Communications market transformed says regulator

Telecoms regulator Ofcom has published its annual Communications Market Report, which reveals new industry trends and changes in consumer behaviour.

Telecoms regulator Ofcom has published its annual Communications Market Report, which reveals new industry trends and changes in consumer behaviour.

The report for 2005 shows the number of households with broadband connections increased 63% between 2004 and 2005, to a total of nine million connections.

The number of households using their broadband connections to make low-cost or free voice over internet protocol phone calls rose to 1.8 million by the end of 2005.

Mobile phone usage also increased, accounting for 31% of all call minutes – up from 28% in 2004 and 20% in 2001.

Ofcom said that in the communications sector, a combination of new technology, intense competition between providers and regulatory intervention, has led to significant reductions in retail prices.

Between 2004 and 2005 typical household telecoms costs fell by 5% - from £80 per month to £76 per month.

The cost of a broadband connection faster than 1mbps fell by 60% (from around £41 per month to around £16 per month.

Ofcom said that without continuing downward pressure on retail prices, typical household costs for telecoms services, based on 2001 prices, would have been more than 50% higher in 2005 than actually was the case.

Ofcom also found that online advertising continues to grow in importance as a mass marketing medium, attracting significant revenues away from other media.

Total online advertising revenues have increased almost eight-fold in real terms between 2001 and 2005 – from just £0.17bn per year to £1.3bn per year.

Ofcom said online advertising revenue is now almost three times greater than radio advertising revenue (at around £0.5bn, unchanged since 2001 in real terms) and over one third of that spent on television advertising (£3.8bn in 2005, up from £3.5bn in 2001).

Ofcom chief operating officer Ed Richards said, “The communications sector is being transformed by greater competition, falling prices and the erosion of traditional revenues and audiences.

“A new generation of consumers is emerging for whom online is the lead medium and convergence is instinctive.”

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