Operators’ hopes that data would be the driver of long-term growth are starting to happen, after the average UK household spend on mobile service grew for the first time in three years.
Regulator Ofcom’s Communications Market Report 2013 revealed a UK household paid an average of £46.73 per month last year on contract and prepay deals. This is up 3.4% on 2011 and the highest figure since 2008. While inflation was a factor in the increase, Ofcom’s director of research James Thickett said the public’s thirst for data was crucial.
He said: ‘People are spending more on mobile for the first time in many years. This increase in spend is more a reflection of people trading up rather than growing underlying costs. Although operator competition has been driving down the cost of mobile calls, people are migrating to smartphones and going onto longer contracts. The devices will be more expensive and they’ll be using more data services.’
The report also revealed 15% of households were ‘mobile-only’ without any fixed line voice or broadband packages. Thickett added: ‘Between 2009-2011 we saw significant numbers having a broadband connection through a dongle connected to a laptop. What we’re now seeing is smartphones, tablets and Wi-Fi actually substituting the use of dongles.’
The annual document showed just over half (51%) of adults owned a smartphone in the first quarter of 2013, while for the first time since 1999 contract subscribers outnumbered pre-pay users. Extra spend by consumers in 2012 contributed to a £0.3bn increase in mobile retail revenue on the previous year, although the total UK telecoms landscape showed a bleaker revenue picture with a 1.8% drop in the same period. The £700m shortfall was attributed to regulation and a fall in wholesale revenue.
Additionally, texting has been overtaken by web-based messaging as the primary form of communication between young adults. Email, instant messaging and social networking was used by 84% of 16-24 year olds at least once per week compared to 80% who used traditional SMS. Tablet ownership more than doubled over the last 12 months from 11% of homes to almost a quarter (24%).
Thickett warned operators need to ensure their networks can cope with the forthcoming surge in data usage. He said: ‘The average amount of data used per month, per person, has tripled since July 2010 to around 236Mbits per month. This is putting a huge amount of pressure on the infrastructure, and as the 4G network grows over the next 12 months we’re likely to see pressure grow. So far smartphones haven’t delivered broadband speeds that people feel comfortable with to use as their main device, however, we think when 4G comes in we could see some more substitution for fixed line broadband.’
Author: Matthew Campelli