International Communications Market Report 2011 15 December 2011 - PowerPoint PPT Presentation

Ofcom analyst briefing International Communications Market Report 2011 15 December 2011

Agenda Welcome and overview James Thickett, Director of Research and Market Intelligence Trends in telecoms Ian Macrae, Head of Telecoms Market Intelligence Trends in Internet and web-based consumption Jonathan Fenn, Senior Media Analyst, Market Intelligence Trends in the audio-visual industries Steve Gettings, Head of Media Market Intelligence Trends in consumer pricing Ian Macrae, Head of Telecoms Market Intelligence 1

Welcome and overview of key trends James Thickett, Director of Research and Market Intelligence International Communications Market Report 2011, Analyst briefing, 15 December 2011 2

One of three Communications Markets Reports 3

Methodology • Combination of desk and bespoke research - IDATE - Teligen - PricewaterhouseCoopers - The European Commission - WARC - Mediametrie - Analysis Mason - Nielsen • Online consumer research for supplementary take-up and usage data across six countries • We have used the latest data where possible and figures are nominal unless otherwise stated 4

Global communications revenues increased by 3.4% in 2010 Global communications revenues Growth £1200bn £1,132bn £1,095bn £1,088bn 4yr % 1yr% £29bn £1,049bn £28bn £31bn £986bn £31bn £1000bn £239bn 14.9% 3.4% £30bn £222bn £221bn £211bn £194bn £800bn Radio -4.0% 5.0% £600bn £864bn £846bn £836bn £807bn £400bn 23.2% 7.7% Television £762bn £200bn 13.5% 2.2% Telecoms £0bn 2006 2007 2008 2009 2010 Source: Ofcom analysis based on data taken from PricewaterhouseCoopers Global Entertainment and Media Outlook 2011-2015

Figure 1.2 Advertising revenues returned to 2008 levels Source of global revenues for telecoms, radio and TV services Growth 4yr % 1yr% £984bn £1,049bn £1,086bn £1,094bn £1,131bn 100% £25bn £25bn £25bn £26bn £26bn 14.9% 3.4% £109bn £119bn £120bn £119bn £115bn 80% 6.4% 1.0% Public licence 60% fee £959bn £986bn £904bn £941bn £845bn 40% 3.4% 9.1% Advertising 20% 16.7% 2.8% Subscription 0% 2006 2007 2008 2009 2010 Source: Ofcom analysis based on data taken from PricewaterhouseCoopers Global Entertainment and Media Outlook 2011-2015

Growth in global revenues driven by BRIC countries... Communications sector revenues in 2010 (£bn) Growth 1yr% Telecoms Television Radio 10 1.0 UK £39bn 27 11 -0.7 FRA £44bn 32 10 -5.8 GER £49bn 35 11 ITA £33bn -7.1 24 8 18.2 AUS £20bn 16 4 -1.9 ESP £26bn 20 5 BRA £45bn 18.4 34 11 19.5 RUS £23bn 19 4 34.3 IND £19bn 12 7 £0bn £10bn £20bn £30bn £40bn £50bn USA £294bn 6.5 188 94 12 10.3 JPN £110bn 79 29 3 21.3 CHN £85bn 66 10 9 £0bn £50bn £100bn £150bn £200bn £250bn £300bn Source: Ofcom analysis based on Ofcom / IDATE data for telecommunications/TV and Ofcom analysis based on data taken from PricewaterhouseCoopers 7

...although revenue per capita remains below other countries Communications sector revenue, per head: 2010 (£) Telecoms Television Radio UK 432 181 18 £630ph FRA £668ph 489 159 20 GER £601ph 429 135 37 ITA £533ph 393 133 7 USA 607 304 38 £949ph JPN £871ph 624 226 21 AUS £929ph 739 162 28 ESP 429 107 11 £547ph BRA 52 2 £222ph 168 RUS £158ph 137 20 1 IND £16ph 10 6 0 CHN 49 7 7 £64ph £0 £200 £400 £600 £800 £1,000 Source: Ofcom analysis based on Ofcom / IDATE data for telecommunications/TV and Ofcom analysis based on data taken from PriceWaterhouseCoopers 8

Key trends in telecoms Ian Macrae, Head of Telecoms Market Intelligence International Communications Market Report 2011, Analyst briefing, 15 December 2011 9

Revenues in most European countries fell in 2010 Telecoms service retail revenue, 2010 Revenue (£bn) Annual -1.6% UK 9 15 3 27 change +1.2% FRA 9 18 5 32 -1.2% GER 11 19 5 35 -2.3% ITA 7 13 4 24 +3.2% USA 57 103 27 188 +3.0% CAN 7 11 4 21 -0.1% JPN 20 49 10 79 +3.4% AUS 5 9 2 16 -3.7% ESP 5 12 3 20 Fixed +1.2% NED 2 4 2 8 Mobile +3.7% SWE 1 2 1 4 -4.5% IRL 1 1 0 2 Fixed broadband -5.1% POL 1 4 1 6 +0.4% BRA 15 19 34 +7.4% RUS 6 13 19 +9.4% IND 2 10 12 +5.6% CHN 11 55 66 Source: IDATE / industry data / Ofcom

Data accounts for a third of telecoms revenues in many countries Data revenue as a proportion of total telecoms revenues, 2005 and 2010 2010 2005 43% 39% 36% 33% 33% 32% 32% 31% 29% 29% 29% 28% 27% 22% 22% 19% 18% 18% 17% 17% 16% 15% 14% 12% 12% 12% UK FRA GER ITA USA CAN JPN AUS ESP NED SWE IRL POL Source: IDATE / industry data / Ofcom 11

Non-SMS mobile data now delivers almost as much revenue as fixed broadband Fixed broadband and mobile data revenues in 12 comparator countries Revenue (£bn) 1 year 5 year 100 change CAGR 89 76 80 67 +8.4% +14.7% Fixed broadband 64 61 56 53 50 60 65 43 43 52 +24.3% +25.7% 42 35 33 Non-SMS mobile 40 33 data 26 21 20 25 24 23 SMS +4.0% +11.4% 20 17 14 0 2005 2006 2007 2008 2009 2010 Source: IDATE / industry data / Ofcom Note: Revenues in the following countries: UK, France, Germany, Italy, USA, Canada, Japan, Australia, Spain, Netherlands, Sweden, Ireland Poland 12

Mobile now accounts for more than 50% of revenues in all comparator countries except Ireland Mobile as a proportion of total telecoms revenues 5 year percentage 0% 20% 40% 60% point change 51% +4 UK 55% 52% +4 FRA 56% 51% +3 GER 54% 52% +2 ITA 54% 46% +9 USA 55% 2005 39% CAN +12 51% 2010 61% JPN +1 61% 48% AUS +9 56% 55% ESP +5 60% 49% NED +3 52% 38% SWE +14 52% 52% IRL -3 49% 56% POL +13 69% Source: IDATE / industry data / Ofcom Note: Analysis excludes the BRIC countries 13

Decline in UK fixed connections lower than in other countries Fixed-line (PSTN) voice and mobile connections per 100 population, 2010 Change -1 -4 -5 -2 -2 -1 +1 +4 +1 +3 +5 +10 since 2009 Change -3 -19 -15 -12 -11 -5 +18 +23 +37 +27 +28 +34 since 2005 148 133 131 130 99 98 53 52 50 48 33 29 UK FRA GER ITA USA AUS UK FRA GER ITA USA AUS Mobile Fixed -line Source: IDATE / industry data / Ofcom 14

Levels of fixed-mobile call substitution vary between countries Change in fixed and mobile voice call volumes, 2010 UK FRA GER ITA USA JPN AUS 15.1% 9.1% 7.9% 7.0% 4.6% 2.3% 2.1% 1.1% Fixed Mobile -0.2% -1.2% -1.5% -2.4% -4.9% -10.4% Source: IDATE / industry data / Ofcom 15

Wide variations in mobile’s share of call volumes… and little sign of convergence between countries Proportion of voice calls originating on mobile networks, 2005 to 2010 2010 pp 5 year pp Per cent change change 100 JPN +1.9 +16.9 80 +19.3 ITA +3.4 60 +29.7 AUS +3.2 UK +1.7 +17.9 40 +0.0 +4.1 FRA 20 +1.7 +15.4 GER 0 2005 2006 2007 2008 2009 2010 Source: IDATE / industry data / Ofcom 16

In Germany fixed voice minutes are over twice the cost of mobile minutes Average cost of a mobile voice minute as a proportion of the cost of a fixed voice minute, 2005 to 2010 2010 5-yr pp Per cent change value 500 238 -192 GER 172 +28 FRA 400 167 -19 ESP 116 -93 UK 300 96 -138 SWE 88 -70 200 ITA 82 -131 AUS 100 82 N/A NED 72 -90 JPN 0 2005 2006 2007 2008 2009 2010 Source: IDATE / industry data / Ofcom 17

Different drivers for fixed-mobile substitution of broadband services Household penetration of fixed and mobile broadband, 2011 Proportion of respondents (per cent) 0% 20% 40% 60% 80% 100% UK 82% 11% 5% 2% FRA 84% 13% 2% 1% GER 69% 13% 9% 9% ITA 69% 15% 14% 2% USA 87% 4% 6% 3% AUS 64% 14% 19% 3% Fixed only Fixed and mobile Mobile only No broadband Source: Ofcom consumer research, October 2011 Base sizes: UK=1015, France=1014, Germany=1014, Italy=1045, USA=1002, Japan=1015, Australia=1012. 18