The number of households able to view television over broadband in the UK is likely to exceed the number dependent on analogue terrestrial broadcasts by the end of the decade.
The growth of broadband connections, together with the progressive switch off of analogue broadcast signals between 2008 and 2012, will lead to a transformation in the way that television is consumed.
Ofcom, the UK communications regulator, says that there is an accelerating trend towards broadband internet, digital television and mobile communications.
More households now use broadband than dial-up connections for internet access. There are now over 8 million broadband connections in the UK, representing almost 30% of all UK households and businesses.
More households now receive digital television than analogue broadcasts, with 62% of households now digital. Channels that are only available on digital services now collectively account for a greater share of viewing than BBC 1 or ITV 1.
More revenue is now collected from mobile telecommunications than for fixed-line calls. Last year mobile telecoms revenues increased by 16% to £12.3 billion, while those for fixed-line calls fell 6% to £10.5 billion.
In its annual Communications Market report, Ofcom notes that as more consumers adopt broadband and digital television for the first time and as mobile phone usage increases, these services command a greater share of household expenditure. They now account for around £1,000 a year per household. Excluding inflation that is a third more than in 2000.
Uptake of digital television is accelerating. Every month more than 250,000 households, equivalent to a city the size of Sheffied, convert to digital, with 70% of that growth in 2004 being driven by Freeview, the free-to-air digital television service.
“2004 was the year in which the consumer began to take control of communications,” said Ofcom. “The growth of digital television, digital radio and broadband platforms gave consumers greater access to improved on-demand, interactive and multichannel services.”
The report says there are now more television and radio channels than ever before, and consumers have more freedom to access content when and where they want it.
“Platform convergence began in earnest in 2004,” according to the Ofcom. “Consumers can now use their broadband connection – and soon even their mobile phone – to watch TV or listen to the radio. Many operators are responding by developing digital portfolios which extend their brand across multiple platforms and technologies.”
“The combination of mass-market appeal, rapid growth, falling prices, increasing connection speeds and innovation in video technology means that by 2010, the number of households able to view television over broadband is likely to exceed the number of households dependent on analogue terrestrial broadcasts for all their television viewing,” said Ofcom.
“This report shows that UK households are now accelerating into the digital age,” said Ed Richards of Ofcom. “In parallel, industries formed over decades are being reshaped by digital broadcasting and broadband with every month that passes.”
Only a very small number of people in the UK currently receive television over broadband in the UK, around 20,000 homes, but BT recently announced plans for a service that will combine broadband video-on-demand with broadcast services.
“Broadband and broadcast technologies are coming together to transform the way we view television,” said Dr William Cooper, of independent strategic consultancy informitv. “The worlds of the telephone, the TV and the PC will eventually converge in networks based on IP, or internet protocol, with profound implications for previously separate communications industries.”
Turkeys voting for Christmas
Barry Cox, chairman of SwitchCo, the body appointed to oversee digital switchover, has warned that getting the support of traditional broadcasters for the switch to digital is like “turkeys voting for Christmas”.
He said that both the licence fee and advertising revenue will be significantly threatened. “If the public service broadcasters fail to respond adequately they will enter into serious decline,” he told an audience at the European Media Forum.
He said that traditional channels needed “to maximise the leverage their present dominant status as broadcasters gives them”, noting that their best chance would be to start to wean viewers off the “drug of free television”, before other rival platforms do it for them.
The Communications Market 2005 report is published online by Ofcom and provides a wealth of data together with interpretation of emerging trends in the communications sector.