The UK Broadband Landscape

Industry regulator Ofcom has reported on the changing face of digital UK saying broadband is becoming an integral part of the UK communications landscape; a source of everyday communication, information and entertainment in many homes and central to the strategic plans of many communications service providers.

A significant milestone was passed in Q4 2006 – over half of UK adults now live in households with a broadband connection. Development in the sector is being driven by growing competition in service provision, surging consumer take-up, market innovation and new regulatory arrangements.

At the end of 2006, there were 13 million residential and SME broadband connections compared with just over 300,000 in 2001. Growth has brought with it a corresponding rise in revenue. Ofcom estimate that in 2006 residential and SME connections generated £1.84bn in retail revenue for broadband providers – a fifteen-fold increase in six years.

Report highlights:

Half (50%) of all UK adults lived in households with a broadband internet connection in Q4 2006 – up from 39% a year ago and seven times the 2002 penetration level. In total, there were 13 million residential and SME (small and medium size enterprise) broadband connections at the end of 2006, up 31% over the year.

Revenues from broadband access services continued to grow, reaching an estimated £1.8bn in 2006, an increase of 18% over the year and fifteen times 2001 revenues.

In Q4 2006, over 40% of all adults with broadband at home took broadband alongside other communications services from the same provider; around 32% combined broadband with landline, and a further 12% combined it with landline and TV services.

In Q3 2006, 63% of adults with broadband at home used it daily, while 30% went online at least once a week. Broadband users spent an average of 9.1 hours a week online compared to 4.4 hours for narrowband users.

Around half (51%) of adults with broadband at home had accessed online video clips, with 26% saying they did this weekly, according to Ofcom’s February 2007 survey. 43% of adults with broadband at home had uploaded images, while 15% had uploaded video content at least once.

At the end of 2006 the estimated average headline connection speed was 3.8Mbit/s, up from 1.6Mbit/s in 2005. Headline speeds of over 2Mbit/s were used by 31% of homes and SMEs, compared to only 2% a year earlier. However, almost half (48%) of residential consumers were unaware of their headline connection speed.

Up to 2Mbit/s headline speed connections were available for £15 a month in 2006, down from £50 in 2003. Headline speeds of 8Mbit/s were available for around £10 per month from some operators, compared to £40 when first offered in 2004. In addition, several providers offered a broadband service at no extra cost to consumers who also took other services in a bundle.

At the end of 2006 there were 1.3 million residential and SME broadband unbundled lines, accounting for 10% of all connections compared to only 2% a year earlier. LLU growth continued in early 2007, reaching 1.7 million lines in February.
There were around 12,000 commercial wireless hotspots across the UK in September 2006, an increase of 32% over twelve months. In February 2007, of the 21% of adults owning a WiFi-enabled laptop, over one in three (34%) had used it to access the internet via a WiFi hotspot.

One in three UK adults said they owned an internet-enabled mobile phone in February 2007; however, only half had ever used it to go online. Lack of need or interest was the main reason cited (by 43% of users), with cost second (31%).
Almost two-thirds (62%) of SMEs were connected to broadband in 2006, while 9% used dial-up internet access. Broadband penetration was higher among larger SMEs with 50-250 employees, at 70%.

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