0.4% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators

48 Figure 5. 40

Retail fixed voice teleppyhony revenues, b ypy provider

Revenue (£bn) 2010 5 year 10 growth CAGR 9.2 9.1 9.0 8.9 8.5 8.2 8 2.1 Total -3.2% -2.2% 2.4 2.5 2.7 2.8 303.0 121.2 1.1 6 1.1 1.0 1.0 Others 9.2% 7.3% 1.0 4 5.9 565.6 545.4 525.2 2 4.7 4.2 Virgin Media 0.9% -3.3%

0 BT -11.3% -6.4% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators, excludes NTS voice calls

1 Figure 5. 41

Average monthly voice revenue per fixed line

Revenue per month (£) 2010 5 year 30 growth CAGR £25.16 £25.14 £24.86 £24.38 £23.40 £22.88 Total -2.2% -1.9% 20 13.46 13.09 12.51 11.87 11.32 10.97 Calls -3.1% -4.0% 10 11.70 12.05 12.35 12.51 12.08 11.92 Access -1.4% 0.4% 0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes spend on non-geographic voice calls

2 Figure 5.42

Fixed telecoms voice call volumes

Billions of minutes 2010 5 year 200 growth CAGR 163.2 154.5 149.8 150 141.1 Total -2.4% -4.6% 28.6 24.2 132.0 128.8 31.1 15.7 16.1 27.9 23.5 6.6 6.7 14.6 21.4 Other voice calls -8.8% -5.6% 100 6.9 13.5 12.4 11.9 7.1 7.0 7.2 Calls to mobiles -4.2% -5.4% 112.3 107.5 50 97.2 92.6 89.1 88.4 International calls 2.9% 1.6% 0 UK geographic calls 2005 2006 2007 2008 2009 2010 -0.9% -4.7%

Source: Ofcom / operators

51 Figure 5.43

Share of retail fixed voice call volumes

Per cent %age point change 100 1 year 5years 26.8 30.3 29.8 30.0 80 32.6 33.3 Other Indirect 0.8 6.6 8.2 access 8.2 9.9 12.7 60 14.3 14.4 18.1 Other direct 3.7 9.9 14.5 13.8 13.6 13.0 access 40 12.1 Virgin Media -0.9 -2.2 50.7 46.9 46.5 20 43.7 40.1 36.5 BT -3.5 -14.2 0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Excludes NTS calls

52 Figure 5.44

BT share of residential retail voice call volumes, by type

Per cent 61.0 57.0 %age point change 6058.6 55.4 51.8 1 year 5 years 58.2 52.8 51.9 46.1 52.6 51.4 47.8 41.2 Calls to mobiles -4.9 -19.8 43.1 40 47.1 42.2 39.3 41.0 UK geographic -3.7 19.3 36.8 38.4 32.8 calls 29.2 20 25.0 All voice calls -3.8 -19.9 21.7

International -3.3 -19.3 0 calls 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; excludes NTS voice calls

53 Figure 5.45

Fixed-line connections by type

Millions of connections 40 2010 5 year 34.9 34.5 34.5 34.2 34.2 33.4 0.8 growth CAGR 0.9 1.0 1.0 0.9 1.0 3.1 3.2 3.3 3.3 3.0 2.7 30 1.6 1.5 1.4 1.3 1.2 1.1 Total -2.3% -0.9%

Other lines 6.8% 3.5% 20 29.4 28.9 28.7 28.6 29.1 28.7 ISDN30 -11.1% -3.1% channels 10 ISDN2 channels -10.2% -7.5%

0 Analogue lines -1.3% -0.5% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

54 Figure 5.46

Fixed-line connections by operator

Millions of connections 40 2010 5 year 34.9 34.5 34.5 34.2 34.2 33.4 growth CAGR 3.6 5.6 30 6.9 8.1 4.9 10.5 11.4 Total -2.3% -0.9% 4.7 4.6 4.8 4.9 20 4.9 Other 9.3% 26.1% Virgin Media 1.3% +0.0% 26.4 24.1 10 22.9 21.3 18.8 17.0 BT -9.7% -8.4%

0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators

55 Mobile services

56 Figure 5.47

Mobile telecoms retail revenues

£billions 15.0 15.4 14.9 15.0 2010 5 year 15 13.9 growth CAGR 13.1 0.9 1.4 0.7 1.7 1.8 0.4 2.9 3.0 Total 0.7% 2.8% 2.4 2.6 2.7 2.7 10 Mobile out of bundle data 7.6% 34.0% 6.2 5.8 5.7 5.5 revenue 6.6 6.4 Mobile out of bundle -1.5% 2.4% 5 messaging revenues -3.7% -3.6% 4.3 4.9 5.3 4.9 5.1 Mobile out of bundle voice 3.7 revenues 0 Mobile rental revenues excl 4.6% 6.4% 2005 2006 2007 2008 2009 2010 out of bundle calls

Source: Ofcom / operators

57 Figure 5.48

Mobile telephony retail revenues, by network

2010 5 year £billions growth CAGR

15.0 15.4 14.9 15.0 Total 0.7% 2.8% 15 13.9 13.1 1.1 1.2 1.3 1.4 1.0 3UK 9.7% 10.5% 0.9 3.2 3.4 3.0 3.0 3.1 5.2 Everything Everywhere 10 2.7 2.7 2.5 2.5 (inc. Virgin Mobile) 2.1 Orange -4.7% 0.1% 4.0 4.3 4.4 4.6 5 3.3 3.8 T-Mobile (inc. Virgin } Mobile) 3.7 3.7 4.0 4.0 3.7 3.8 O2 (inc. Tesco Mobile) 3.4% 6.8% 0 Vodafone 2.2% 0.4% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

58 Figure 5.49

Average monthly retail voice revenue per mobile subscription

2010 5 year Revenue (£ per month) growth CAGR 20 17.35 17.07 17.39 17.10 Total -2.1% -2.2% 15.87 0.55 0.83 1.10 1.50 15.54 15 3.15 3.18 3.36 1.79 1.87 3.32 Mobile out of bundle 4.6% 27.5% 2.89 2.77 data revenue 10 8.69 7.79 7.20 6.39 6.01 5.63 Mobile out of bundle -4.2% -2.5% messaging revenues 5 Mobile out of bundle -6.4% -8.3% 5.73 5.89 4.96 5.27 5.17 5.26 voice revenues 0 Mobile rental 1.7% 1.2% 2005 2006 2007 2008 2009 2010 revenues excl out of bundle calls

Source: Ofcom / operator data

59 Figure 5.50

Average monthly revenue per mobile subscriber, by connection type

£ per month 40 2010 5 year 34.55 33.51 33.64 31.65 growth CAGR 30 27.45 25.29 Contract -7.9% -6.0%

2017.35 17.07 17.39 17.10 15.87 15.54 Overall -2.1% -2.2%

8.47 8.40 8.45 10 8.32 8.13 7.59 Pre-pay -6.6% -2.2%

0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

60 Figure 5.51

Mobile originating voice call volumes

Minutes (billions) 2010 5 year growth CAGR 150 124.6 118.3 Total 5.3% 11.8% 110.9 17.1 99.9 14.3 2.0 100 12.7 2.0 Other calls 19.7% 14.2% 11.5 1.8 82.5 1.4 33.1 71.4 30.2 32.1 10.2 27.4 International 0.0% 17.4% 8.8 1.0 0.9 20.8 calls 50 16.0 41.1 42.7 31.5 37.8 Off-net mobile 3.0% 15.6% 21.4 24.4 calls On-net mobile 3.9% 14.8% 28.4 28.8 29.8 24.3 26.0 28.0 call 0 UK geographic 3.3% 4.1% 2005 2006 2007 2008 2009 2010 calls

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators

61 Figure 5.52

Mobile voice call volumes, by subscription type

Minutes (billions)

150 2010 5 year 124.6 118.3 growth CAGR 110.9 99.9 32.6 100 34.0 Total 5.3% 11.8% 82.5 31.5 71.4 27.4 21.1 17.2 Pre-pay -4.1% 13.6% 50 84.3 92.1 72.5 79.4 54.2 61.4 Contract 9.1% 11.2%

0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators

62 Figure 5.53

Mobile messaging volumes

Billions of messages 150 129.7 0.5 2010 5 year growth CAGR 104.5 0.5 100 83.8 Total 24.1% 29.4% 0.5 63.0 0.3 129.1 MMS 9.5% 17.1% 46.3 50 104.0 35.7 83.3 62.6 SMS 24.2% 29.5% 35.5 46.1 0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators

63 Figure 5.54

Mobile subscriptions, by network operator

2010 5 year Subscriptions (millions) growth CAGR 100 Total 1.1%% 4.3% 80.3 81.1 76.7 3UK 80 70.1 73.8 4.9 5.6 12.4% 9.7% 65.8 4.5 3.8 4.0 3.5 16.4 16.9 Everything Everywhere 60 15.7 31.2 14.9 15.3 (inc. Virgin) 17.2 17.3 16.8 T-Mobile (inc. Virgin) -8.4% 0.7% 40 15.3 16.9 21.4 22.4 24.3 Orange 17.0 19.0 20.0 } 20 O2 (inc. Tesco) 8.4% 7.4% 15.2 15.0 16.8 17.7 18.8 20.1 0 Vodafone 6.6% 5.8% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators

64 CONFIDENTIAL

Figure 5.55

Mobile subscriptions by technology

Subscriptions (millions) 100 2010 5 year 81.1 76.7 80.3 growth CAGR 80 70.1 73.8 4.1 4.8 65.8 2.6 Total 1.1% 4.3% 8.0 13.1 16.9 22.9 60 4.6 28.4 3G mobile 16.8% n/a 40 broadband 61.2 62.1 60.7 57.3 53.3 3G handset 23.9% 43.8% 20 48.0

0 2G -9.9% -4.8% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

65 Figure 5.56

3G connections, by network operator

Connections (millions)/ % of total connections 3UK 50 40.9 Everything Everywhere 40 (including Virgin Mobile) 33.6 33.1 Orange 30 25.4 27.0 5.6 T-Mobile (including Virgin 17.7 19.5 5.0 20 5.3 12.6 Mobile) 11.4 13.1 4.5 O2 (including Tesco 3.3 4.3 7.0 8.0 4.0 7.9 Mobile) 10 4.6 1.8 2.8 6.4 3.8 1.4 3.9 Vodafone 3.5 0.51.0 2.6 5.0 6.0 7.1 0 0.70.10.00.3 1.51.2 3.3 2005 2006 2007 2008 2009 2010 % total subs

Source: Ofcom / operators Note: 3G includes connections made via laptops/dongles as well as mobile handsets

66 Fixed data services

67 Figure 5.57

Estimated UK internet and broadband retail revenue

Revenue (£billion)

4 2010 5 year 3.2 3.2 3.2 3.2 growth CAGR 3.0 3 2.8 0.6 0.7 0.7 0.5 0.5 0.6 Total -5.7% 1.3%

2 SME -10.3% -3.1% 2.0 1.6 2.3 2.5 2.6 2.5 1 Residential -4.8% 9.0% broadband 0.7 0.5 Residential 0.2 -5.7% -36.9% 0 0.1 0.1 0.1 narrowband 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

68 Figure 5.58

Estimated UK fixed internet connections

Connections (millions) 25 20.5 2010 5 year 19.2 20 18.3 18.6 0.9 growth CAGR 16.6 17.1 1.3 1.0 2.7 15 4.1 Total 6.7% 4.4% 6.7

10 18.3 19.6 15.6 17.3 Narrowband -3.1% -32.4% 13.0 5 9.9 Fixed 7.2% 14.6% 0 broadband 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

69 Figure 5.59

UK residential and small business fixed internet connections

Connections (millions) 2010 5 year 20.5 19.2 growth CAGR 20 18.3 18.6 1.6 0.1 16.6 17.1 1.5 1.5 1.5 0.2 0.2 Total 6.7% 4.4% 1.3 1.6 0.2 15 0.3 0.3 SME 4.1% 3.2% broadband 10 8.6 18.0 11.5 14.1 15.8 16.8 SME -22.4% -15.3% narrowband 5 Residential 7.5% 16.0% 6.4 broadband 3.8 Residential 1.2% -34.0% 2.5 1.1 0.8 0.8 0 narrowband 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: SME broadband includes some connections over leased lines

70 Figure 5.60

UK residential and small business fixed broadband connections

Connections (millions) 2010 5 year growth CAGR 19.6 20 18.3 17.3 Total 7.2% 14.6% 15.6 15 6.4 7.5 Other 177.7% 58.4% 13.0 3.7 5.5 1.3 9.9 LLU DSL 17.7% 108.1% 10 0.2 3.1 3.4 3.7 3.8 4.0 2.7 Cable modem 4.8% 8.6% 4.3 3.5 3.1 2.5 5 5.5 4.7 Other non-LLU -18.6% -11.6% 4.1 4.5 4.9 5.4 DSL 2.3 3.1 0 BT retail DSL 10.5% 18.4% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Excludes connections made over cellular networks

71 Figure 5.61

Fixed broadband connection market shares

Share (per cent) Percentage point change 1 year 5 year 100% 7.0 6.9 6.1 15.9 12.7 8.7 2.0 3.4 0.6 5.8 3.24.8 4.0 Others -2.0% -9.8% 8.8 7.3 80% 8.7 1.5 7.7 11.3 13.2 15.3 O2/Be 0.2% 3.4% 60% 23.4 27.7 25.5 24.9 22.7 21.6 Everything Everywhere -0.8% -4.7%

40% 28.7 25.5 23.7 22.8 22.5 22.0 Sky 2.2% 15.3% 20% TalkTalk Group -1.1% -1.8% 23.4 23.8 26.5 26.3 26.7 27.5 0% Virgin Media -0.5% -6.6% 2005 2006 2007 2008 2009 2010 BT 0.8% 4.2%

Source: Ofcom / operators Note: Where providers have merged historic data is included under the ISP it was part of at the end of 2010; excludes connections made over cellular networks

72 Business markets

73 Figure 5.62

UK business telecoms services revenue

Revenue (£billion) 2010 5 year growth CAGR 15 13.7 14.3 14.5 13.8 13.8 13.0 3.2 3.2 Total 0.4% 1.3% 3.1 3.1 3.3 3.5 0.7 0.7 10 0.6 0.6 0.5 0.5 Corporate 4.7% 2.6% data services 6.3 6.6 5.0 5.6 6.4 6.6 Non-corporate -10.3% -3.1% internet 5 Mobile 3.7% 5.8%

4.4 4.3 4.2 3.9 3.6 3.3 Fixed voice -8.0% -5.7% 0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators / IDC

74 Figure 5.63

Average monthly voice revenue per business fixed line

£ per month 2010 5 year 40 growth CAGR

Total £30.41 £30.05 £29.33 -2.7% -3.5% 30 £28.04 £26.23 £25.51 6.55 6.73 Calls to mobiles -3.7% -2.7% 6.35 5.95 2.58 5.94 5.72 2.63 2.49 2.26 20 3.04 2.92 2.63 1.68 1.62 International -3.6% -8.9% 2.37 2.01 1.91 2.70 2.57 2.18 1.88 1.77 1.71 National -4.7% -8.9% 10 15.54 15.20 15.68 15.58 14.83 14.55 Local -3.2% -8.7%

0 Line rental -1.9% -1.3% 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Excludes revenues from non-geographic voice calls

75 Figure 5.64

Breakdown of business mobile revenue

Revenue (£billion)

8 2010 5 year 6.6 6.3 6.4 6.6 growth CAGR 6 5.6 0.7 0.8 0.8 0.9 5.0 0.5 Total 3.7% 5.8% 0.4 4 Data (inc. 6.3% 15.1% 5.8 5.7 SMS) 5.0 5.6 5.5 2 4.5 Voice calls 3.3% 4.7% and rental 0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

76 Figure 5.65

Business voice call volumes

Call minutes (billions) 100 95.5 88.3 90.9 91.0 84.1 2010 5 year 79.9 80 growth CAGR

38.6 47.5 60 31.8 54.5 59.0 63.7 Total 4.9% 3.6%

40 Mobile 8.0% 14.9% 48.1 45.5 20 40.8 36.4 32.1 31.8 Fixed -0.7% -7.9% 0 2005 2006 2007 2008 2009 2010 Proportion 39.8% 45.9% 53.8% 60.0% 64.8% 66.7% mobile

Source: Ofcom / operators Note: Fixed data excludes non-geographic voice call volumes

77 Figure 5.66

Business fixed lines, by type

Lines / channels (millions)

15 2010 5 year growth CAGR 11.0 10.8 10.9 10.7 10.2 Total 0.8 0.9 1.0 9.6 -5.2% -2.6% 10 1.0 0.9 3.1 1.0 3.2 3.3 3.3 Other lines 7.0% 4.6% 3.0 2.7 1.5 1.4 1.4 1.3 1.2 1.1 ISDN30 -11.1% -3.1% 5 channels ISDN2 -10.2% -6.6% 5.6 5.3 5.2 5.1 5.1 5.0 channels PSTN lines -2.7% -2.4% 0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators

78 UK Communications Market 2011: telecoms charts

• Key market developments

• The telecoms industry

• The telecoms user

79 Residential sector overview

80 Figure 5.67 Average household spend on telecoms services

£ per month (2010 prices) As a % of total expenditure

120 4% 3.4% 3.4% Internet & 3.3% 3.2% 3.2% broadband 100 3.1% 3% £75.56 80 £73.77 £70.92 Mobile voice & £68.57 £65.92 10.39 11.01 £63.10 data 9.91 10.22 60 10.38 9.48 2% Fixed voice 37.20 36.63 36.26 40 34.87 33.02 31.34 1% 20 27.97 26.13 24.76 23.48 22.52 22.27 As a %age of total household 0 0% spend 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators / ONS Notes: Includes estimates where Ofcom does not receive data from operators; adjusted to RPI; includes VAT

81 Figure 5.68 Comparison of average fixed and mobile voice call charges

Pence per minute 20

14.4 15 12.9 11.2 10.0 Fixed 10 8.9 8.5 Mobile 7.8 7.8 5 6.8 7.0 7.6 7.6

0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; fixed calculation excludes non-geographic voice calls Figure 5.69 Household penetration of key telecom technologies QE1: Does your household have a PC or laptop computer? / QE2: Do you or does anyone in your household have access to the Internet/Worldwide Web at HOME (via any device, e.g. PC, mobile phone etc)? / QE6: Which of these methods does your household use to connect to the Internet at home?

Proportion of adults (%) 100 93 93 93 92 92 91 90 Fixed telephony 90 90 90 88 87 85 85 80 76 73 Mobile telephony 70 71 74 64 67 68 Internet 60 60 60 65 67 58 65 connection 52 Total broadband 40 41 Fixed broadband 31 28 20 22 20 Internet on mobile 17 12 15 Mobile 0 broadband 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 Source: Ofcom technology tracker, Q1 2011. Base: All adults aged 16+ (n=3474)

83 Figure 5.70

Household penetration of fixed and mobile telephony

Proportion of respondents (per cent) 100% 1 0 1 1 1 1 1 9 10 9 11 12 14 15 None 80%

60% Mobile only 81 80 84 81 80 78 79 40% Fixed and mobile 20% Fixed only 10 10 0% 7 8 7 7 6 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1

Source: Ofcom research Base: All adults aged 16+

84 Figure 5.71

Household penetration of fixed and mobile broadband

Proportion of respondents (per cent) Total broadband 68% 71% 74% 100% take-up 32 29 26 None 80% 48 42 59 7 69 3 6 Mobile only 60% 9 9 9 Fixed and mobile 40% 52 58 56 56 58 20% 41 Fixed only 31 0% Any broadband 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1

Source: Ofcom research Base: All adults aged 16+

85 Figure 5.72 Average monthly time per person spent using telecoms services

Hours 15 14.1

10 2005 7.8 7.6 6.1 5.0 5 3.0 2010 1.7 1.7 0.5 n/a 0 Fixed voice Mobile voice Mobile Fixed internet Mobile internet messaging Annual -4.9% 11.2% 28.6% 13.2% n/a growth rate

Source: Ofcom / operators / Nielsen / UKOM/ Comscore Note: Includes estimates where Ofcom does not receive data from operators; fixed voice call figures include NTS voice calls; mobile messaging figures assume an average of 35 seconds per message; Ofcom estimate of fixed internet use per person is based on Nielsen’s data on the average monthly time spent online at home including the use of applications across the online population only; Nielsen’s methodology changed in October 2006 so comparisons before this period should be treated with caution; fixed internet use figures are for May of the following year. 86 Fixed line services

87 Figure 5.73

Cost of a basket of residential fixed voice services

£ per month (2010 prices)

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; excludes non-geographic voice calls; adjusted for RPI; includes VAT

88 Figure 5.74

Use of landline for voice communications services within the home QC2A. Do you ever use this landline phone at home yourself to make and/or receive calls, for internet access or both?

Proportion of respondents 100% 98% 98% 97% 97% 97% 96% 95% 94%

90%

85%

80% All adults ABC1 C2DE 16-34 35-54 55-64 65+ Socio economic group Age group

Source: Ofcom research, Quarter 1 2011 Base: All adults aged 16+ with a landline phone at homes (n = 3474 All, 1798 ABC1, 801 C2DE, 537 16- 34s, 680 35-54s, 312 55-64s, 381 65+)

89 Figure 5.75

Use of fixed voice communication services in the home

Per cent 100% 92% 93% 83% 86% 75% Landline - 80% personally 64% use 60% VoIP - ever 40% used 26% 27% 21% 24% 25% 21% 22% 20% 18% 18% 18% VoIP - 8% 7% currently use 0% All 16-24 25-34 35-54 55-64 All aged 65 respondents or older

Source: Ofcom research Q1 2011 Base = All respondent s: 3474; 16-24s = 460; 25-34s = 540; 35-54s = 1204; 55-64 = 535; 65+ = 735

90 Figure 5.76

Average monthly outbound fixed voice call volumes per person

Call minutes 250 225 NTS voice 212 204 calls 39 191 200 33 177 42 172 22 38 22 32 Calls to 150 9 9 20 29 9 18 17 16 mobiles 10 9 10 100 Outgoing 155 147 132 125 120 118 international 50 calls UK geographic 0 calls 2005 2006 2007 2008 2009 2010 Annual -4% -6% -4% -6% -7% -3% change

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators

91 Figure 5.77

Fixed voice options tariffs 2010 and 2011

2010 2011

Provider with fixed with fixed with fixed with fixed Fixed phone Fixed phone calls off- calls calls off- calls only only peak anytime peak anytime BT - £11.54* £16.54 - £13.60¹ £18.60 O2 - - - £7.66 £9.70 £12.77² Orange £10.25 - - £11.50 - - Sky - £11.00 £16.00 - £11.25 £16.25 TalkTalk £11.49 £14.44 £16.98 £12.30 £15.91 £18.51³ Virgin Media £11.99 £15.44 £19.94 £12.994 £16.994 £20.993,4

Source: Pure Pricing UK Broadband Pricing Factbook, March 2010 and March 2011 Notes: All tariffs exclude activation charges and promotional discounts and include VAT; all tariffs are the lowest price available, contract lengths vary. ¹Off-peak only applies to weekends ²Also includes 600 minutes to selected international destinations, + 600 minutes to 0845/0870 numbers (O2 only). ³ includes calls to Talktalk/Virgin mobile numbers. 4 Set to increase by £1.00 on 1 August 2011.

92 Figure 5.78

Residential consumer satisfaction with overall fixed line service

Proportion of all adults with service (per cent)

100 92 91 88 91 91 89 80 32 34 34 32 51 48 Satisfied 60

40 Very satisfied 56 57 57 57 20 41 42

0 2006 Q1 2007 Q2 2008 Q1 2009 Q1 2010 Q1 2011 Q1

Source: Ofcom research Base: All adults aged 15+ with a fixed line phone Note: Includes only those who expressed an opinion

Figure 5.80

Lowest cost fixed broadband options from major suppliers, June 2011

Broadband Broadband Broadband, Broadband, Broadband and fixed and fixed Broadband Broadband fixed line fixed line Provider only calls line and mobile and pay-TV and mobile and pay-TV AOL £15.31 1 £10.20 1 £19.09 - - - - BSkyB £15.00 1 £15.00 1 £21.25 - - - £30.75 BT £25.60 £25.60 £26.90 - - - £31.90 O2 £13.50 1 - £21.00 £8.501,2 - £16.002 - Orange Home £15.00 1 - £24.00 £10.00 2 - £19.00 2 - Plusnet £6.49 1 - £18.48 - - - - TalkTalk £6.50 1 - £22.70 £16.50- -- £29.10 - Virgin Media £21.00 £26.49 £26.00 £45.99 £31.49 £32.99

Source: Pure Pricing UK Broadband Pricing Factbook, June 2011 Notes: All tariffs exclude activation charges and promotional discounts and include VAT; all tariffs are the lowest price available, contract lengths vary; allowances for fixed-line and mobile calls, plus availability of TV channels included within packages may differ by operator and option; 1Also requires BT fixed line rental at £13.90 a month; 2plus cost of mobile tariff

95 Figure 5.81

Take-up of fixed and mobile broadband services by age

Proportion of respondents (per cent) 77 79 80 73 73 75 67 70 70 69 65 65 66 63 6 11 11 63 10 13 10 14 60 6 Fixed and 7 9 9 5 60 12 13 7 51 mobile 46 2 39 1 broadband 40 2 69 66 68 63 25 58 56 58 60 54 60 60 59 53 58 21 50 45 49 18 20 37 1 1 Fixed 25 17 20 broadband 0 only 2011 2011 2011 2011 2011 2011 2011 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 All adults All aged All aged All aged All aged All aged All aged aged 16+ 16-24 25-34 35-54 55-64 65-74 75+

Source: Ofcom research, data as at Q1 of each year Base: All adults aged 16+

96 Figure 5.82

Non-ownership of home broadband, by socio-economic group and age

Proportion of respondents (per cent)

60 2009 Q1

82 40 7975 2010 Q1 61 5148 5247 20 45 39 2011 Q1 3229 3331 3428 26 21 26 252322 21 1916 1915 171714 0 All ABC1 C2 DE 15-24 25-34 35-54 55-64 65-74 75+

Source: Ofcom research, Q1 2011 Base: All adults 16+

97 Figure 5.83 Main reasons for not having a home broadband connection

Proportion of those without broadband 40

20 37 24 10 18 18 18 15

0 Don't need it Don’t want a Too expensive Don't have Too old to use Likely to get in computer knowledge / internet next year skills Source: Ofcom research Note: 6% of people without the internet did not know what their main reason was or provided an ‘other’ reason Base: All adults without the internet aged 16+ (n=920)

98 Figure 5.84

Location of internet access

Proportion of adults aged 16+ (per cent) 0 20 40 60 80

74 72 At home 67 61 24 25 At work 24 25 11 10 2011 Q1 At someone elses house 12 15 10 2010 Q1 11 At library or educational institution 12 14 2009 Q1 17 7 Anywhere via portable device 5 2008 Q1 5 3 2 At internet cafe, shop or kiosk 4 7 2 1 All other locations 1 2 In total 80% of UK adults used the internet in 2011 Q1 Source: Ofcom research Base: All internet users aged 16+

99 Figure 5.85

Average PC / internet time online at home, per person

Hours per month

14.7 14.1 12.4 5

0 May 2009 May 2010 May 2011

Source: Ofcom / Nielsen / UKOM Note: Ofcom estimate of fixed internet use per person is based on Nielsen’s data on the average monthly time spent online at home including the use of applications across the online population only; data are for May of each year.

100 Figure 5.86

Residential consumer satisfaction with aspects of fixed broadband service

Proportion of all adults with service (per cent)

100 89 90 90 86 83 81 80 80 80 34 38 Satisfied 40 41 34 60 36 38 41

40 Very satisfied 55 52 50 49 20 46 45 42 39

0 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 Overall Speed of service

Source: Ofcom research Base: All adults aged 16+ with a fixed broadband connection Note: Includes only those who expressed an opinion

101 Mobile services (including mobile broadband)

102 Figure 5.87

Cost of a basket of mobile services

£ per month (2010 prices) 30 Metered messaging £22.90 £21.49 £20.94 £19.27 20 5.18 Metered voice 5.10 5.23 £16.19 4.96 £15.22 6.60 6.22 5.19 4.16 4.00 4.50 Line rental fee 10 3.89 3.30 and inclusive calls, texts and 11.12 10.16 10.51 9.80 8.14 7.92 data 0 2005 2006 2007 2008 2009 2010 Annual -11% -6% -3% -8% -16% -6% change

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; excludes non-geographic voice calls; adjusted for RPI; includes VAT 103 Figure 5.88

Average mobile cost per voice minute, by customer type

Pence per minute 20

14.8 15 13.0 14.3 11.8 10.6 Contract 12.5 9.3 10 8.9 9.7 8.4 7.9 7.3 5 Pre-pay

0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; contract calculation includes rental element which will often includes a number of inclusive messages and data allowance; calculations use actual minutes of usage

104

Figure 5.90

Household penetration of fixed and mobile telephony, by socio-economic group and age

Proportion of respondents (per cent)

100% 1 2 16 5 42 15 10 13 13 25 23 None 80% 32 57 60% Mobile only 80 88 79 86 82 86 40% 62 77 67 Fixed and mobile 20% 37 11 14 Fixed only 0% 6 4 5 1 6 All ABC1 C2 DE 16-24 25-34 35-54 55-64 65-74 75+

Source: Ofcom research Base: All adults aged 16+

106 Figure 5.91

Average monthly outbound mobile voice minutes per person

Call minutes

200 Other calls 167 159 150 23 150 136 19 Outgoing 17 3 3 16 2 international calls 113 2 44 98 41 43 100 14 Off-net calls 12 1 37 1 29 22 57 43 51 55 50 29 33 On-net calls

34 36 38 38 39 40 UK fixed calls 0 2005 2006 2007 2008 2009 2010 Annual 9% 11% 15% 21% 11% 6% change

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; excludes 3UK; calculation excludes mobile broadband connections

107 Figure 5.92

Average monthly outbound mobile call minutes, by subscription type

Call minutes 300

237 233 224 211 218 212 200 Contract

100 Pre-pay 56 60 61 35 39 49

0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators; excludes 3UK; calculation excludes mobile broadband connections

108 Figure 5.93 Average monthly messaging volumes per subscription type

Messages per month 200

145 150 126 111 Contract 111 110 107 125 100 101 Pre-pay 78 78 80 84 50

0 2005 2006 2007 2008 2009 2010

Source: Ofcom / operators Note: Includes estimates where Ofcom does not receive data from operators.

109 Figure 5.94

Residential consumer satisfaction with aspects of mobile service

Proportion of all adults with service (per cent)

100 94 94 94 93 88 88 87 88

80 35 32 33 32 30 29 30 30 Satisfied 60

40 Very 59 62 61 61 58 59 57 58 satisfied 20

0 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1

Overall Accessing the network

Source: Ofcom research Base: All adults aged 16+ with a mobile phone Note: Includes only those who expressed an opinion

110 Figure 5.95 Take-up of mobile broadband, by socio-economic group

Annual +2 +6 +5 +1 +1 +1 +/-0 +1 +2 +1 +3 +2 +3 +3 change % take-up 30

20 16 12 4 16 Mobile 7 7 4 7 broadband 10 8 11 12 3 16 only 13 14 11 11 11 9 6 2 7 9 2 4 5 0 1 Fixed and All 24 34 54 64 74

C1 C2 mobile AB DE - - - - - 75+ broadband 16 25 35 55 65 social private - - Rent Rent Rent Rent

Socio-economic mortgage / Own Age group Housing Source: Ofcom research, Q1 2011 Base: All adults aged 16+ (n=3474)

111 Figure 5.96

Location of those using mobile broadband to access the internet

5% Always use in the home

20% 29% Mainly use in the home

Use equally in and outside the home

12% Mainly use outside the home 34% Always use outside the home

Source: Ofcom Base: 750 UK adults

112 Figure 5.97

Use of the internet on mobile phones by age and socio-economic group

Take-up (per cent)

60 57 53 46 41 39 38 40 35 34 36 32 30 31 27 28 26 25 24 22 21 23 19 181920 20 13 9 6 4 2 2 0 Total 15-24 25-34 35-54 55-64 65+ AB C1 C2 DE

2009 2010 2011

QD28A: Which if any, of the following activities, other than making and receiving voice calls, do you use your mobile for? Source: Ofcom technology tracker, Q1 2011 Base: All adults 16+ (n = 3474 UK, 460 16-24, 540 25-34, 1204 35-54, 535 55-64, 735 65+, 784 AB, 1014 C1, 701 C2, 975 DE, 1679 male, 1795 female) Note: Web/data access includes accessing the internet, downloading and streaming content, connecting using Wi-Fi and using VoIP. 113 Figure 5.98

Location of internet access using a mobile device

4% 8% 6% 9% Always use in the home Mainly use in the home Use equally in and outside the home 23% Mainly use outside the home Always use outside the home

50% Don't know

Source: Ofcom Base: 471 UK adults

114 Figure 5.99 Lowest cost standalone mobile broadband contracts by provider Minimum Charges Monthly Data contract above WiFi hotspot ProviderMobile broadbandcharge tariffs allowance length allowance use Vodafone 2009 £14.68 1GB 1 month £7.50 / 500MB Not included 2010 £15.00 3GB 1 month £15.00 / GB Not included 2011 £7.50 500MB 1 month £15.00 / GB 1GB O2 2009 £14.69 3GB 1 month 19.6p / MB Unlimited 2010 £10.00 1GB 1 month 2.4p / MB Unlimited Bundles available 2011 £5.11 500MB 1 month e.g. £5.11 / 500MB Unlimited T-Mobile 2009 £14.68 3GB fair use 18 months n/a Unlimited 2010 £15.00 3GB fair use 18 months n/a Unlimited 2011 £10.00 1GB fair use 18 months n/a Not included Orange 2009 £9.79 1GB 18 months 1.43p / MB Not included 2010 £10.00 1.5GB 18 months 2p / MB Not included £10.00 500MB 1 month Bundles available 2011 e.g. £5.00 / 500MB Not included 3UK 2009 £9.79 1GB 12 months 10p / MB Not included 2010 £7.50 1GB 18 months 10p / MB Not included 2011 £7.89 1GB 18 months 10p / MB Not included Virgin Mobile 2009 £14.68 3GB 18 months £14.68 / GB Not included Source: PurePricing 2010 £10.00 1GB 2 months £15 / GB Not included115 Note: Data as at March of each year Exlcudes Orange’s Racoon pay as you go tariff (5 1 pence per

Figure 5.100

Residential consumer satisfaction with aspects of mobile broadband service

Proportion of all adults with service (per cent) 100 88 82 83 80 80 70 73 Satisfied 46 60 40 44 41 35 40 40 Very 42 42 satisfied 20 39 35 33 39

0 2009 Q1 2010 Q1 2011 Q1 2009 Q1 2010 Q1 2011 Q1

Overall Speed of service

Source: Ofcom research Base: All adults aged 16+ with a mobile broadband connection Note: Includes only those who expressed an opinion

116