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Ofcom: Total UK telecoms spend rises to £35.6bn

“Overall, spend on telecoms services accounted for 3.8 per cent of average total household spend during the year, the highest proportion recorded since 2012.

Figure was driven mainly by take up of superfast broadband services

Revenue for total telecoms spent by consumers in the UK grew 0.4 per cent year-on-year to £35.6 billion, driven by take up of superfast broadband services.

This is according to Ofcom’s annual Communications Market Report for 2016. Industries such as TV, radio and postal services also contributed to the total figure.

UK telecoms revenue stood at £35.4 billion in 2015. Growth in retail mobile telecoms remained flat contributing £15.3 billion to the total, while retail fixed line services such as broadband rose 1.1 per cent from £13.6 billion, to £14.2 billion.

Average household spend on telecoms services has increased from £84.46 to £85.26, continuing an incremental 0.1 per cent rise since 2014. Mobile voice and data services was down 3p to £45.60 year-on-year, while fixed voice gained 3p to £22.75, and fixed Internet rose to £16.90 from £15.11.

The report said: “This increase was due primarily due to an 11.8 per cent increase in average monthly spend on fixed Internet access, caused mainly by the continued migration of superfast broadband services.

Average revenue per fixed line increased in 2016, despite falling call volumes

The main driver for this was a 5.0% increase in average line rental and bundled call revenue, to £15.76 per
month, equating to 75% of total average monthly spend. Average line rental prices have increased by 34% in real terms over the last decade, despite a fall in the underlying wholesale costs related to providing these services.

Mobile retail revenues remained flat at £15.3bn in 2016

An increase in revenue from access and bundled services (up £0.5bn to £10.9bn), due to the continued
migration from pre-pay to post-pay services, was offset by a £0.4bn fall in revenue from out-of-bundle
calls and a smaller fall in out-ofbundle messaging revenue.

More than half of new mobile contracts had a minimum period of 12 months or less in Q1 2017

Post-pay mobile connections with a minimum contract period of 24 months are the most popular way for
consumers to acquire a new handset with their mobile service; the device cost is paid off over the course of a
contract as part of the monthly fee. However, an increasing number of consumers are either keeping
their old handset or buying a SIM-free handset (i.e. purchasing one without a mobile service), and using it with a SIM-only post-pay mobile service. SIM-only post-pay services typically have a minimum contract period of either one month or 12 months, and sales data from GfK Retail and Technology indicate that more than half of new
mobile contract sales (53%) were for a minimum contract period of 12 months or less in Q1 2017, compared to 43% a year previously. Consumers may do this to save money, or because they do not feel that the latest smartphone models provide a sufficient increase in functionality to warrant an upgrade.

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