Communications Market Report: Northern Ireland

Transcription

1 Communications Market Report: Northern Ireland Research Document 0

2 Introduction This is Ofcom s fourth annual review on Northern Ireland, covering the markets for television, radio and telecommunications, and setting out detailed industry and consumer data. We have had very positive stakeholder feedback on previous reports, and this year we have decided to publish this report with the main UK Communications Market review to give a consistent and timely picture of the communications market across the UK. The review aims to provide an overview of the communications market for consumers and stakeholders. It also provides important analytical context for the discussions and decisions taken by government and stakeholders in the public and private sectors. As with our previous reports, the analysis presented here paints a detailed picture of consumer behaviour, right down to the level of individual cities across the UK. This year, our analysis covers a range of consumer indicators in Belfast and Londonderry/Derry, in addition to the Border area and rural areas of Northern Ireland. The research shows that some gaps, in service availability, take-up and use, between Northern Ireland and the rest of the UK are narrowing. However, it also highlights significant differences in these same areas between different parts of Northern Ireland, particularly between rural and urban areas. Our research has also provided us with an opportunity to explore consumers engagement with new technologies in Northern Ireland. This year we examined the consumption of television content online and found substantial differences in its use across the UK. We publish these reports to support Ofcom s regulatory goal to research markets constantly and to remain at the forefront of technological understanding; this also fulfils the requirements on Ofcom under section 358 of the Communications Act 2003 to publish an annual factual and statistical report. It also addresses the requirement to undertake and make public our consumer research (as set out in Sections 14 and 15 of the same Act). The information set out in this report does not represent any proposal or conclusion by Ofcom in respect of the current or future definition of markets and/or the assessment of significant market power for the purposes of the Communications Act 2003, the Competition Act 1998 or other relevant legislation. As with previous years reports, the detailed data must be seen in the context in which they are collected. Care must be taken in drawing far-reaching conclusions at a city-based level, since sample sizes are comparatively small. We are publishing additional charts on our website which could not be accommodated in this report. 1

3 Contents Introduction 1 Key Points 3 1 The market in context Northern Ireland: setting the scene Recent developments in Northern Ireland Northern Ireland s communications market in the UK context Northern Ireland s communications market and the economic downturn 29 2 Converging markets Converging communications markets Devices Consumption 39 3 Television PSB spend on television content for viewers in the nations Hours of output of content for viewers in the nations PSB television quota compliance Digital television take-up Television viewing 62 4 Radio The radio industry Radio service availability Patterns of radio listening 72 5 Telecoms Availability Service take-up Take-up, by supplier Telecoms spend Satisfaction Annexes 111 Annex A: Survey methodology 113 Glossary 116 Table of Figures 121 y Points 2

4 Key Points Key points: television Digital TV take-up rose by 10 percentage points in Northern Ireland, to 89% Digital television penetration rose by ten percentage points in the twelve months to Q1 2009, to stand at 89%; this compares with the UK average figure of 90%, which rose by five percentage points over the same period. Rapid take-up in Northern Ireland narrowed the gap with the UK average by five percentage points over the year. Take-up stood at 85% in Belfast but just 71% in Londonderry/Derry (page 62). The five PSB networks held their share best in Northern Ireland during 2008 Since 2003, the five PSB channels combined share of viewing fell by ten percentage points in all homes in Northern Ireland, the smallest reduction of any region and well below the UK average reduction of 16pp. As a result the five PSB channels attracted a 61% viewing share in Northern Ireland in 2008, one percentage point higher than the UK-wide average (page 63). The BBC/UTV invested 29m on output for N Ireland viewers in 2008 The BBC and UTV together spent 29m on new commissions in news, current affairs and non-news/non-current affairs output for viewers in Northern Ireland during This amounted to 9% of the total spend across the UK on content for a specific nation, and was down by 6% year on year, broadly in line with the UK average. A further 6m ( 0.3%) was spent on programmes produced in Northern Ireland that were shown UK-wide (page 51). funding 1,142 hours of English language output down 0.7% The 1,142 hours represented 9.5% of the UK-wide hours of nations content, and comprised 707 hours of news, 368 hours of non-news/non-current affairs and 67 hours of current affairs. It fell by 0.7% year-on-year and by 7% in five years, compared to the UK annual growth of 0.7% and a five year contraction of 7.5% (page 54). Nations television news is most popular in Northern Ireland Viewers in Northern Ireland watched more hours of nations early evening news bulletins than anyone else in the UK in 2008, viewing an average of 24 hours per head per year unchanged on 2007, seven hours more than viewers in Wales and six more than the UK average (page 65). A third of households in Northern Ireland have watched TV or video online The number of households watching audio-visual content online grew by three percentage points to 33% in Q this was comparable to the UK average (34%) and ahead of Scotland (21%) (page 42). and 11% of adults live in a household that has watched catch-up TV People in Northern Ireland were less likely than average to use services like the BBC s iplayer (11% versus the UK-wide figure of 16%). But their use was still higher than in Scotland (7%). Watching catch-up TV appeared to be more popular in rural (15%) than in urban (9%) areas. By city, use stood at 13% in Belfast and 8% in Derry/Londonderry (page 42). 3

5 Key points: radio BBC radio expenditure per head highest in Northern Ireland in 2008/09 The BBC spent 18.4m on radio services for listeners in Northern Ireland in 2008/09, down by 9% year-on-year. Spend per head remained the highest of the UK nations, equating to around per person (page 70). Listening to BBC Ulster/Foyle was down in 2008 BBC Northern Ireland services Radio Ulster / Radio Foyle attracted 37% of the adult population on a weekly basis during This was the highest reach for nationsbased radio services in the UK; BBC nations stations in Scotland and Wales reached 22% of adults each while local radio in England attracted 18% of the population. However, the weekly listening share BBC Ulster/Foyle was down by 2.5 percentage points in 2008 to 37% in 2007 (page 74). Commercial radio revenue/head the highest in the UK and the only one to rise Revenue generated by local commercial radio stations in Northern Ireland exceeded 14m in 2008, up by 0.3m or 2% year-on-year; revenue elsewhere in the UK fell in These revenues equated to 8.63 per head in 2008, up by 0.18 on 2007 the highest average revenue per head in the UK (page 70). DAB ownership rising, but still lower than UK average 19% of people in Northern Ireland owned a DAB digital radio in Q1 2009; up by three percentage points from 2008, but well below the UK average of 41% (which was up 8pp on last year). Lower rates of adoption in Northern Ireland resulted in the widening, by five percentage points, of the take-up gap with the UK average. A new DAB transmitter was installed at Armagh in April 2009, increasing national DAB coverage in Northern Ireland (page 75). Radio listening through mobile phone, and MP3 ownership highest in N Ireland 15% of people in Northern Ireland said that they had used their mobile phone to listen to the radio above the UK average of 12%. Claimed ownership of an MP3 or ipod was also the highest in the UK, at 46% (page 78). Twelve community stations are now serving Northern Ireland There are currently twelve community radio stations broadcasting in Northern Ireland, with a further two stations yet to go on air. The twelve stations serve local communities in Aldergrove / Antrim, Ballykinler, Banbridge, Belfast, Derry / Londonderry, Downpatrick, Enniskillen, Holywood, Lisburn, and Newry / Mourne. The stations still to launch will broadcast to people in Bangor and Lisburn (page 76). 4

6 Key points: telecoms Rapid broadband take-up during 2008, up by 12 percentage points to 64% In Q1 2009, 64% of households in Northern Ireland had a broadband connection, up from 52% a year previously. Broadband take-up was higher than in Scotland (60%) or Wales (58%), but lower than in England (70%). The gap with the UK average narrowed by one percentage point year on year. The highest take-up of broadband was in the rural and urban areas in the East (66%) and lowest in small towns (51%) (page 94). High take-up of mobile services in Northern Ireland By the end of Q1 2009, 93% of households in Northern Ireland had a mobile connection (85% in Q1 2008), the highest penetration among the four nations. Takeup of mobile was highest in rural areas (94%) and lowest in Londonderry/Derry (88%) (page 94). Increase in number of mobile-only households in Northern Ireland The proportion of consumers who have given up their home phone line and now rely on a mobile connection for all their telephony needs rose by two percentage points to 13% in Northern Ireland, slightly above the UK average of 12% (page 96). Dial-up internet access more common than in the rest of the UK In Q1 2009, 4% of households in Northern Ireland were using dial-up internet access. This was a fall from 9% a year previously, as consumers migrate to a faster broadband connection, but remains a higher proportion than in England (2%), Scotland (2%) or Wales (2%) (page 100). Cable broadband availability low in rural areas of Northern Ireland In Northern Ireland 40% of households in urban areas were passed by Virgin Media's broadband network at the end of 2008, and there was no rural coverage. These figures are lower than average, with the urban figure being the second lowest and the rural the lowest of the nations (page 83). LLU broadband availability grows fastest in N Ireland In Northern Ireland, 71% of homes were connected to an unbundled exchange at the end of 2008, compared to the UK average of 84%. This was up from 51% a year previously. The gap with the UK average narrowed from 40 pp to just 13 pp over the same period (page 86). One in twelve households in Northern Ireland used VoIP to make a phone call VoIP use in Northern Ireland (8%) is the lowest in the UK. In Q rural areas of Northern Ireland (15%) were more likely than urban areas to have used VoIP (12%). The gap with the UK-wide average widened by two percentage points year on year, to four percentage points (page 41). Fewer people in Northern Ireland access the internet on their mobile 18% of people in Northern Ireland claimed to use mobile handsets to access the internet in Q a drop of five percentage points on Mobile internet use was at the same level in Wales, but higher in England (21%) (page 45). 5

7 Key points: converged communications Northern Ireland leads the UK for ownership of games consoles Over half of households in Northern Ireland had either a Wii, a PS3, or an Xbox 360 in Q1 2009, the highest take-up of the four UK nations. Take-up was lowest in Wales at 36%. Within Northern Ireland, take-up was highest in the East Urban area (54%) and lowest in small towns (39%) (page 38). Nearly four in ten adults in Northern Ireland took a bundle of communications services 39% of adults in Northern Ireland bought communications services in a bundle in 2009 an increase of ten percentage points on Service bundling in Northern Ireland is comparable to Scotland (42%) but behind the UK average (46%). The gap with the UK-wide average narrowed by four percentage points, to seven percentage points over the period. Take-up of bundles ranged from 27% in the small towns to 51% in Belfast (page 40). One in four households in Northern Ireland use social networking sites Take-up of social networking has grown by six percentage points in Northern Ireland since 2008 to reach 28%, slightly behind the UK average (30%)(page 47). Sales of HD discs in Northern Ireland were below the UK average Blu-ray and HD-DVD disc sales ran at 5.4 discs per 100 people in Northern Ireland in 2008, well below the UK average of 7.2. Take-up was highest in London (9.5) and lowest in the South West (page 39). 6

8 The Communications Market The market in context 7

9

10 1.1 Northern Ireland: setting the scene Introduction The following sections analyse some of the socio-demographic characteristics that influence communications services across Northern Ireland, including population, socio-economic groups and age, in addition to geography and current political structure. Many of the statistical data in this section are taken from the 2001 Census and, as such, have not changed materially since the 2008 report Socio-demographic features Population Northern Ireland has a population of 1.75 million (approximately 3% of the UK population). Between 1981 and 2007 all local government districts, with the exception of Belfast, experienced population growth. Growth levels were highest in Banbridge, Carrickfergus, Lisburn and Ards, which are in the more densely populated east of Northern Ireland. In 2005 Northern Ireland's overall population density was 127 people per square kilometre (Source: Northern Ireland Yearbook, 2008). This figure varies considerably across Northern Ireland and is lowest in rural areas in the west (Fermanagh, Omagh, Strabane) and north (Moyle), and highest in the east (Greater Belfast) (Figure 1.1). One-third of Northern Ireland's population lives in the Greater Belfast area and generally enjoys access to a wide range of communications services from competing providers. Thirtyfive per cent of Northern Ireland's population live in rural areas (UK average 12%), a factor which may impact access to communications services and levels of take-up. Figure 1.1 Population density Source: Ofcom, based on Office of National Statistics 2001 Census (National Statistics website: Crown copyright material is reproduced with the permission of the Controller of HMSO) 9

11 Household size Northern Ireland has approximately 630,000 households. Of these, 13% have five or more occupants, 32% have three or four occupants, 28% of households have two occupants and 27% are one-person households. Religious affiliation The 2001 Census reported that 40.3% of the population were Roman Catholic, 45.6% were Protestant or other Christian religions, while 0.3% were of other religions and 13.9% claimed no religious affiliation or did not state their religion. Ethnic minority groups Political and economic circumstances may have, in the past, acted as a deterrent to potential inward immigration. However, in recent years there has been a significant increase in inward immigration. The Northern Ireland Statistics and Research Agency estimates that the size of the European Union accession population resident in Northern Ireland stood at 30,000 in % of the population. Age profile Northern Ireland has one of the youngest populations in the UK, with an average age of 35, second only to London where the average age is 34. Figure 1.2 Age profiles across the UK's nations 80% 60% 40% 51% 49% 51% 49% 60% 40% 52% 48% 55% 45% Age % 0% UK England Scotland Wales N Ireland Age 45+ Source: Office of National Statistics, Census 2001 (National Statistics website: Crown copyright material is reproduced with the permission of the Controller of HMSO) Urban/rural split As shown in Figure 1.3, Northern Ireland has the largest rural population in the UK, at 35% compared to the UK average of 12%. 10

12 Figure 1.3 % ABC1 70% The geographic and socio-economic profile of the UK 65% 60% East England South East London 55% South West UK average 50% 45% Northern Ireland Wales East Midlands North West West Midlands Scotland Yorks. & Humberside North East 40% 60% 65% 70% 75% 80% 85% 90% 95% 100% % Urban Source: Indicative analysis based on Business Geographics Urban Indicator and Office of National Statistics, Census 2001 (National Statistics website: Crown copyright material is reproduced with the permission of the Controller of HMSO) Language and culture English is the first language of the large majority of people in Northern Ireland. However, according to the 2001 census around 170,000 people (10.4%) have some knowledge of Irish. In the school year 2007/2008, there were 46 Irish medium pre-schools (Naíscoileanna), 31 Irish primary schools (Bunscoileanna) with 2,653 pupils, and three Irish secondary schools, with 632 pupils. Irish is also taught in mainstream schools and in the 2007/08 school year there were approximately 2665 GCSE and 281 GCE level entrants. Ulster Scots is also recognised as a distinct language in Northern Ireland under the European Charter for Minority Languages. There is no universal agreement on the number of Ulster Scots speakers in Northern Ireland and the 2001 Census did not include a question on the language. The 1999 Northern Ireland Life and Times Survey found that 2% (approximately 30,000) of the Northern Ireland population claimed to be able to speak Ulster Scots; research undertaken by the Ulster Scots Agency suggested that the figure could be as high as 100,000. Income and expenditure Figure 1.4 illustrates the average weekly gross income and expenditure of a household in Northern Ireland in the calendar year These figures have been updated since the 2008 Report to include new figures published by the Office of National Statistics in Weekly household income in Northern Ireland, at 592, is below the UK average of 647 but weekly expenditure ( 466) is the highest of the four nations and above the UK average ( 454). A 2009 report from the Northern Ireland General Consumer Council also claimed that consumers in Northern Ireland paid, on average, 40% more than their counterparts elsewhere in the UK for car, contents and buildings insurance. This pattern is repeated for a range of other expenditure, including energy and food. 11

13 Figure 1.4 Average weekly household income and expenditure Weekly household income and expenditure UK England Scotland Wales N Ireland Average weekly household income (gross) Average weekly household expenditure Source: Office of National Statistics, Family Spending: 2008 edition. National Statistics website: Crown copyright material is reproduced with the permission of the Controller of HMSO Economy 1 Northern Ireland s economy has a relatively large public sector compared to the rest of the UK, while the contribution of manufacturing, construction and the agriculture industries to the local economy is above the UK average. In recent years there has been significant growth in service industries, such as software engineering and call centre operations. In addition, the decline of civil unrest the ending of what is often referred to as the Troubles - has led to rapid growth in the tourism, hospitality and retail sectors. Historically, the large public sector has insulated Northern Ireland somewhat from global recessions. But the private sector is experiencing significant difficulties in the current economic downturn and the construction, business services and retail sectors have all reported job losses and falling output. The depreciation of sterling has provided some relief to the manufacturing and agriculture sectors, which have retained some stability, while parts of the retail sector has enjoyed a significant increase in cross-border shopping due to the strength of the Euro and the lower VAT rate in Northern Ireland. Employment Northern Ireland's unemployment rate in the period January 2009 to March 2009 was 6.1%. This represents an increase, both from the rate recorded in the previous quarter (5.1%) and from the rate for the same period last year (4.6%), but remains below the UK average rate of 7.1%. The working age economic inactivity rate was 28.6% in the same period, significantly higher than the UK average of 20.7% and the highest of all the UK's nations and regions. The public sector accounts for 31% of employment (not including the national health or teaching sectors) in Northern Ireland. The private sector is primarily SME driven; of the estimated 132,000 businesses in Northern Ireland in 2007, 99% were SMEs, accounting for 81% of private sector employment, compared to the UK average of 59%. Most SMEs in Northern Ireland employ fewer than 10 people (while some UK-wide definitions include businesses employing up to 250). 1 Source: Department of Enterprise, Trade and Investment Quarterly Economic Review, Winter 2008/09 12

14 Education levels The last 11-plus, the transfer test for primary school pupils, was taken by pupils in autumn Over 14,000 pupils took the test with almost 6,000 achieving grade A. The new transfer arrangements have yet to be finalised, but many grammar schools have already decided not participate in them and intend to set their own tests for 2010/11 entry. In 2008 the Northern Ireland pass rate at 'A' level increased for the 26th year in a row, with 35.4% of students gaining at least one grade A, compared to the UK average of 25.9%. The overall A to E pass rate in Northern Ireland was 98.2%, compared to the UK average of 97.2% Geography Northern Ireland occupies 5461 square miles in the north-east of the island of Ireland and has six counties: Antrim, Armagh, Down, Fermanagh, Londonderry/Derry and Tyrone. Belfast is its principal city. Northern Ireland shares a border with the Republic of Ireland, running for 360 km (224 miles) from Lough Foyle in the north west to Carlingford Lough in the south-east. At the geographical centre of Northern Ireland is Lough Neagh, the largest freshwater lake in the UK and one of the largest in Europe (151 square miles or 392 km). The country's topography consists mainly of low hills and drumlins, but with two mountain ranges the Mournes and the Sperrins. Over 20% of Northern Ireland has been designated areas of outstanding natural beauty. Northern Ireland is the only part of the UK to share a land border with another jurisdiction - a feature which generates challenges but also opportunities, providing access to another market for both Northern Ireland companies and consumers, and vice versa Politics The Northern Ireland Assembly and Executive were restored in May The Assembly is made up of 108 members. A First Minister and a Deputy First Minister are jointly elected to lead the Executive Committee of Ministers. The Executive has ten other ministers with departmental responsibilities. The number of ministerial posts each party has is based on its proportion of Assembly seats, using the d Hondt method. Membership of the Assembly is made up as follows: Democratic Unionist Party (DUP): 36; Sinn Féin: 27; Ulster Unionist Party (UUP); 18; Social Democratic and Labour Party (SDLP): 16; Alliance: seven; Progressive Unionist Party (PUP): one; Greens: one; Independents: two Northern Ireland also has 18 Westminster MPs and 3 MEPs. There is an Assembly Committee for each of the Ministerial portfolios, the role of which is to scrutinise the work of its respective Minister and Department. There are also six Standing Committees. During 2008 the Northern Ireland Executive failed to meet for 152 days due to a disagreement between the DUP and Sinn Féin on the way forward for the devolution of policing and justice. In November the two parties reached an agreement on the timetable for devolving these powers and a Bill was subsequently published in Westminster in February

15 Northern Ireland consists of one constituency with three seats in European elections. In the June 2009 election there were seven candidates the three standing MEPs Jim Allister from the Traditional Unionist Voice (TUV), Bairbre de Brún, Sinn Féin and Jim Nicholson from the Conservatives and Unionists. The other candidates were Stephen Agnew, Green Party, Diane Dodds, DUP, Alban McGuinness, SDLP; and Ian Parsley, Alliance. Bairbre de Brún, Diane Dodds and Jim Nicholson were elected. A review of the structure of public administrations in Northern Ireland is ongoing, designed to create a new, more accountable public sector. On 1 April 2009, a Health and Social Services Authority and a Public Health Authority replaced the four Health and Social Services Boards and the Health Promotion Agency. The review also includes proposals to reduce the number of local councils from 11 to 26 and replace the five Education and Library Boards with a new Education and Skills Authority. 14

16 1.2 Recent developments in Northern Ireland Television Public service broadcasting Ofcom Northern Ireland held two major stakeholder conferences in June and November 2008 as part of the consultation process on the future of public service broadcasting, The main issues which arose from the consultation concerned plurality of provision, network production and portrayal and indigenous language broadcasting. Following the consultation, Ofcom decided to revise upwards its proposals for UTV s minimum non-news requirements from one and a half hours per week to two hours. The new minimum requirement for regional news was set at four hours a week - in line with that for Scotland and Wales. BBC Northern Ireland New BBC-wide structures and processes were put in place to facilitate network television production across the UK, including from Northern Ireland. These form part of a series of commitments which will increase the value of locally-produced network commissions to around 3% of total BBC production by Other investments were also made to improve BBC Northern Ireland s editing and production capabilities and to increase the efficiency of its programme-making. Local Audience Council activities included a series of consultation events on coverage of the arts. UTV In the past year UTV relaunched all its regional new bulletins using a new studio set and new graphics. A new night-time news and current affairs programme on UTV was launched in April 2009, running for thirty minutes at every Monday to Thursday a first for the ITV network. UTV also relaunched a video-rich website and its own media player the uplayer offering catch-up of UTV s regional programming and the best of ITV Network output. In May 2009 the UTV Group announced that its profits for the previous year were just over 20m, down 0.5m from the year before. The group s annual report showed that most of its profits came from its radio operations across the UK and Ireland, with its television operation profits down 24%. During the year UTV made cuts to its workforce with the aim of saving 5m in the coming year. Channel 9 In November 2008 Ofcom agreed to the transfer of the Channel 9 Restricted Service Television Licences for Derry/Londonderry, Coleraine and Limavady from North West Television Services Ltd to new owners, UC Business. We understand that the licensee hopes to resume broadcasting shortly. Irish Language Broadcast Fund In June 2008 the UK Government committed an additional 6m of funding to the Irish Language Broadcast Fund (ILBF), thereby guaranteeing the ILBF for an additional two years until

17 The ILBF was set up to provide finance for the production of quality moving image products in the Irish language in Northern Ireland. It aims to deliver at least 75 additional hours of Irish language broadcasting per year to a weekly audience of 25,000 people across Northern Ireland. Network programming from Northern Ireland The importance of network television production from each nation and region was a significant issue during our second Public Service Broadcasting Review and the final document, published in January 2009, recognised that primary responsibility in this area should rest with the two broadcasters with the greatest public purposes the BBC and Channel 4. The BBC has committed to source a total of 17% of its production from the nations, including Northern Ireland, by The Fairytales series and Panorama, strands of which are made by BBC Northern Ireland, reflect this commitment. The PSB Review also increased Channel 4 s out-of-london production to 35% of total production, of which a combined total of 3% must come from Northern Ireland, Scotland and Wales. Ofcom plans to review these quotas once the future of Channel 4 is clearer. Ten Alps purchase Below the Radar and Country Link Media In February 2009, Ten Alps, the UK factual media company, co-founded by Sir Bob Geldof, purchased Northern Ireland-based independent producer, Below the Radar, and the online TV production company, County Link Media. County Link Media is behind the online TV channel Fermanagh TV, which is backed by the local district council and other public agencies and delivers local news, features and information. Fermanagh TV was launched in June Radio Community radio The number of community radio stations on air in Northern Ireland increased this year to 12 with the launch of Drive 105FM in Derry/Londonderry in June 2009 and Blast FM in Belfast in July Drive 105FM was awarded a grant of 16,000 in February from the Community Radio Fund, to pay for fundraising posts. Illegal radio stations The Ofcom Northern Ireland Field Operations team continued to work closely with ComReg, the broadcasting regulator in the Republic of Ireland, to tackle the problem of illegal radio broadcasters in border areas. Some of these stations broadcast from high sites within the Republic of Ireland, targeting Northern Ireland and taking advertising revenue from Northern Ireland businesses. On occasions these transmitters have caused serious disruption to aircraft radio systems. A series of cross-border enforcement operations involving Ofcom and ComReg teams was carried out in the last year, the most recent against Clanrye in July Ofcom and ComReg continue to monitor the illegal broadcast situation and will take action to prevent any re-emergence of illegal cross-border broadcast activity. 16

18 BBC Radio update The availability of the BBC s national DAB multiplex has been further enhanced by the recent commissioning of a new transmitter in Armagh Telecoms Project Kelvin Project Kelvin is part of the Northern Ireland Executive s strategy to improve Northern Ireland s international connectivity. The 30million project has been financed under EU INTERREG IV funding and will provide Northern Ireland with its first direct international telecommunications link to North America. Eight locations across Northern Ireland, including Armagh, Ballymena, Belfast, Coleraine, Londonderry, Omagh, Portadown and Strabane will benefit (as well as five locations in the Republic of Ireland.) DETI next- generation access tender 15m has been set aside by the Northern Ireland government (under the ERDF Competitiveness Programme) to improve Northern Ireland s internal connectivity by making next generation broadband speeds available to 85% of businesses by This procurement is now under way and the Prior Information Notice was issued on 31 March The 15m contract will target areas not served, or unlikely to be served, by the market, with a particular focus on rural and urban business areas. Service provider(s) will be required to provide a wholesale service to other providers at an appropriate price. The contract, which will be awarded through a competitive dialogue process, is expected to run for five years and will be split into two lots the first covering areas of low business density and the second covering areas of high business density. Logon-NI In December 2008 DETI announced that broadband advice would be offered to small companies across Northern Ireland through the Logon-NI project. The project includes a fixed ICT demonstration centre, a mobile facility and a team of 10 broadband advisers. The contract, valued at 3.9m, is part-funded under the European Regional Development Fund Competitiveness Programme. Logon-NI was launched in June Northern Ireland Broadband Fund Launched by DETI in August 2008, the Northern Ireland Broadband Fund offers financial support to organisations undertaking innovative broadband technology trials in Northern Ireland. 1.9m was made available and the project is part-funded under the ERDF Competitiveness Programme. Under the Fund, DETI invested 237k in developing a fixed wireless network across large parts of the rural west. On completion it will make it possible to offer a wide range of highspeed business and domestic broadband packages.the project is scalable to speeds of up to 100Mb/s if there is demand. Also as part of the Fund, DETI is investing a further 138k in 3G technology trials one in Ballinamallard in Co. Fermangh and one in Ballintoy in Co. Armagh, with a further trial being undertaken as part of the same project at the Northern Ireland Science Park in Belfast. 17

19 Wireless Walls Project 2.3m was invested in the flagship Wireless Walls Project in Londonderry/Derry, which included 80,000 in 2008/09 to extend the network to cover more parts of the city centre. Fibre Optic Ring Network DETI invested 30,000 in the creation of a fibre optic ring network at a Business Park at Kilcronagh, Cookstown, Co. Tyrone. This will deliver speeds of up to 100 Mb/s if there is demand. WiFi hotspot zones DETI is also investing 100k in the development of WiFi hotspots in Antrim, Ballycastle, Enniskillen and Newcastle. BT super-fast broadband In July 2008 BT announced plans to invest 1.5bn in fibre-optic cables to give customers across the UK access to next generation networks. The Balmoral Exchange in South Belfast, serving some 30,000 lines, will be among the first 29 exchanges across the UK to access to super-fast broadband from early In July 2009 BT announced that the Lisburn exchange would have super-fast fibre broadband by early summer EU cap on mobile roaming The European Parliament voted to cap roaming charges for text messages and data, which will enable customers to set a limit on their total bill when downloading data in Europe. This will be of interest to consumers in Northern Ireland who have been adversely affected by inadvertent roaming charges near the border. These changes came into effect on 1 st July Eircom expansion In April 2009 Eircom announced plans to double its Northern Ireland workforce, with the creation of 60 new jobs, after winning a tender worth 600,000 over three years with Northern Ireland Water. The announcement was made at the opening of Eircom s new offices in Belfast, by the Enterprise Minister, Arlene Foster. 2 Virgin Media broadband upgrade In February Virgin Media launched a new 50Mb/s broadband service in Belfast, one of the first cities in the UK to receive the upgrade. Customers on Virgin s lowest-speed service were also upgraded from 2Mb/s to a new minimum offering of 10Mb/s from May. 3 Rainbow expansion Rainbow Telecom acquired the Northern Ireland business customers of both Opal Telecom and Carphone Warehouse, expanding its Northern Ireland customer base by 10% Northern-Ireland.aspx

20 Avanti contract for satellite broadband Avanti Communications Group, a London-based satellite communications company, secured the DETI contract to deliver satellite broadband services across Northern Ireland. The contract makes Avanti responsible for connecting customers in remote locations across Northern Ireland who cannot access ASDL broadband via telephone lines. BT previously held the contract. 5 Titanic Quarter Redstone appointment Redstone plc was granted exclusive rights to develop the advanced fibre-to-the-home infrastructure for the Titanic Quarter regeneration scheme in Belfast. The announcement means that residential and business occupants of Titanic Quarter will have access to fullyfibred high speed telecoms services. The network will be available to all communications service providers on a wholesale basis. 6 Orange s new network In December 2008 Orange upgraded its 3G network to provide Northern Ireland customers with access to faster mobile voice and data services. Networks covering cities and towns were updated, as well as major roads, rail routes, business parks, conference centres, hotels and airports Media literacy Media Literacy Network The establishment of a Media Literacy Network for Northern Ireland was announced in February 2009, to provide a forum for the sharing of expertise, information and best practice on the development of media literacy in Northern Ireland. The network will also act as a vehicle for the development of strategic thinking and co-ordinated activity with a view to achieving greater media literacy in Northern Ireland. The Network s steering partnership consists of representatives of Ofcom, BBC Northern Ireland, Northern Ireland Screen, EGSA and the Department of Finance and Personnel for Northern Ireland. Membership of the Network is open to any public, private or voluntary sector organisation in Northern Ireland with an interest in promoting a digitally inclusive society. The Network held its first event in March A round-table workshop, Media Literacy for the Creative Industries, examined the link between the creative industries and media literacy. E-democracy Ofcom Northern Ireland in partnership with the Digital Inclusion Steering Group held an e- democracy workshop in April 2009 at the Long Gallery at Parliament Buildings, Stormont. Over 70 delegates attended, including MLAs, government and agency officials, public relations consultants and public affairs practitioners. Presentations included Ofcom s research on Citizens Digital Participation, the current plans of and future strategy for e

21 democracy in the National Assembly for Wales, the Obama Presidential campaign s use of social networking and online viral tools and the Northern Ireland Assembly s plans for engaging with key audiences. mylearningni.org.uk A new online learning portal for Northern Ireland, mylearningni, was launched during Adult Learners Week in May The facility is designed to help adults access information and support about learning and careers choices, learn more about media literacy and share and communicate ideas with other users online. mylearningni was developed by the Educational Guidance Service for Adults (EGSA), in partnership with the Department of Finance & Personnel, Ufi Learndirect and MMC Consulting. BITC users with disabilities Ofcom Northern Ireland supported a pilot project with residents of the Cedar Foundation in conjunction with Business in the Community, to help them develop their online skills. Five residents expressed an interest in being able to use the internet but had no experience of using digital technology. Business volunteers were recruited and trained to deliver one-toone sessions. A special training manual was developed to take the participants and volunteers through the basics of using computers to accessing the internet and sending e- mails. Digital Britain The Digital Britain team, led by Lord Stephen Carter, visited Northern Ireland in April 2009 and met with a range of stakeholders from the public and private sector. The Digital Britain project aims to create an effective digital economy for the United Kingdom by providing citizens with access to new technology at an affordable level, coupled with access to the appropriate Media Literacy skills. 20

22 1.3 Northern Ireland s communications market in the UK context This section sets out a selection of headline figures for Northern Ireland s communications market, setting them in a UK-wide context Availability of communications platforms and services A rising number of homes in Northern Ireland are connected to unbundled exchanges the gap with the UK average narrowed during 2008/09. The availability of communications services in Northern Ireland varies to some degree (see Figure 1.5), from near-universal coverage for well-established products such as fixed lines to less extensive footprints for more recently launched services: Digital terrestrial television coverage for all six multiplexes in Northern Ireland stood at 58% in Q This was unchanged from 2008 and is the second lowest coverage level among the four nations; across the UK as a whole the DTT footprint extended to 73% of homes. Digital digital switchover is not due to commence in Northern Ireland until All homes in Northern Ireland have access to a fixed line telephone service; this was in line with the rest of the UK. All homes in Northern Ireland also have access to DSL broadband infrastructure in Northern Ireland in 2009, broadly in line with the UK-wide average and on a par with coverage in England and Wales. Broadband cable infrastructure was also available to 30% of homes (unchanged from 2008 and largely concentrated in Belfast), running behind the UK average of 49%, although ahead of Wales (24%). Seven out of ten homes in Northern Ireland were connected to an unbundled exchange by 2009, up by 20 percentage points from While this lags behind the UK-wide figure of 84%, the gap between availability in Northern Ireland and the whole of the UK narrowed substantially from 29 percentage points in 2008 to just 13 in Second-generation mobile phone coverage remains stable, with 100% of the population in Northern Ireland residing in a postcode area that offered at least 75% coverage from one mobile operator or more. The figure for third-generation mobile phone coverage also remained static year-on-year at 44% - the lowest level of coverage among the four nations. 21

23 Figure 1.5 Availability of communications infrastructure UK-wide Platform Change England Scotland Wales N Ireland Fixed line 100% 100% 0% 100% 100% 100% 100% 2G mobile 1 98% % 89% 92% 92% 3G mobile 2 87% % 67% 67% 43% DSL 3 100% 99.6% 0.0% 100% 99.9% 100% 100% Cable broadband 4 49% 49% 0% 53% 38% 24% 30% LLU 5 84% 80% +4 87% 70% 76% 71% IPTV 6 15% 15% 0% Digital satellite TV 98% 98% 0% Digital terrestrial TV 7 73% 73% 0% 73% 82% 63% 58% DAB digital radio 8 90% 90% % - Sources: Ofcom and: 1. Proportion of population living in postal districts where at least one operator reports at least 90% 2G area coverage. Sourced from GSM Association / Europa Technologies (Q1 2008). Note we have raised this threshold from 75% in 2008; as a result we do not have time series data. 2. Proportion of population living in postal districts where at least one operator reports at least 90% 3G area coverage. Sourced from Europa Technologies (Q1 2009). Note we have raised this threshold from 75% in 2008; as a result we do not have time series data. 3. Proportion of premises able to receive DSL services at 512kbit/s based on data reported by BT 4. Proportion of households passed by Virgin Media s broadband-enabled network 5. Proportion of households connected to an LLU-enabled exchange 6. IPTV availability figure calculated on the assumption that Tiscali TV is now available in London, Stevenage, Birmingham, Newcastle and Edinburgh 7. Availability of services from all six digital multiplexes 8. DAB digital radio coverage figure based on a Digital One estimate. Both the BBC and Digital One built new transmission masts during 2006/07 * Mobile figures as of Q Take-up of communications platforms and services in Northern Ireland Mobile take-up in Northern Ireland was the the highest in the UK at 93% in Q1 2009, up eight percentage points year-on-year Take-up of communications services in Northern Ireland varies to some extent - perhaps connected to levels of service availability: Digital television take-up among households in Northern Ireland rose rapidly during 2008/09 and stood at 89% in Q Such was the speed of adoption, with a further 10% of homes acquiring digital reception equipment for the first time, that the gap between take-up in Northern Ireland and the UK as a whole narrowed from six percentage points to just one over the year. Eighty seven per cent of individuals in Northern Ireland also claimed to have access to a fixed-line telephone in Q1 2009, on a par with the UK-wide average (Figure 1.6). Personal use of a mobile phone stood at 93% of the Northern Ireland population (eight percentage points higher year-on-year). This was four percentage points higher than the UK figure of 89%, and the gap with the UK average has widened (in Northern Ireland s favour) by three percentage points over the last twelve months. This may be driven by Northern Ireland s younger population profile. 22

24 Residential broadband take-up (fixed or mobile) in Northern Ireland was second only to England in Q1 2009, at 64% of homes, up by 13 percentage points year-on-year, getting closer to the UK average (68%). Nineteen per cent of homes in Northern Ireland had one or more DAB digital radio set in Q1 2009, compared to 41% across the UK as a whole. Figure 1.6 Patterns of technology adoption across the UK s nations Change year-on-year % 89% 90% 88% 89% 90% 91% 93% 84% 86% 89% 83% 85% 87% 89% 68% 70% 60% 64% 58% 41% 44% 25% 27% 19% UK England Scotland Wales N Ireland Fixed Mobile Broadband DTV DAB Source: Ofcom research, Quarter Consumer take-up of bundled services Among those in Northern Ireland that bundle, dual-play bundles are more popular than anywhere else in the UK Across the UK, 46% of individuals claimed to receive more than one communications service from a single provider in Q1 2009, up by seven percentage points in 12 months. By contrast, 39% of people in Northern Ireland took a service bundle, up by 11 percentage points over the same period with the gap between Northern Ireland and the UK narrowing over the period from 11 percentage points to seven. Among those taking a bundle of services, people in Northern Ireland were more likely than in any other nation to take a dual-play package. Sixty seven per cent of homes with a bundle of communications services took two products from a single provider. This compared to the UK-wide average of 56% (Figure 1.7). Conversely, triple-play bundles were less popular in Northern Ireland, with only a quarter of those with a bundle choosing this option, compared to 35% of homes with bundles across the UK. 23

25 Figure 1.7 Service bundling, by nation Homes taking bundles (%) Increase since 2008 (pp Distribution of bundles by type (%) 46% 7pp 48% 7pp 7% 7% 4% 4% 3% 2% 2% 2% 3% 35% 35% 56% 57% 42% 4pp 45% 49% 35% 10pp 39% 11pp 31% 26% 65% 67% UK England Scotland Wales N Ireland Other Quad Triple Dual Source: Ofcom research, Quarter Base: All adults aged 15+ with a package of services regardless of whether or not these include a discount (n = 2467 UK, 1508 England, 351 Scotland, 344 Wales, 264 Northern Ireland) QG1. Do you receive more than one of these services as part of an overall deal or package from the same supplier?/ QG3. Do you receive a discount or special deal for subscribing to this package of services? Spending by public service broadcasters on television and radio content Spend per head on broadcast content production in Northern Ireland stood at (UK average: 41.50) Figure 1.8 illustrates four categories of broadcast content spend: the value of networked television content produced in Northern Ireland; BBC spend on radio for listeners in Northern Ireland; spend by the BBC and UTV on television content for viewers in Northern Ireland; and spend by the ILBF on Irish language television programming. Total spend across these four categories of content reached in Northern Ireland during 2008, compared to the UK-wide figure of The Northern Ireland figure was driven mainly by spending on TV programmes for` viewers and listeners in Northern Ireland; the UK-wide spend, by contrast, was fuelled by spend on networked television production. 24

26 Figure 1.8 Spend per head on UK-originated content by public service broadcasters on TV and radio, UK England Scotland Wales N Ireland BBC Nations/Local radio Welsh, Irish and Gaelic television programming BBC/ITV1/STV/UTV spend on TV content for the nations BBC/ITV1/STV/UTV network TV spend Source: Broadcasters, Annual Reports and Accounts, and Ofcom calculations Consumption of communications services in Northern Ireland PSB television and radio services are as popular in Northern Ireland as they elsewhere in the UK People in Northern Ireland spend broadly similar amounts of time each day watching television and listening to the radio 3.4 and 3.2 hours respectively (Figure 1.9). Watching television was less popular than in the UK as a whole (where it was 3.8 hours per day per person); radio listening was as popular in Northern Ireland as it is across the whole of the UK. UTV and the BBC s television services attracted an audience share of 61% in multichannel homes during 2008, in comparison to the UK-wide average of 60%. On radio, the BBC s services accounted for a listening share of 53% over the same period, in comparison to 56% across the UK as a whole. 25

27 Figure 1.9 Hours of daily viewing of television and radio, by nation Hours per person per day 100% Proportion of hours (%) 80% 60% 40% 20% 30% 40% 44% 44% 13% 60% 56% 57% 56% 39% 61% 54% 46% 38% 37% 39% 62% 63% 61% 47% 53% Non-PSB PSB 0% TV Radio TV Radio TV Radio TV Radio TV Radio UK England Scotland Wales N Ireland Source: Broadcasters and Ofcom calculations Note: PSB share of television viewing in England varies from 57% (in London) to 70% (in the South West). An England-wide figure is not available. Across many of the UK s nations, converging technologies are finding favour with consumers. UK-wide, a growing proportion of individuals now uses the internet to access audio-visual and audio-based services, while mobile handsets are increasingly capable of supporting internet access. Figure 1.10 illustrates how thirty three per cent of individuals in Northern Ireland claimed that they, or someone in their home, used the internet to watch television in Q broadly in line with the UK-wide average. But only 7% made the same claim about listening to radio over the internet, in contrast to the 12% figure for the UK as a whole. Eighteen per cent of individuals claimed that they used their mobile handset to access the internet in comparison to the UK-wide average of 20%. 26

28 Figure 1.10 Consumers use of converging platforms Proportion of individuals who claim that someone in their household does the following(%) Change year-on-year TV over internet Radio over internet Internet over mobile TV over internet Radio over internet Internet over mobile TV over internet Radio over internet Internet over mobile TV over internet Radio over internet Internet over mobile TV over internet Radio over internet Internet over mobile UK England Scotland Wales N Ireland Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 3437 England, 1014 Scotland, 987 Wales, 652 Northern Ireland) QE12. Which, if any, of these do you or members of your household use the internet for whilst at home? QD28. Which, if any, of the following activities, other than making and receiving calls, do you use your mobile for? People in Northern Ireland are more likely to rely on mobile phones Across the UK an average of 58% of individuals said their fixed-line telephone was their main method of making and receiving calls with 38% saying the same claim about their mobile phone (a further 3% citing their fixed line at work). Consumers in Northern Ireland were more likely to claim that their mobile phone was their main means of making/receiving calls 52% in Q1 2009, the highest proportion of any of the UK s nations and 20 percentage points ahead of the comparable figure in Scotland. Forty-four per cent claimed that their fixed line at home was their principal means of making/receiving calls the lowest among the four nations. 27

29 Figure 1.11 Main means of making/receiving telephone calls Proportion of individuals (%) 100% 80% 60% 40% 20% 0% UK England Scotland Wales N Ireland Unsure Other Internet voice service (VoIP) Public payphone Fixed line at work Mobile phone Fixed line at home Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 3437 England, 1014 Scotland, 987 Wales, 652 Northern Ireland) QC28. Which of these do you consider to be your main method of making and receiving telephone calls? 28

30 1.4 Northern Ireland s communications market and the economic downturn Since the last Communications Market Report for Northern Ireland was published, the UK economy has moved into recession. As a result, Ofcom commissioned a survey to explore consumers attitudes towards the economic downturn and the impact that it might be having on their attitudes towards and use of communications services. This research revealed that if people in Northern Ireland were forced to select one communications service where they would first cut expenditure, they were most likely to select spending on their mobile phone (33% of individuals) the lowest proportion across the UK (though care must be taken in making comparisons owing to the small sample size for this question). Television subscription services were nominated by a quarter of respondents (Figure 1.12); one in five selected home telephone calls and their broadband subscription. The ranking of these services was similar to that for respondents across the UK as a whole. Figure 1.12 The communications service that consumers in Northern Ireland would cut spending on first Proportion of individuals selecting each communications service (%) 100% 80% 60% 40% 20% 12% 11% 12% 14% 18% 18% 19% 14% 28% 28% 30% 31% 43% 43% 38% 41% 22% 19% 25% 33% Broadband subscription Home telephone calls Television subscription Spend on mobile phone 0% UK England Scotland Wales N Ireland* Source: Ofcom-commissioned research Base: Those with all four communications services (n= 862 for UK, n= 632 for England, n=84 for Scotland ; n=83 for Wales and n=63 for Northern Ireland).*Note small base size for Northern Ireland; results should be treated as indicative only. Question: Which ONE of the following would you be most likely to cut back spending on? Our research also examined changes in consumers attitudes towards three decisions connected with their communications services: taking communications services in a bundle; keeping their existing mobile handset (rather than trading up); and keeping or taking up pay-tv as an alternative to going out. The findings suggest that communications bundles offering price discounts might take on added significance for some consumers in the downturn; 49% of people in Northern Ireland agreed that they were more likely now than 12 months ago to consider purchasing services in a bundle (Figure 1.13). Consumers are also more conscious of the costs connected with acquiring new mobile handsets, with 81% agreeing that they were now more likely to put off making a change to their handset than they were twelve months ago. 29

31 Among those with pay-tv subscription services, nearly six in ten respondents in Northern Ireland agreed that they were more likely now than twelve months ago to keep their subscription (higher than the UK average, though care with comparisons is necessary owing to small sample sizes). But among those who did not pay for additional television channels, just 15% thought that they were now more likely than a year ago to upgrade to pay-tv. Figure 1.13 Consumers agreement with a range of statements exploring changes in behaviour over the last twelve months Proportion of individuals (%) 100% 80% 60% 40% 20% 0% 20% 27% 5% 45% 47% 49% 12% 15% 70% 2% 14% 81% 24% 36% 37% 8% 36% 56% 23% 52% 5% 79% 15% 15% UK N Ireland UK N Ireland UK N Ireland UK N Ireland Purchase services in a bundle Put off purchasing a new mobile Retain a pay TV subscription Take-out a pay TV subscription Neither Disagree Agree Source: Ofcom-commissioned research Base: UK n=2321, 1970, 1188, 1133; Northern Ireland n=185, 172, 101, 84 respectively Question: I am now going to read out a number of statements other people have made about how the recession has changed their spend on TV, broadband, mobile and home phone services. For each tell how much you agree or disagree. Overall, the downturn appears to be having some bearing on some consumers sense of what they spend on communications services. Nearly one in five people in Northern Ireland claimed they were more conscious of their spending on broadband now than a year ago; that rose to nearly a quarter for television subscriptions (Figure 1.14). It stood at 45% for mobile telephony and at 47% for fixed line services. Note that the analysis below sets out responses from all of those that have broadband, mobile, free television or pay television. The demographic profile of each group may therefore be different, limiting the degree to which meaningful comparisons can be made between the responses for different services. 30

32 Figure 1.14 Whether consumers have become more conscious of their spending on a variety of communications services Proportion of individuals (%) 100% 80% 60% 85% 81% 63% 55% 78% 76% 73% 53% No 40% 20% 0% 15% 19% UK Northern Ireland 37% UK 45% Northern Ireland 22% 24% 27% UK Northern Ireland Broadband Mobile phone TV subscription Fixed line UK 47% Northern Ireland Yes Source: Ofcom-commissioned research Base: Broadband (n=1398 for UK and n=90 for Northern Ireland); Mobile (n=1970, n=172); TV subscription (n=1188, n=101); home telephone calls (n=1901, n=157). Question: In the last 12 months have you become more conscious about your spend on any of the following services? Consumers in Northern Ireland also appear to believe that some communications service providers are offering better value for money now than they did twelve months ago. Figure 1.15 shows how twenty-eight per cent thought that mobile operators offered better deals; a fifth thought home phone providers and broadband operators were doing the same. The providers of television subscription services were thought by 7% of respondents to be offering better deals now than a year ago. At the same time, however, 27% of people in Northern Ireland did not regard any category of communications service provider as offering a better deal. Figure 1.15 Consumer perceptions of which operators are offering better deals now than twelve months ago Proportion of individuals (%) No operators Mobile phone Broadband Homes telephone calls Television subscriptions UK Northern Ireland Source: Ofcom commissioned research Base: All UK n=2321, Northern Ireland n=185 Question: Which providers do you think are offering better deals than they were 12 months ago? 31

33 These attitudes may be shaping consumers future engagement with communications products, as they pay closer attention to the deals on offer and their overall spend. Nearly one-third of people in Northern Ireland said that they were now more likely to shop around for their mobile phone service than they were a year ago. Twenty four per cent said the same for their broadband provider while 23% made the same claim about their home telephone calls; the figure fell to 16% for a television subscription service. That said, a substantial number of people (39%) did not appear any more motivated to shop around now than they were a year ago. Figure 1.16 Consumers claims about which services they are now more likely to shop around for, compared to twelve months ago Proportion of individuals (%) No service Mobile phone Broadband Home telephone calls Television subscriptions UK Northern Ireland Source: Ofcom-commissioned research Base: Base: All UK n=2321, Northern Ireland n=185 Question: Which of the following are you more likely to shop around for than you were 12 months ago? 32

34 The Communications Market Converging markets 33

35

36 2.1 Converging communications markets Convergence in communications markets is often used to describe the growing tendency for different content formats (audio, video, text, pictures) to reach consumers through a range of different digital networks (the internet, mobile infrastructure, satellite, cable, digital terrestrial etc) and consumer devices (PC, TV, mobile etc.) This section looks at what these changes mean for the supply and consumption of communications content and services in Northern Ireland How content gets from creator to consumer There are many ways in which content travels from creator to consumer, and from consumer to consumer. But it follows the same general path, set out in Figure 2.1 below: Figure 2.1 Delivering content and voice services to consumers (value chain) Content Distribution Devices Navigation Aggregation Consumption This year the convergence section of the Nations and Regions Report looks at devices, where there have been interesting trends in take-up, and more generally at consumer behaviour, where we have a rich base of consumer research. The section follows the structure below: Consequently, this year the convergence section follows the structure below: devices the equipment consumers use to access content (section 2.2, page 35); and consumption how people consume and create content (section 2.3, page 39). 2.2 Devices Convergence in communications services has led to an increase in the number of devices through which consumers can access content. These range from mobile phones and other handheld devices to broadband-enabled PCs and flat-screen TVs. Often the same device can access content from more than one distribution technology; for instance, both WiFi and 3G networks are available on some smartphones. As the range and complexity of activities that consumers can use these devices for increases, the devices become more important as a means of accessing converged networks. 35

37 A note on the Northern Ireland survey data We conducted a face-to-face survey of 6,090 adults in the UK, with 652 interviews conducted in Northern Ireland. Fieldwork took place in January and February Some of the survey data in this section of the report are split by geographic areas of Northern Ireland. West NI is defined as areas broadly to the west of the River Bann. East NI is defined as areas broadly to the east of the River Bann. Respondents in the east and west were defined as urban if they lived in a settlement with a population of 2000 or more and rural if they lived in areas with smaller populations. Small towns are defined as Enniskillen, Omagh, Newry, Dungannon, Armagh, Ballycastle, Ballymena, Cookstown and Coleraine. The border area is defined as Londonderry/ Derry, Newry, Strabane, Portstewart, Warrenpoint. In addition to the survey data, this section of the report refers to data from a range of other sources, including data provided to Ofcom by stakeholders. Direct comparisons between 2008 and 2009 data from specific geographic areas should be treated with caution, as in most cases each figure will be subject to error margins of +/- 6-10%. Differences of up to 20 percentage points may still be within the survey margins of error Device and platform take-up across the nations varies relatively little Take-up of TV sets equipped to receive digital services was broadly similar in each of the four nations, at around 90% in Q During 2008 take-up of digital TV grew by 11 percentage points in Northern Ireland the fastest of any UK nation. Digital switchover will not be complete until 2012 in Northern Ireland, so digital TV take-up is unlikely to approach 100% until then. But there were differences in consumer take-up of some services and devices (Figure 2.2). Northern Ireland had the second highest take-up of broadband-enabled PCs of the UK nations (64%). This was behind England (70%), but ahead of Scotland (60%) and Wales (58%). Northern Ireland lags behind the rest of the UK in claimed take-up of 3G handsets (14% vs 22%), but has the highest games console take-up at 55%, well ahead of the UK average (47%). This is likely to reflect the younger demographic profile of Northern Ireland. 36

38 Figure 2.2 Take-up of main communications devices and platforms 100% Figures above bar show % point change in take-up since Q % 60% 40% 20% 0% Broadband Digital TV Blu ray/ HD DVD player G phone Games console UK England Scotland Wales N Ireland Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 3437 England, 1014 Scotland, 987 Wales, 652 Northern Ireland) QE9. Which of these methods does your household use to connect to the internet at home?/ QH1a. Which, if any, of these types of television does your household use at the moment?/ QB1. Which of the following do you, or does anyone in your household, have in your home at the moment?/ QD24B: Do you personally use a 3G mobile handset? Take-up of leading games consoles was highest in Northern Ireland In recent years games consoles have developed from simple games-playing machines into sophisticated pieces of technology, allowing consumers to use them for a variety of converged activities. As well as using them for games, consumers can, among other things: watch audio-visual content on demand including streaming and downloading films on demand and watching content on catch-up applications such as the BBC iplayer; watch high-definition content using the Blu-ray and HD-DVD drives on the Playstation 3 and Xbox360; download new content (such as audio-visual content or games) and extras to their console; play networked games and communicate and chat with other players ; and (from autumn 2009) watch live streamed television from Sky on the Xbox 360. As functionality has increased, games consoles have expanded out of their traditional niche segments to reach a wider audience, and nearly one in every two households now have these highly converged devices. Figure 2.3 shows the take-up of the three leading games consoles (PS3, Wii and Xbox 360) across Northern Ireland, where take-up, at 51%, was ahead of the UK average of 44%. This was mostly driven by higher take-up of the PS3 and the Xbox 360; take-up of the Nintendo Wii was roughly the same in each of the four nations of the UK. Across Northern Ireland take-up of the major consoles lay between 39% in the small towns and 54% in east urban. There was little discernable difference between rural and urban areas overall, although households in Belfast were least likely to have access to a Nintendo Wii. 37

39 Figure 2.3 Take-up of leading games consoles 80% 60% Xbox % 20% 0% UK 18 N Ireland England Scotland Wales 16 West NI 18 East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area Playstation 3 Nintendo Wii *Base size less than 100: Apply caution Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 987 Wales, 3437 England, 1014 Scotland, 652 Northern Ireland) QB4. Which games console/s do you or does anyone in your household have at the moment? Advanced devices enable HD content to proliferate A key feature of some of the latest games consoles is the inclusion of high definition functionality. The Playstation 3 (Blu-ray) and Xbox 360 (HD-DVD) both offer an alternative platform to cable or satellite, through which consumers can watch HD content. Consumers need an HD-ready TV set and buy or rent a Blu-ray or HD-DVD disc. Xbox 360 owners also need to acquire the optional HD-DVD drive. With sales of HD-ready TV sets now around 18 million, according to GfK sales data, and with Xbox 360/PS3 take-up standing at 24%, it would appear that a substantial number of consumers may already be able to access discbased HD content. But despite this, sales of HD-content discs remain relatively low. Figure 2.4 shows that just over seven HD discs were sold per 100 people in This compares to 415 standard DVDs sold per 100 people over the same period. The great majority of HD content discs sold were Blu-ray. This reflected the decision of Toshiba (the main driver behind HD-DVD) to discontinue its HD-DVD business in February Northern Ireland had one of the lowest levels of HD content disc sales in the UK, at 5.4 per 100 people; only the South West had a lower level of sales. The highest sales were in London and southern England, at over nine discs per 100 people. 38

40 Figure 2.4 HD disc sales, by region, 2008 HD content discs sold per 100 population UK average London South East Grampian Scotland Source: Ofcom analysis/british Video Association Yearbook Consumption Wales North East Midlands Lancashire York Border Ulster South West HD-DVD Blu-ray This section looks at how people consume and share content over converging networks and devices. It starts by looking at service bundling before reviewing how consumption of selected converged services varies by region. In turn it looks at consumption of: internet services including voice calls, audio and audio-visual content (page 40); mobile services including mobile internet, audio and audiovisual content (page 44); and social networking sites including Facebook, MySpace, Bebo and Twitter (page 46) Service bundling Convergent devices and technologies allow consumers to access multiple content types over a variety of networks. Many operators seek to exploit this by expanding into adjacent markets and offering bundles of communications services: for instance, a mobile operator may offer a bundle of mobile phone, mobile data and fixed broadband services. This can benefit both operator and consumer. For the operator it can increase average revenue per user and increase customer loyalty. For consumers some bundles can offer considerable savings over the separate purchase of services, with the added convenience of receiving a single bill for all services. Take-up of bundles appeared highest in Belfast and Londonderry/Derry Nearly four in ten (39%) adults in Northern Ireland took communications service bundles in Q1 2009, an increase of 11 percentage points from Q (Figure 2.5). Growth was particularly rapid in rural Northern Ireland, where there was a 22 percentage point increase year-on-year. Despite this, consumers in Northern Ireland remained less likely than the UK average (46%) to take a bundle. Twenty-two per cent of adults in Northern Ireland claimed to take bundles which offered a price discount over single services. Bundles often include a fixed broadband element. Northern Ireland is less well-served by both cable and unbundled broadband than the rest of the UK. This may reduce the number 39

41 of bundles available for some; it may also mean that some of the cheaper deals are unavailable in more parts of Northern Ireland than in the rest of the UK. Use of service bundles appears highest in Belfast (51%) and Londonderry/Derry (46%). Again, this is consistent with areas of higher LLU and cable availability. Figure 2.5 Bundling of telecoms services in Northern Ireland Figure above bar shows % point change in any bundling from Q % 60% 40% 20% 0% UK Northern Ireland England Scotland Wales West NI East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural Discounted bundle Bundle but no discount Bundle but unsure if discount QG1. Do you receive more than one of these services as part of an overall deal or package from the same supplier?/ QG3. Do you receive a discount or special deal for subscribing to this package of services? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales) *Base size less than 100: Apply caution Consumption of content and services over the internet The internet allows consumers to engage in a range of converged activities online. These include making phone calls, listening to the radio, watching video, and creating and sharing content. This section considers the online consumption of these types of service in detail. Use of the internet to make phone calls (VoIP) has grown most in rural Northern Ireland Voice over Internet Protocol technology allows users to make cheap (or free) voice calls over fixed or mobile telephony networks. Recent entrants (e.g. Skype) and existing operators (e.g. BT and Orange) provide services that make use of VoIP technology. Almost one in ten (8%) adults in Northern Ireland used the internet to make telephone calls in Q lower than the UK average. Use of VoIP has remained relatively stable in Northern Ireland since 2008, when take-up stood at 9% (Figure 2.6). However, there were indications that take-up was higher in rural areas (11%) compared to urban (6%) areas, with the former recording an increase of eight percentage points year-on-year. 40

42 Figure 2.6 Proportion of adults living in a household that has used VoIP Figure above bar shows % point change in use of VoIP from Q Individual use of VoIP Proportion of individuals with broadband at home 25% 20% / % 60% Use of VoIP 15% 10% 5% 0% % 20% 0% Broadband penetration (%) UK Northern Ireland England Scotland Wales West NI East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural *Base size less than 100: Apply caution Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales) QE29. Before now, were you aware that you could make voice calls using the internet?/ QE30. Have you or anyone in your household ever used one of these services to make voice calls using the internet? A third of households in Northern Ireland used the internet to watch video online Audio-visual content online can include catch-up TV, user-generated content and music videos. Sites like YouTube, that let consumers share content with each other, and video content embedded in social networking sites, have continued to grow in popularity. And the success of services like the BBC iplayer, Skyplayer and itvplayer (uplayer on UTV) has shown that there is also an appetite for free-to-view made-for-television content online. A third of adults in Northern Ireland (33%) said that someone in their home had used the internet to watch television or video content. This was on a par with the UK average (34%), despite lower take-up of broadband. The relatively high use in Northern Ireland might be related to Northern Ireland s younger demographic profile. Watching video content in this way was similar across most of Northern Ireland, though notably lower (25%) in the small towns. 41

43 Figure 2.7 Proportion of adults living in a household that has used the internet to watch TV or video content Figure above bar shows % point change in online TV/ video viewing from Q Online TV/ video viewing Proportion of individuals with broadband at home 60% 40% % 60% Online TV viewing 40% 20% 0% % 0% Broadband penetration (%) UK Northern Ireland England Scotland Wales West NI East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural QE12. Which, if any, of these do you or members of your household use the internet for whilst at home? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales) *Base size less than 100: Apply caution Catch-up TV During 2008 a growing range of free catch-up TV services, delivered over the internet, became available. Viewers can now watch a selection of recent broadcast content on the BBC iplayer, itvplayer, 4OD catch-up, Demand Five and Sky Player. And their growing popularity was much in evidence over the year, with 41 million requests to view iplayer streams in December 2008 alone, according to the BBC. Across the UK 16% of people reported that someone in their household had used the internet to watch catch-up TV. The figure was highest in England at 18%, while just over one in ten homes in Wales and Northern Ireland reported using catch-up TV. Use was lowest in Scotland at only 7%. In general, use of catch-up TV accounted for between a third and a half of total use of online TV and video. In Northern Ireland use varied from 7% in the small towns to 15% in some rural areas. Use was generally more common in rural areas than urban, by 15% to 9%. Take-up may be influenced by broadband take-up, viewership of to the BBC, broadband connection speeds and demographic profile. 42

44 Figure 2.8 Proportion of adults living in a household that has used the internet to watch catch-up TV (e.g. iplayer, Skyplayer, itvplayer) 30% 25% 20% 15% 10% 5% 0% 16 UK 11 N Ireland 18 England 7 Scotland Wales West NI East NI 9 9 West Urban Small base size: Apply caution Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales,) QE12. Which, if any, of these do you or members of your household use the internet for while at home? East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban 15 NI Rural * Use of the internet to listen to the radio remains a niche pastime Listening to radio services online is less popular than watching TV content online. This may reflect differences in how people consume audio and video content. For instance, most radio listening is ambient and frequently takes place outside the home, away from an internet connection. By contrast a large amount of TV content is seen as an appointment to view. It may also be true that internet radio faces more competing alternatives than does online TV. Many people already have extensive personal libraries of digital music, and both unauthorised peer-to-peer networks and new online streaming services (e.g. Spotify and We7) also provide alternatives. But fewer people have large digital video libraries, and ondemand TV streaming is less well-developed than existing music services. Less than one in ten (7%) adults in Northern Ireland said that someone in their household had listened to the radio online in Q (Figure 2.9), a lower proportion than the UK average, which is heavily influenced by take-up in England (13%). This is a small decline over the past year. 43

45 Figure 2.9 Proportion of adults living in a household that has used the internet to listen to radio Figure above bar shows % point change in online radio listening from Q Online radio listening Proportion of individuals with broadband at home 25% 20% 15% 10% 5% 0% / % 60% 40% 20% 0% Online radio listening Broadband penetration (%) UK Northern Ireland England Scotland Wales West NI East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural QE12. Which, if any, of these do you or members of your household use the internet for whilst at home? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales) *Base size less than 100: Apply caution Content consumption over mobile devices 2G and 3G mobile phone technologies can carry voice, data and audio-visual content. In addition, mobile handsets can incorporate other functions such as the ability to play music and games, and technologies such as WiFi, Bluetooth and GPS. This section looks at use of mobile phones to access the internet, watch video and listen to audio content. 3G coverage appeared to have little effect on using a mobile phone to access the internet Figure 2.10 shows how the proportion of adults in Northern Ireland who have accessed the internet using a mobile telephone was in line with the UK average (18% compared to 20% across the UK). In the past year, there has been a fall of eight percentage points in the number of adults using their mobile phone in this way in Northern Ireland s urban areas. Users can access the internet over both 2G and 3G mobile networks. Currently, 3G coverage is mainly restricted to Belfast and the surrounding area, indicating that people outside this area may well have used a 2G network to access the internet on their mobiles. 44

46 Figure 2.10 internet Proportion of adults who have used a mobile phone to access the Figure above bar shows % point change in use of internet on mobile from Q % +/ / % 20% 10% 0% UK Northern Ireland England 14 Scotland Wales West NI East NI West Urban East Urban West Rural* East Rural* 14 Belfast QD28. Which, if any, of the following activities, other than making and receiving calls, do you use your mobile for? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales) *Base size less than 100: Apply caution Londonderry/ Derry Using a mobile phone to listen to audio is most common in Northern Ireland One in five adults in Northern Ireland (20%) had used a mobile phone handset to listen to audio content such as radio, pre-recorded digitally stored music and podcasts. This reflects the versatility of phones as audio devices and the ability to listen to audio content without either paying data charges or needing lots of storage space. This figure was slightly higher than the UK average (17%) (Figure 2.11). There was a marginal difference between urban and rural areas (21% and 18% respectively). Derry/Londonderry had the highest number of people listening to audio content on their mobiles (26%). Small towns Border area NI Urban NI Rural 45

47 Figure 2.11 Use of a mobile phone to listen to audio Figure above bar shows % point change in listening to audio on mobile from Q % 25% 20% 15% 10% 5% 0% +/ / UK 20 Northern Ireland 17 England Scotland Wales 19 West NI 21 East NI 23 West Urban QD28. Which, if any, of the following activities, other than making and receiving calls, do you use your mobile for? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales) *Base size less than 100: Apply caution East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area 21 NI Urban 18 NI Rural Social networking Social networking sites (SNS) are websites such as Facebook and MySpace on which users can create their own profiles using text, graphics and photos, join groups of people with common interests and send messages to other site members. The use of SNS in Northern Ireland has increased since 2008 (by six percentage points) and is now on a level similar to the UK as a whole (28% compared to 30% UK average). Use was higher in urban areas, with use in Belfast particularly high at 36%. Use of SNS in Northern Ireland was also higher than in Scotland (20%) or Wales (25%) (Figure 2.12). The relatively high use of SNS in Northern Ireland may be related to the younger demographic profile of Northern Ireland s population. 46

48 Figure 2.12 sites Proportion of adults in a household that has used social networking Figure above bar shows % point change in use of social network sites from Q Use of social networking sites Proportion of individuals with broadband at home 60% 40% 20% % 60% 40% 20% Use of social networking sites Broadband penetration (%) 0% 0% UK Northern Ireland England Scotland Wales West NI East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural QE12. Which, if any, of these do you or members of your household use the internet for whilst at home? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales) *Base size less than 100: Apply caution SNS have developed rapidly over the past year. Our UK report shows that Facebook is now the most popular SNS, overtaking MySpace. Many of the major sites (including Facebook) have also undergone redesigns. And newer sites have grown in popularity. Twitter, a popular micro-blogging service founded in 2006, has grown in terms of users and cultural status. All major SNS have now been optimised for mobile phone too, and it is likely that this will be an area of future growth. 47

49

50 The Communications Market Television 49

51

52 3.1 PSB spend on television content for viewers in the nations BBC and UTV spent a total of 29m on programmes for viewers in N Ireland in 2008, down 6% year-on-year In 2008 the BBC and UTV/ITV/STV spent a total of 306m on producing TV programmes specifically for viewers in Wales (Figure 3.1), Scotland, Northern Ireland and the English regions. Expenditure fell by 10% (or 33m) year-on-year; over a five-year period, spend declined by 117m or 28%, contracting at an annualised average rate of 6%. Spend on programmes for viewers in Northern Ireland totalled 29m in 2008 (9% of the overall figure), down by 6% over 12 months; a smaller reduction than the overall figure of 10%) and down by an average of 8% per year since The 2008 reduction was primarily due to falling spend on non-news/non-current affairs output and on news. Figure 3.1 BBC/UTVITV/STV spend on TV programmes for viewers in the nations Spend ( m, 2008 prices) m 410m 44m 43m 50m 49m 383m 42m 36m 81m 77m 72m 350m 339m 36m 30m 32m 36m 67m 67m 306m 29m 33m 54m Year on year Change -10% -6% -9% 5 yr CAGR -6% -8% -8% N Ireland Wales m 240m 233m 216m 206m 191m -20% -8% Scotland % -5% England Source: Broadcasters. All figures expressed in 2008 prices. Note: The BBC changed the way it calculated its spend figures from 2005 onwards. The figures for are based on cost per hour averages, while those for are actual spend figures. Comparisons over the period should therefore be made with caution. Much of the 2008 reduction in spend in Scotland was explained by changes in BBC spend. This reduction was driven by a variety of factors including (i) reallocation of spend on Gaelic television programming from BBC Two to BBC ALBA (ii) reduced spending on election coverage and sports rights (iii) reductions in programme production (iv) reallocation of spend out of BBC Scotland s programming budget. The 6% ( 1.7m) year-on-year fall in spend on programmes for viewers in Northern Ireland represented the smallest proportionate reduction across the four nations during 2008 (Figure 3.2). It was driven by a 14% ( 1.5m) fall in spending on news. Spend on current affairs fell by 16% ( 0.5m) over the period, compared to flat spend across the UK. Expenditure on nonnews/non-current affairs rose by 2% or 0.3m the only nation where spend on this genre increased during Over the past five years, total expenditure by the BBC and ITV on content for viewers in Northern Ireland fell by 35% ( 15m) broadly in line with reductions of 34% in Scotland and 34% in Wales, but larger than the 23% reduction in England. The largest proportion of this reduction was explained by declining spend on non-news/non-current affairs programming ( 9m), while the falling cost of news accounted for much of the remainder ( 5m). 51

53 Figure 3.2 Changes in spend on TV programmes for viewers in the nations England Scotland Wales Northern Ireland Total spend in m 54m 33m 29m Change in spend (%) 10 1 yr -7% 5 yr -23% 1 yr -20% 5 yr -34% 1 yr -9% 5 yr -34% 1 yr -6% 5 yr -35% Change in investment ( m) m - 5m - 5m - 7m - 1m - 5m - 7m - 11m - 47m 2m 1m - 21m - 1m - 2m - 3m - 1m - 12m - 2m - 5m - 9m - 1m Other CA News Source: Broadcasters. All figures expressed in 2008 prices. Note: The BBC changed the way it calculated its spend figures from 2005 onwards. The figures for are based on cost per hour averages, while those for are actual spend figures. Comparisons over the period should therefore be made with caution. The future funding of regional television news Consumer research shows that people value regional television news, but the current system faces a number of challenges. In Ofcom s Second Public Service Broadcasting Review we showed that viewers believe that news is the main priority for nations and regions television. But there are cyclical and structural pressures on the commercial providers of nations/regions news. As we set out in the PSB Review there is a tension between ITV plc s desire to reduce regulatory burdens and its ongoing ability to maintain investment in public service programming. This tension is becoming more acute as switchover completes and digital distribution becomes widespread. If regional/nations news is to continue beyond the BBC, provision of additional funding may be necessary. To address these challenges, Digital Britain outlined the government s intentions for independently funded news consortia (IFNCs). IFNCs are a combination of interested parties who will provide a more ambitious crossmedia proposition and enhanced localness compared with current commercial television regional news; but which, to maximise audience reach and impact, will also broadcast in the regional news slots in the schedule of current Channel 3 licensees. Consortia would include but not be limited to existing television news providers, newspaper groups or other newsgathering agencies. IFNC funding would be awarded on a contestable basis and against a set of public criteria to maximise public value. The Digital Britain report announced three pilot IFNC projects - in Scotland, Wales and one in England. Further details on the proposal can be found on page 156 of the report: 52

54 The DCMS are consulting until 22 September on the importance of plurality in regional news and the potential sources of top-up funding. Details on the consultation can be found at: Adjusting for population size reveals that viewers in Northern Ireland benefited from expenditure per head on nations programming of in 2008 higher than the UK-wide average of 4.99 (Figure 3.3). Spend per head in England totalled 3.72, in Scotland and in Wales. This variance is explained by the fixed costs of programme production versus Northern Ireland s comparatively small population size. Programming falling outside the genre categories of news or current affairs ( non-news/non-current affairs ) accounted for over 59% ( 9.42) of total spend per head in Scotland (in common with Wales and Northern Ireland), while news ( 5.25) made up a further 33%; current affairs accounted for the remaining 1.38 or 9%. Figure 3.3 Content spend per head, by nation Spend per head on content for viewers in the nations (, 2008 prices) UK England Scotland Wales N Ireland Other Current Affairs News Source: Broadcasters. All figures expressed in 2008 prices. Note: The BBC changed the way it calculated its spend figures from 2005 onwards. The figures for are based on cost per hour averages, while those for are actual spend figures. Comparisons over the period should therefore be made with caution. In addition to English language programming, viewers in Northern Ireland benefit from Irish language programming funded from both the BBC and the Irish Language Broadcast Fund (ILBF). In 2008/09, spend by the ILBF totalled 2.0m, down from 3.0m, while spend on documentary series rose year-on-year from 0.5m to 0.8m over the period, and spend on new media, factual entertainment and youth programming fell from 1.6m to 1.0m. 53

55 Figure 3.4 4m 3m 2m 1m 0m Spend by the ILBF on Irish language programming 3.0m 0.1m 0.5m 0.1m 2.0m 0.8m 0.8m 0.4m 0.1m 0.4m 0.7m 0.4m 0.3m 0.2m 0.2m 2007/ /09 New Media Documentary series Single documentaries Factual entertainment Drama Youth Children's Source: ILBF 3.2 Hours of output of content for viewers in the nations Hours of output for viewers in Northern Ireland fell by 7% since 2003, broadly in line with the UK average Across the four nations, the BBC/ITV/STV/UTV spent between them a total of 306m on 12,032 hours of output covering news, current affairs and non-news/non-current affairs, up by 0.7% on 2007 but down by 7.5% since 2003 (Figure 3.5). Hours of output for viewers in Northern Ireland accounted for 9.5% of that total in 2008 and contracted by 0.7% year-onyear well behind of the UK-wide average. Over five years, hours of output for viewers in Northern Ireland have fallen by 7.1% - the smallest reduction among the three devolved nations and broadly in line with the UK-wide average. News from BBC Northern Ireland and from UTV accounted for the majority (62%) of all hours in 2008 (broadly in line with the distribution in Wales), while non-news/noncurrent affairs made up a further 32%. Figure 3.5 Hours of output of television content for viewers in Northern Ireland Hours of output Total hours Change since 2007 Change since 2003 Hours of output 100% 80% 60% 40% 20% 0% 12,032 hrs 0.7% -7.5% 1, ,155 2, ,945 7,954 hrs 1.3% -4.5% 3,879 1,743 hrs 2.6% -14.9% ,193 hrs -4.5% -15.0% 1,142 hrs -0.7% -7.1% UK England Scotland Wales N. Ireland ITV/stv/UTV Current Affairs ITV/stv/UTV non-news/noncurrent affairs ITV/stv/UTV News BBC Current Affairs BBC non-news/non-current affairs BBC News Source: Broadcasters. 54

56 An hour of television output, tailored to the needs of audiences in one of the four nations, cost an average of 24k in 2008, down by 20% from 30k in Reductions in spend can be attributable a number of factors, including budget cuts or programme production efficiencies. Non-news/non-current affairs output was the most expensive to produce on an hourly basis, at 39k in 2008, followed by current affairs at 33k and news at 22k. The cost of current affairs programming fell furthest over the five-year period by nearly a third (31%); non-news/non-current affairs costs reduced by 25% while the hourly cost of news remained relatively stable, contracting by 8% over the same period. The cost of output for viewers in Northern Ireland stood at 25k in 2008 (Figure 3.6), broadly in line with the UKwide average; hourly costs have fallen by 31% since 2003 well ahead of the UK-wide average and the greatest reduction across the four nations. Figure 3.6 The cost per hour of output for the nations, by genre Cost per hour ( k, 2008 prices) Change since % -20% -21% -20% -31% 40k Cost per hour ( /hr, 2008 prices) 30k 20k 10k 0k 39k 35k 36k 33k 30k 31k 25k 28k 24k 25k UK England Scotland Wales Northern Ireland Source: Broadcasters. All figures expressed in 2008 prices. Note: The BBC changed the way it calculated its spend figures from 2005 onwards. The figures for are based on cost per hour averages, while those for are actual spend figures. Comparisons over the period should therefore be made with caution. 3.3 PSB television quota compliance Programme production in the nations and English regions Every year the four main PSBs must each broadcast minimum amounts of programmes that have been produced outside the M25. These out-of-london production quotas have two elements one relating to the value, which applies to the amount of money spent on programmes produced in the nations and regions, and the second relating to the volume of hours broadcast. In order to qualify against the quota, programmes must comply with Ofcom s Regional Production Definition, which establishes three criteria: having a substantive base in the relevant nation or regional area; achieving a minimum level of expenditure in the nation or region; and achieving a minimum spend on production talent based in the nation or region. In order to qualify, programmes must meet at least two of these three criteria. The quota levels are different for each broadcaster, as shown in Figure 3.7, where the amounts achieved over the last three years, in terms of the value and volume, are also 55

57 given. The quotas for the BBC are set at 30% by value and 25% by volume and apply across all its PSB channels. The BBC exceeded these quotas in each of the last three years, achieving 34.9% by value and 33.5% by volume in The BBC has undertaken to increase the production and commissioning of programmes from Scotland, Wales, Northern Ireland and the English regions and has introduced a new commitment to produce 50% of its output outside London. Within this, 17% must come collectively from the devolved nations. The BBC is working towards full delivery of this requirement by In Digital Britain the government noted the BBC s proposals to relocate a number of long-running programme strands to Scotland and encouraged the BBC to improve on its targets for production in Scotland, while adopting a similar approach for Wales and Northern Ireland. The report also recognised the increasing pressure on the commercial PSBs production in the nations. ITV1/STV/UTV currently has a higher quota level than the other PSBs, at 50% for both value and volume, and has met its volume quota in each of the last three years. In 2008 it narrowly missed the value target, achieving 49.9%, having also failed to reach the required levels in 2006 and 2007 by much wider margins (delivering 45.6% and 44.3% respectively). Ofcom imposed sanctions in respect of the 2006 and 2007 breaches and is in discussion with ITV about the shortfall in Prior to 2005, the quotas were set at 40% of expenditure and 33% of volume, and the quotas were increased to 50% for both volume and spend, in line with the conclusions reached in Ofcom s PSB Review of 2004/05. However, reflecting the need to align PSB requirements on ITV1/STV/UTV with the diminishing value to ITV of holding the licences, the second PSB Review decided that the quotas would be reduced to 35%, on a par with 2004 levels, with effect from Ofcom s PSB Review also increased the spend and volume quotas for Channel 4 from 30% to 35% with effect from As Figure 3.7 shows, Channel 4 has consistently exceeded its quota levels and this increase in the quotas effectively locks-in the current delivery. In 2008 Channel 4 achieved 31.7% by value and 40.7% by volume against a quota of 30% (Figure 3.7). Alongside the 2010 quota revision is the introduction of a new minimum devolved nations quota of 3% of programmes which must be produced outside England. This is a more stretching requirement than Channel 4 s own suggestion, that would have taken effect from 2012, and Ofcom has suggested that, subject to funding, the figure should grow substantially in future years. It will consider whether to revise the figure upwards in the future. Five has a much lower quota commitment, at just 10%, but has exceeded its obligations by large margins over recent years, reaching 34.5% by value and 17.4% by volume in 2008, albeit based on lower expenditure figures than the other broadcasters. 56

58 Figure 3.7 Performance against the out-of-london production quotas Percentage of network production produced outside London, by value and by volume 60% 50% 40% Quota Achieved 2006 Achieved 2007 Achieved % 20% 10% 0% % % % % % 0 1 All BBC ITV1 Channel 4 Five All BBC ITV1 Channel 4 Five Value % Volume % % Source: Broadcasters Figure 3.8 shows how the proportion of spend on network original programme productions in the UK by the four PSBs as a whole was divided up. Out of the total UK spend of 1,915 million, the majority of programmes were made in London, but this proportion has reduced a little; from 63.3% in 2006 to 61.1% in The total spend in the nations and regions reached 744m in 2008, and a greater proportion of the total UK spend was attributable to the Midlands and East, and the South of England, than in The figure for the Midlands and East rose from 5.9% to 6.7%, while in the South the increase was from 8.9% to 10.2%. The percentage achieved in Wales was 1.7%, an increase on the previous two years (1.5% in 2006 and 1.3% in 2007). There was a reduction in Scotland to 2.5% from 2.6% in the two previous years while the proportion in Northern Ireland remained the same in 2007 and These levels are expected to grow in future years, as the BBC s commitment to producing more programmes in the devolved nations starts to take effect, and Channel 4 s new 3% quota specifically for the nations is implemented. In Northern Ireland the value of programmes produced in the Province in the last two years increased from 4m in 2006 to 6m in As a proportion of total programme budgets, this represented a small increase, from 0.2% to 0.3%. Figure 3.8 Expenditure on out-of-london production Percentage of production by value London Midlands & East Northern England Southern England Scotland Wales Northern Ireland % 5.9% 17.6% 8.9% % % % % 5.7% 17.3% 9.6% %.6 2 %.3 1 % % 6.7% 17.4% 10.2% %.5 2 %.7 1 %.3 0 0% 20% 40% 60% 80% 100% Source: Broadcasters 57

59 Of the total 16,100 hours of first-run UK-originated network programmes broadcast by the four main PSBs in 2008, 5,700 hours were made in the nations and English regions, equating to 35.4% of the total, up from 34% in The share fell in the Midlands and East from 4.8% of total hours in 2006 to 4.4% in 2007, but increased to 8.9% in 2008 with reductions being seen in the North and South of England. The number of hours produced in Scotland and its share of total volume improved marginally from 1.6% to 1.8%, and in Wales the proportion increased to 0.9% from 0.7% the previous year, returning to the same level as was delivered in In Northern Ireland there was a reduction in share, to 0.1% in 2008 from 0.2% in the previous two years. Figure 3.9 Volume of out-of-london production Percentage of production by volume London Midlands & East Northern England Southern England Scotland Wales Northern Ireland % 4.8% 14.5% 12.0% %% % % 4.4% 17.9% 10.8% % % % % 8.9% 12.7% 11.0% %.8 1 %.9 0 %.1 0 0% 20% 40% 60% 80% 100% Source: Broadcasters Figure 3.10 shows that all the broadcasters, with the exception of Channel 4, increased the proportion of their expenditure on UK original productions made in the nations and regions in 2007 and The BBC s out-of-london spend went up from 32.4% in 2006 to 34.9% in 2008 while ITV1/STV/UTV increased from 45.6% to 49.9% over the same period. The increase on Five was more significant, albeit from a lower base, rising from 21.3% to 34.5%. The proportion of Channel 4 s spend on programmes produced outside London has reduced from 37.2% in 2006 to 31.7%, partly because the overall programme budget has increased, but also because there were fewer commissions from independents based in Southern England in 2008, mainly in the hobbies and leisure category. The proportions of programme spend in Northern Ireland remained relatively low but have increased a little year-on-year on BBC channels, rising from 0.3% of total expenditure in 2006 to 0.6% in

60 Figure 3.10 Percentage of production by value Breakdown of expenditure, by broadcaster 100% 80% 60% 0.3% 0.4% 0.6% 0.2% 0.1% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 3.2% 2.6% 3.5% 0.0% 0.0% 0.1% 0.1% 0.2% 0.0% 0.0% 0.5% 0.5% 3.5% 3.3% 3.7% 1.7% 1.9% 1.4% 2.6% 1.7% 1.4% 0.5% 2.3% 2.9% 4.6% 3.7% 4.0% 5.3% 12.7% 12.8% 10.8% 2.7% 12.1% 8.7% 10.5% 12.0% 14.2% 12.8% 3.0% 5.1% 9.7% 10.2% 30.8% 29.4% 31.0% 18.4% 9.1% 19.9% 18.5% 15.4% 17.4% 5.2% 4.1% 3.7% 1.0% 2.0% 2.1% 8.4% 9.2% 13.4% Northern Ireland Wales Scotland Southern England Northern England Midlands & East London 40% 20% 67.6% 67.4% 65.1% 54.4% 55.7% 50.1% 62.8% 64.7% 68.3% 78.7% 66.9% 65.5% 0% BBC ITV1 Channel 4 Five Source: Broadcasters The volume of out-of-london production by broadcaster over the last three years is shown in Figure On the BBC s PSB channels, the proportion of hours made in the Midlands and East macroregion has remained unchanged, but the level has gone down by four percentage points in Northern England, from 9.7% to 5.7%. In the South of England there was an increase of seven percentage points, from 10% in 2006 to 17% in In Scotland the proportions showed small increases, and in Wales and Northern Ireland the proportions were unchanged (at 1.5% and 0.3% respectively). There were significant changes on ITV1/STV/UTV, with an increase of 17 percentage points in the Midlands and East from 4.2% to 21%, and decreases in Northern and Southern England, which were mainly the result of changes in programme production and output for the night-time schedule. The percentage of hours of production in Scotland and Northern Ireland were lower in 2008 than in 2006, but higher in Wales in There were no changes of particular note in Channel 4 s production volumes in the English regions, while on Five there were small increases in the Midlands and East, with reductions in the North and South of England. On Channel 4 the proportion of hours made in Scotland fell from 1.5% in 2007 to 1.4%, returning to the 2006 level. In Wales the proportion fell from 1.5% to 0.8% in 2007, rallying to 1.3% in 2008 but failing to regain the 2006 level. On Five, the proportion increased a little in Scotland and remained the same as the 2007 levels in Wales. It should be noted that as the number of hours produced in the devolved nations is low, changes in the proportions broadcast year-on-year are not statistically significant. 59

61 Figure 3.11 Breakdown of production volume, by broadcaster Percentage of production by volume 100% 80% 60% 0.3% 0.3% 0.3% 0.2% 0.1% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 1.5% 1.5% 1.5% 0.0% 0.0% 0.2% 1.5% 0.8% 1.3% 0.0% 0.2% 0.2% 2.9% 3.2% 3.4% 0.6% 0.4% 0.3% 1.4% 1.5% 1.4% 0.2% 0.2% 0.6% 10.0% 14.6% 17.0% 6.0% 4.3% 8.7% 4.6% 3.1% 3.3% 4.9% 19.3% 13.3% 16.3% 14.6% 7.3% 7.1% 8.7% 24.3% 6.2% 9.7% 6.6% 5.7% 5.9% 5.8% 5.6% 26.0% 43.7% 22.0% 23.5% 22.2% 21.0% 1.6% 0.5% 1.2% Northern Ireland Wales Scotland Southern England Northern England Midlands & East London 4.2% 2.9% 40% 20% 69.9% 68.1% 66.5% 49.7% 46.9% 49.7% 60.1% 57.3% 59.3% 77.6% 84.6% 82.6% 0% BBC ITV1 Channel 4 Five Source: Broadcasters Non-network production in the nations and English regions Regional programmes are non-network productions made in the nations and English regions specifically for local audiences. The majority are regional news programmes, currently shown at 6pm or 6.30pm on weekdays on BBC One and ITV1/STV/UTV. Channel 4 and Five do not provide regional programmes as their output is fully networked across the whole of the UK. Figure 3.12 illustrates the trends in the volume of regional programme output on BBC One and Two and ITV1/STV/UTV since Over the years, both broadcasters have increased the number of hours shown, with the total on ITV peaking at 9,700 hours in Until 2005 ITV broadcast more regional programmes each year than the BBC but increased production by the BBC and contractions in ITV s regional services meant that by 2005 the BBC had overtaken ITV in terms of the total volume of regional programmes broadcast annually. The totals achieved in 2008 were 6,378 hours by the BBC and 5,666 hours on ITV1/STV/UTV. 60

62 Figure 3.12 Hours per year Historic trend: total nations & regions output, BBC and ITV1/STV/UTV 10,000 8,000 6,000 4,000 2,000 BBC1 and BBC2 ITV Source: Annual reports and account, Broadcasters. Note: Pre-1998 the BBC figure excludes London productions. The chart shows first-run totals, apart from ITV 1993 to 1998 which includes repeats. Figure 3.13 shows the delivery of non-network programmes in Northern Ireland since The BBC s output continued to be provided at similar levels as in previous years, totalling 646 hours in 2008, against a total of 496 hours on UTV. BBC Northern Ireland and UTV both increased the amount of news they broadcast in 2008, compared with 2007, by 9% and 11% respectively, while non-news programmes fell by a similar proportion in UTV s case and by 20% on the BBC. The number of hours of non-network current affairs programmes shown by the two broadcasters remained relatively stable throughout the period under review. Since 2009, as a result of Ofcom s second PSB Review, it has been agreed that one of UTV s priorities should be on nations and regions news programmes, especially in peak time. In prioritising prime-time regional news, the volume during the daytime will be reduced and the minimum quota for UTV s non-news programmes will be cut from three hours to two hours per week, although peak time will remain unchanged. Figure 3.13 Non-network output in Northern Ireland, BBC non-network output in NI UTV non-network output Other Current Affairs News Source: Broadcasters Note: Figures exclude repeats 61

63 3.4 Digital television take-up Digital television take-up in Northern Ireland rose by 10pp to 89% by the end of Q Digital television (DTV) take-up in Northern Ireland stood at 89% in Q broadly in line with the UK-wide average of 90% (Figure 3.14). Penetration rose by 10 percentage points year-on-year double the UK-wide average increase of five percentage points and the most substantial rise year-on-year among the four nations. Rural and urban DTV take-up in Northern Ireland stood at 87% and 91% respectively, with urban take-up rising by six percentage points over the period and rural rising by 18 percentage points. Reported levels of penetration stood as high as 91% in the east of Northern Ireland, but fell as low as 71% in Londonderry/Derry. Fifty-nine per cent of DTV homes in Northern Ireland took a pay-tv service such as Sky or Virgin Media in Q1 2009, compared to the UK-wide average of 56%. This represented the second highest proportion of homes paying for television after Scotland, where take-up stood at 63%. Of those with either cable or pay satellite, 79% claimed to take a pay satellite service, with the remaining 21% taking cable. These compare to the UK-wide averages of 68% and 32% respectively; above-average levels of take-up of pay satellite might be explained by lower than average levels of availability of cable outside the Belfast and Derry/Londonderry areas. Figure 3.14 Digital television take-up in Northern Ireland Proportion of homes(%) 100% 80% Analogue 60% Digital 40% % 0% UK Northern Ireland England Scotland Wales West NI East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural QH1a. Which, if any, of these types of television does your household use at the moment? Source: Ofcom research, Quarter Base: Adults aged 15+ with a TV in the household (n= 6001 UK, 640 Northern Ireland, 3389 England, 1002 Scotland, 970 Wales) *Base size less than 100: Apply caution Note: the UK-wide figure of 90% is drawn from Ofcom s consumer research for Q1 2009; our quarterly Digital Progress Report: DTV for Q quotes a UK-wide figure of 89.2%; the difference between the two figures is not statistically significant. 3.5 Television viewing During 2008, people in Northern Ireland spent 11% less time watching television than people in the rest of the UK, at 3.4 hours a day, compared to 3.8 hours. And average viewing levels have fallen in Northern Ireland, contracting by 1.5% since 2003, compared to the UK-wide increase of 0.3%. 62

64 The proportion of the population that watched at least 15 consecutive minutes of television in any one week in Northern Ireland during 2008 also ran below the UK average 90.6% compared to 92.4%, having decreased by 2.2pp since 2003, ahead of the UK average reduction of 1.4pp. The five PSB networks viewing share fell least in Northern Ireland The five PSB channels held a 61% viewing share in Northern Ireland in 2008, which was 1pp higher than the UK-wide average (60%). This was largely because UTV attracts a high share of viewing in Northern Ireland, averaging 21% in 2008, higher than any other ITV1 licensee apart from Border, which attracted a 23% share. BBC One, BBC Two and Five s audience shares were all 1pp lower than the UK average (Figure 3.15), at 21%, 7% and 4% respectively, whereas Channel 4 was slightly more popular in Northern Ireland, where its share, at 8%, was 1pp higher than in the UK as a whole. Figure 3.15 Share of the five terrestrial networks, all homes, 2008 Audience share (%) 80% 60% 40% 20% 0% 60% 57% 62% 59% 63% 59% 61% 62% 64% 70% 61% 58% 62% 62% 4% 5% 8% 6% 5% 3% 4% 4% 5% 4% 5% 5% 6% 7% 7% 8% 8% 8% 4% 8% 8% 4% 3% 5% 7% 8% 8% 20% 8% 8% 18% 15% 19% 20% 21% 19% 19% 19% 19% 21% 18% 19% 10% 23% 8% 8% 8% 7% 8% 7% 7% 8% 10% 9% 8% 7% 6% 22% 21% 22% 20% 21% 20% 21% 24% 23% 28% 21% 17% 22% 24% Five S4C C4 ITV1 BBC2 BBC1 UK London Midlands North West Yorkshire North East Scotland Meridian East of England South West N Ireland Border ITV West ITV Wales Source:BARB Since 2003, the five PSB channels combined share of viewing fell by 10 percentage points in all homes in Northern Ireland. This was the smallest reduction of any region and was well below the UK average reduction of 16 percentage points. 63

65 Figure 3.16 Reduction in combined share of the five PSB channels, Audience share 100% 80% 60% 40% 20% 16% 15% 15% 17% 16% 17% 17% 14% 11% 60% 57% 62% 59% 63% 59% 61% 62% 64% 70% 61% 58% 62% 58% 16% 10% 17% 16% 14% Share loss since 2003 Share of the five PSB channels in % (%) UK London Midlands North West Yorkshire North East Scotland Meridian East of England South West N Ireland Border ITV West ITV Wales Source:BARB Note: The share figure for Wales in this chart does not include the full Channel 4 service. PSBs and their portfolio channels share of viewing is rising in multichannel homes Despite losing share in all homes, in multichannel homes (i.e. those homes where the main set is not connected to an analogue television tuner) in Northern Ireland the five main PSB channels share grew between 2003 and 2008 by 3.2pp, compared to the UK-wide average reduction of 1.1pp (Figure 3.17). The PSB portfolio channels (this includes all PSB channels except the five terrestrial channels) further boosted the PSB share over the period, by 8pp although this was lower than the UK share rise of 8.6pp. In multichannel homes in Northern Ireland, the most popular channel choice, beyond the five PSB channels, was ITV2 with a 2% viewing share, marginally higher than E4 s audience share which was also 2%. 64

66 Figure 3.17 Net change in the audience share of the five main networks and the PSB portfolio channels, multichannel homes, Change in share (percentage point) Change in share of five PSB channels since 2003 Change in share of the PSB portfolio channels since ITV Wales 7.0 ITV West Border N. Ireland South West 8.4 East of England Meridian Scotland North East Yorkshire North West Midlands London UK Change in audience share (percentage points) Source: BARB. Note: PSB Portfolio channels include all PSB channels apart from the five terrestrial channels. In the chart the ITV Wales bar for PSB Channels includes Channel 4 and S4C. Local television news is most popular in Northern Ireland Ofcom consumer research shows that 64% of people in Northern Ireland claimed that television was their main source for local news (Figure 3.18), with only 9% preferring newspapers. This was higher than the UK average of 49% who preferred television; preference for newspapers was well below the UK average of 23%. This is reflected by viewers in Northern Ireland having the highest levels of consumption of early evening news bulletins in the UK in 2008, watching an average of 24 hours each seven hours more than viewers in Wales and six more than the UK average (Figure 3.18). Figure 3.18 Combined total hours of viewing of early evening regional news bulletins, all homes, 2003 to 2008 Hours per viewer/year UK Scotland ITV Wales N.Ireland Source: BARB. Analysis done on genre regional news, start time 17:55-18:35, 10 mins+ duration, channels BBC One and ITV1 combined, Monday through to Friday. 65

67 In 2008, UTV s early evening news bulletins were more popular with viewers than any other comparable bulletin on STV or ITV1, attracting a 36% average, almost double the UK ITV1 average of 19%, and over three times the viewing share that ITV1 attracted in London (11%). BBC One Northern Ireland s early evening news bulletin share was in line with the UK average of 28% (Figure 3.19), and consequently Northern Ireland was one of only two regions where ITV1s share was higher than BBC One s share. Figure 3.19 BBC One and ITV1/UTV/STV early evening news bulletin shares, 2008 Audience share (%) 40% 30% BBC One 20% 10% 28% 19% 24% 11% 28% 18% 26% 17% 30% 20% 20% 17% 27% 25% 31% 23% 31% 23% 31% 15% 28% 36% 20% 24% 25% 15% 36% 17% ITV1/UTV/ STV 0% UK London Midlands North West Yorkshire North East Scotland Meridian East of England South West N. Ireland Border ITV West ITV Wales Source:BARB 66

68 The Communications Market Radio 67

69

70 4.1 The radio industry Radio station choice below average in Northern Ireland With ten local commercial analogue radio stations, listeners in Northern Ireland have a lower than average choice of local stations, with around 2.1 local commercial stations per person. This compares to 5.2 local commercial stations in England, 3.3 in Scotland and 2.8 in Wales (Figure 4.1). This reflects the generally higher population density in the other three countries, particularly in England. With the national BBC services BBC Radio Ulster and Radio Foyle, listeners in Northern Ireland therefore have access to about 3.1 local or national stations on average. Northern Ireland also has 14 community radio licences awarded, with 12 of these already on air. Five of the ten local commercial stations in Northern Ireland cover smaller populations of fewer than 100,000; these include local stations serving Ballymena, Coleraine, Mid Ulster, Newry, Omagh and Enniskillen. Of the larger stations, City Beat and U105 broadcast to the Greater Belfast area, with Cool FM covering two-thirds of the population in Northern Ireland and Downtown Radio covering all of the country. There is also one medium-sized station in Derry / Londonderry, covering just over 100,000 people. This distribution pattern is similar to that in Scotland, with around half of the stations serving smaller dispersed communities and the other stations serving larger urban populations. Figure 4.1 Average choice of local commercial and local / nations BBC stations Total number of local commercial stations / BBC stations 300 / / / 2 18 /2 10 / 2 Average choice stations per head Commercial BBC UK average England Scotland Wales Northern Ireland Source: Ofcom, July 2009 Note: Average local commercial radio choice calculated by population coverage of stations. UK total for local commercial excludes overlapping stations. BBC spend on national radio highest in UK on a per head basis BBC local radio spend in Northern Ireland totalled 18.4m in 2008/09, down from 20.2m in 2007/08, a fall of 9% on the year. Expenditure per head was still the highest of the UK nations in 2008/09, at per head, just ahead of Wales at and well above the UK average of 3.80 per person

71 Figure 4.2 BBC investment in national / local radio programming Change on previous year: BBC programme spend per head ( per capita) UK England Scotland Wales N Ireland Source: BBC Annual Report and Accounts 2008/09 Note: The revenue data above have been compiled by the BBC to illustrate UK public services expenditure by service. Commercial radio revenue per head highest in Northern Ireland and the only grower in 2008 Two main groups own eight of the ten local commercial stations in Northern Ireland. The Northern Media radio group holds the most licences, with six, followed by Bauer with two, and the CN Group and UTV both owning one station each. Revenue generated by the commercial stations in Northern Ireland reached over 14m in This was up by 0.3m, or 2%, on 2007, making Northern Ireland the only commercial market of the UK nations to see an increase during Local commercial radio revenue was equivalent to around 3.2% of the UK total of 505m; by comparison, Wales had a 4.0% share of UK revenues and Scotland 9.4%. Per head of population, local commercial revenues in Northern Ireland were equivalent to 8.63 per person in 2008 (Figure 4.3), up by 0.18 on the year before. This was higher than the local commercial radio revenues per head in Scotland ( 8.48), in England ( 7.54) and in Wales ( 6.12). Figure 4.3 Local commercial radio revenue, per head, 2008 Change on previous year: Commercial radio revenue per head ( per capita) UK local commercial revenues England Scotland Wales N Ireland Source: Ofcom / commercial radio operators Note: Chart shows net broadcasting revenues as based on returns received by Ofcom for the year The UK total shows the average for local commercial radio revenues across the four nations. 70

72 4.2 Radio service availability DAB available to just under 90% of the population of Northern Ireland Analogue radio is available to almost all of Northern Ireland, while digital radio coverage via the BBC and the local DAB network is estimated at 87-89% of the population. Digital radio services in Northern Ireland are provided by the BBC s national multiplex, and by a local multiplex operated by Bauer (formerly Emap). Emap previously estimated that its local multiplex covered 88.6% of the population of Northern Ireland. The BBC national multiplex was extended in April 2009, with a new transmitter installed at Armagh, adding coverage for an estimated 80,000 people and improving reception for around 200,000 more in the area. The other four transmitter sites in Northern Ireland are at: Divis, Brougher Mountain, Limavady and Sheriff s Mountain in Derry/Londonderry. The BBC DAB coverage is estimated at around 87% of the population. Through the BBC and local multiplexes, Northern Ireland listeners have access to 23 DAB stations. These include the 11 UK-wide BBC stations (BBC Radio 1,2,3,4,5, Five Live Sports Extra, 6Music, BBC7, World Service, 1Xtra and The Asian Network), BBC Radio Ulster, and four of the UK s national commercial stations (Classic FM, talksport, BFBS and Amazing Radio). An additional six stations are available through the local DAB multiplex in Northern Ireland. Figure 4.4 illustrates the availability of local and national DAB services across the UK. Figure 4.4 Availability of DAB stations, by area Northern Ireland Scotland Wales Central Southern England East England East Midlands London ` West Midlands North East North West South West West England Yorkshire BBC network and local National commercial Local commercial Source: Ofcom, July 2009 Note: This chart shows the maximum number of stations available in each area; local variations and reception issues mean that listeners may not be able to access all of these. BBC Radio Ulster is also available on digital TV through DTT, satellite and cable, more recently becoming available on the BBC/ITV freesat service, while BBC Radio Foyle is available via Freeview. Both services are also available on DAB and via the internet. 71

73 Figure 4.5 Availability of national BBC radio stations in Northern Ireland through a digital platform BBC station Available DAB area Freeview Sky Virgin Media Freesat bbc.co.uk Radio Ulster Northern Ireland Radio Foyle Northern Ireland Source: BBC 4.3 Patterns of radio listening Radio listening in Northern Ireland second highest in UK Radio services reached 87.1% of the adult population in Northern Ireland on a weekly basis in Q1 2009, down by 2.4 percentage points from 89.5% a year ago in Q This was lower than radio reach in the other UK nations, with a UK average of 89.4%. For radio listeners in Northern Ireland, the average listening per week was 22.7 hours in Q1 2009, (down slightly from 23.0 hours in Q1 2008); this was, however, the second highest in the UK (behind Wales at 23.2 hours) (Figure 4.6) Figure 4.6 Levels of radio listening, Q Average weekly listening hours and percentage reach of population England Scotland Wales Northern Ireland UK TOTAL Average weekly listening 22.3 hours 21.6 hours 23.2 hours 22.7 hours 22.4 hours Reach Source: RAJAR Q % 87.4% 91.0% 87.1% 89.4% BBC stations account for over half of all listening in Northern Ireland The combined BBC stations continued to enjoy a majority share in Northern Ireland, with an overall 52.5% share of all listening in Q1 2009; up by 2.8pp on 49.7% a year ago. The main increase in listening share was on the BBC network (UK-wide) stations, up by 2.6pp to 29.6%, although this is still lower than the in other UK nations (UK average 45.9%. The share of listening to the BBC national stations (Ulster and Foyle) was up slightly, by 0.2pp to 22.9% (Figure 4.7), and remained much higher than the UK average (9.6%) for BBC local share. Listening to other radio stations, which includes RTÉ Radio, community radio and shortterm licensed stations (RSLs), accounted for 7.9% of all radio listening in Northern Ireland. This was down 2.5pp on last year but is still higher than the UK average of 2.2% for other listening. Local commercial radio stations held a 32% share of listening in Northern Ireland by Q This was higher than levels of commercial listening in Wales (25.5%) but lower than 72

74 the UK average of 31.5%. National commercial, at 8.0%, was also below the UK average of 10.8%. In Northern Ireland the BBC national/local stations have the highest share in the UK at (23%), while other listening, with an 8% share among local audiences, is also the highest of the UK nations. The general picture across the other nations varies. In England the BBC network (47%) and the local commercial stations (31%) have an above-average audience share. In Wales the BBC stations are the most listened-to services, with national BBC (14%) and BBC network (49%) both above average. In Scotland local commercial radio is the most popular sector (41%), well above the UK average of 32%, with the BBC share of listening below average in Scotland as a consequence. Figure 4.7 Share of listening hours, by nation Audience share for BBC and commercial stations, local/national 100% 80% 60% 40% 20% 2% 2% 2% 31% 26% 41% 9% 11% 14% 9% 11% 9% 47% 37% 49% 8% 32% 8% 23% 30% 2% 32% 11% 10% 46% Other Local Commercial National Commercial BBC Local/National BBC Network 0% England Scotland Wales Northern Ireland UK Source: RAJAR, Q BBC Radio Ulster / BBC Radio Foyle is the most widely-used BBC national service, reaching 37% of adults per week Thirty-seven per cent of adults listened to BBC Radio Ulster / Foyle in an average week in This was down by 2.5 percentage points on last year, but was still the highest reach of the BBC s national services, and higher than the average local BBC radio audience in England. 73

75 Figure 4.8 Weekly reach for national / local BBC services % of adult population reached per week 40% 30% 20% 10% 0% % BBC Radio Ulster / Foyle 22% 22% BBC Radio Scotland Change on previous year (percentage points) BBC Radio Wales / Cymru 18% BBC Radio Wales 6% BBC Radio Cymru 18% BBC Local Radio in England Source: RAJAR, average reach over calendar year 2008 Listening hours for the BBC national / local radio services saw a general fall across the UK in 2008, compared to average listening in Total weekly listening hours to BBC Radio Ulster / Foyle saw a drop of 6.8% in 2008, with local BBC services in England falling by a similar amount. Despite this decrease, BBC Radio Ulster is still the most listened-to of the BBC national services (see Figure 4.9), at 4.4 hours per week per head of population, compared to 2.8 hours per head in Wales, 1.6 hours per head in Scotland and 1.8 hours per head for BBC local radio in England. Figure 4.9 Weekly listening to national / local BBC services, 2008 Weekly hours, change on previous year: Average weekly listening hours per head % -0.1% % -2.9% - 6.8% -6.8% 2.7 Total BBC Radio Wales/Cymru 0.8 BBC Radio Cymru BBC Radio Wales BBC Radio Scotland 4.4 BBC Radio Ulster 1.8 BBC Local Radio in England Source: RAJAR, adults 15+. Average weekly listening hours per head, over calendar year 2008 Ownership of DAB digital radio sets below UK average Across Northern Ireland 19% of individuals claimed to own at least one DAB digital radio set, compared to the UK average of 41%. This was the lowest of the UK nations, with ownership in England at 44%, Wales at 27%, and Scotland 25% (Figure 4.10). The gap between average UK take-up and take-up in Northern Ireland has widened year-on-year, with claimed ownership across the UK increasing by 8%, compared to 3% in Northern Ireland. 74

76 Of the regions within Northern Ireland, claimed ownership was higher in rural areas (24%) than in urban areas (16%). Similarly, the western side of the country had higher ownership than in the east, at 23% against 17%. In the larger cities, take-up was lower than the UK average, with Belfast at 19% and Derry / Londonderry at 17%, while ownership in smaller towns was similar at 19% (Figure 4.10). Figure 4.10 Ownership of DAB digital radios Change year on year Percentage of respondents 50% 40% 30% 20% 10% 0% UK Northern Ireland West NI East NI West Urban East Urban 28 West Rural* East Rural* Belfast* Londonderr y/ Derry* Small towns Border area +3 NI Urban NI Rural UK Northern Ireland Source: Ofcom research Q Base: Adults aged 15+ who listen to radio (n= 5016 UK, 569 Northern Ireland) *Base size less than 100: Apply caution Q: How many DAB sets do you have in your household? Listening to radio over mobile phones highest in Northern Ireland By Q well over a quarter (29%) of people in Northern Ireland claimed to be using digital TV to listen to radio channels; a similar proportion to the other nations, with a UK average of 30% using this feature. Listening online had been tried by 12% of people in Northern Ireland; higher than in Scotland (8%) and Wales (9%), but lower than in England (20%). Levels of listening to digital radio via a DAB set were lower in Northern Ireland, with only 11% claiming to do this, compared to the UK average of 29%. Listening to radio over a mobile phone was highest in Northern Ireland, at 15% compared to the UK average of 12%, and was more widely used in Northern Ireland than either DAB or the internet as a way of accessing the radio (Figure 4.11) 75

77 Figure 4.11 Listening to radio via DTV, internet, mobile phone Proportion of respondents (%) who have ever listened to radio via DTV, internet or mobile phone 40% 30% 20% 10% 30% 29% 18% 12% Digital TV DAB Internet Mobile 33% 34% 30% 30% 27% 29% 29% 28% 24% 23% 20% 18% 15% 18% 17% 12% 12% 8% 9% 11% 12% 7% 9% 6% 0% UK England Scotland Wales N Ireland Urban Rural Source: Ofcom research Q Base: Adults aged 15+ who listen to radio (n= 5016 UK, 569 Northern Ireland) Higher availability of community radio stations in Northern Ireland Community radio licences are awarded to small-scale operators working on a not-for-profit basis to serve local areas or particular communities. The number of community stations has increased over the last couple of years, with 205 licences issued by Ofcom throughout the UK s nations and regions. In terms of community radio availability, Northern Ireland has the most stations per head of population, with an average of 8.4 community stations per million people. Scotland has the next highest number, with 3.9 community stations per million people, followed by Wales (3.2) and England with 3.1 (Figure 4.12) Figure 4.12 Community radio stations awarded, by nation Number of community radio stations, (average per million head of population) Total number of awards UK England Scotland Wales Northern Ireland Source: Ofcom, July

78 Community radio 12 now on air in Northern Ireland Northern Ireland has 14 community radio licences awarded, of which 12 are currently on air. The latest community stations to begin broadcasting were Drive 105FM in Londonderry/Derry in June 2009 and Blast FM in Belfast in July Additional stations for Bangor and Lisburn are still to go on air. Figure 4.13 Community licences awarded in Northern Ireland Community station Location On-air date Aldergrove and Antrim FM Aldergrove and Antrim 05/03/2008 Ballykinler FM Ballykinler, County Down 05/03/2008 Shine FM Banbridge County Down 02/06/2007 Blast FM Belfast 01/07/2009 Féile FM Belfast 12/09/2007 Raidió Fáilte Belfast 15/09/2006 Down FM Downpatrick, County Down 30/03/2006 XLFM Bangor, County Down - Vibe FM Enniskillen, County Fermanagh 12/03/2008 Drive 105 FM Derry / Londonderry 27/06/2009 Holywood FM Holywood, County Down 05/03/2008 BFBS Lisburn Lisburn, County Antrim 08/05/2006 Lisburn City Radio Lisburn, County Antrim - Iúr FM Newry & Mourne 10/10/2007 Source: Ofcom, July 2009 Likelihood to purchase DAB radio set Just over one in ten (11%) of respondents in Northern Ireland without a DAB radio set said they were likely to purchase one within the next six months. This was lower than the UK average of 16% intending to buy. Within the regions, people in Londonderry / Derry were the most likely to obtain DAB, at 20%, whilst people in the Border area (19%) and Western Urban areas (18%) were also more likely than average. People in the eastern part of the country were less likely to buy, at 10% compared to 14% in the west (Figure 4.14). 77

79 Figure 4.14 Intention to purchase DAB radio How likely is it that your household will get a DAB radio in the next 12 months? Percentage of respondents 100% 80% 60% 40% 20% 0% Don't know Unlikely Likely UK Northern Ireland West NI East NI West Urban East Urban* West Rural* East Rural* Belfast* Londonderry/ Derry* Small towns* Border area NI Urban NI Rural *Base size less than 100: Apply caution Source: Ofcom research, Quarter Base: Adults aged 15+ who listen to radio and do not have a DAB set (n= 3314 UK, 443 Northern Ireland) Ownership of MP3 players highest in Northern Ireland Ownership of MP3 players or ipods was highest in Northern Ireland of all the UK nations, with almost half (46%) of the population aged over 15 claiming to own one. This compared to 30% in Scotland, 35% in Wales and 43% in England, and could be partly due to the younger demographic in Northern Ireland. Figure 4.15 Ownership of MP3 / ipod Ownership of either an MP3 player or an ipod (%) 60% 50% 40% 30% 41% 43% 30% 35% 46% 41% 40% 20% 10% 0% UK England Scotland Wales N Ireland Urban Rural Source: Ofcom research, Q Base: Adults aged 15+ who listen to radio and do not have a DAB set (n= 3314 UK, 443 Northern Ireland. Q: Which of the following do you, or does anyone in your household have in your home at the moment: An MP3 player/ipod? 78

80 The Communications Market Telecoms 79

81

82 5.1 Availability Fixed line BT is subject to the universal service obligation (USO) which makes access to voice services over the public switched telephone network (PSTN) available to all Northern Ireland households at a standardised charge (although additional connection charges apply in areas where the cost of installation exceeds 3,400). This means that there are no significant issues regarding the availability of landline services in Northern Ireland, or in the UK as a whole, although a small number of remote premises may have difficulties in connecting to a fixed network. The USO also makes it mandatory for BT to provide affordable fixed telephony services for less-advantaged members of the community in the form of special pricing schemes Narrowband internet Narrowband internet services are those achieved by means of dial-up over a twisted copper pair or coaxial cable at download speeds of less that 128kbit/s. Internet connections of this type have largely been superseded by higher-bandwidth broadband connections, and according to the Office for National Statistics8 less than 5% of UK internet connections were narrowband in December 2008, down from almost 75% five years previously. As the only requirement to access narrowband internet services (apart from a suitably equipped PC) is a standard fixed telephony line, the USO ensures that, like fixed voice telephony, narrowband services are available to all UK residents Broadband internet Almost all (over 99%) UK broadband internet connections are provided using either digital subscriber line (DSL) provided over a standard twisted copper pair connected to a DSLenabled local telephone exchange, or over a cable operator s hybrid fibre-coaxial network. Our data show that at the end of December % of UK non-corporate fixed internet connections were provided using DSL technology, while cable broadband connections made up most of the remainder. Fibre-to-the-home (FTTH) deployment has been limited in the UK, with availability of fibrebased services confined to small geographic areas. A fibre network is currently being deployed in the Titanic Quarter development in Belfast. Other deployments in the UK include BT s roll-out in greenfield developments in the Ebbsfleet Valley area and Fibre-to-the-cabinet (FTTC) trials currently under way in Muswell Hill in London and Whitchurch in South Glamorgan. H2O Networks already provides a FTTH service in Bournemouth and Dundee by routing its cabling through the sewerage network. As a result of the limited fibre roll-out in the UK, the majority of connections that are not provided using DSL or cable networks (accounting for less than 1% of the total) are provided using satellite and fixed-wireless technologies. 8 Office for National Statistics Internet Connectivity report, December 2008: 81

83 5.1.4 DSL broadband As DSL broadband availability is higher than that of cable-based broadband services in all areas of the UK, it can be used as a measure of overall broadband availability. Almost all UK households (over 99.98%) were connected to a DSL-enabled BT local exchange at the end of 2008, unchanged over the year and up from 99.91% three years previously. However, not all of these will be able to obtain broadband services, for a variety of reasons which include the distance of the premises from the local exchange, home wiring problems and random network effects (see the box on not-spots below). Broadband not-spots Although our data show that over 99.98% of households are connected to a DSL-enabled local exchange, BT estimates suggest that 99.6% of its network is able to provide downstream broadband speeds of 512kbit/s and above. However, even with this high level of availability, a significant number of people still live in not-spots ; areas where it is not possible to receive DSL broadband services. Those living in not-spots cannot properly access, or fully benefit from, those online services which require higher download speeds or constant connectivity, such as the real-time streaming of video used by services such as the BBC s iplayer or by internet telephony services such as Skype and Vonage. The problem of not-spots is becoming more apparent as more people try to subscribe to broadband services. The exact scale of the problem is difficult to ascertain, although the government s Digital Britain report estimated that around 11% of UK households are currently unable to get broadband at 2Mbit/s. All households in Northern Ireland are connected to a DSL-enabled local exchange At the end of 2008 almost all UK households were connected to a DSL-enabled BT local exchange (Figure 5.1). Over 99.9% of households were connected in all of the UK nations except Scotland, where the proportion was very slightly lower. In total, around 4,200 UK households were not connected to an exchange able to provide DSL at the end of 2008, all of which were located in England and Scotland. All BT local exchanges in Northern Ireland have offered DSL for a number of years. Figure 5.1 Proportion of households connected to a DSL-enabled BT exchange UK England Scotland Wales N Ireland Proportion of households (%) London SE SW EM WM EE Y&H NE NW UK Urban UK Rural Source: Ofcom / BT, December 2008 data 82

84 The government's Digital Britain 9 report announced a new broadband universal service commitment to address the problem of broadband not-spots. This will make 2Mbit/s broadband connections available to all UK residents who request the service by 2012, using a mixture of fixed and wireless technologies to plug gaps in current DSL broadband availability. It also proposed a 50p a month supplement on all fixed copper lines (PSTN and cable analogue and ISDN2 lines) from 2010 to help deliver at least 90% next-generation broadband coverage by % of households in Northern Ireland are passed by Virgin Media's cable broadband network At the end of % of UK households were passed by Virgin Media s cable broadbandenabled network (Figure 5.2), although a small proportion of these may not be able to obtain a service. This figure has remained unchanged for a number of years, as the cost of deploying new network has limited the incentive for further roll-out, and Virgin Media has focused investment on upgrading its existing network to digital and increasing take-up of its services in cabled areas. There is wide variation in the availability of cable broadband services across the UK. Northern Ireland had the second lowest proportion of households passed by Virgin Media's broadband-enabled network at the end of 2008 (30%); this was highest in England, at 53%. Figure 5.2 Proportion of households passed by Virgin Media broadband Proportion of households (%) UK England Scotland Wales N Ireland London SE SW EM WM EE Y&H NE NW UK Urban UK Rural Source: Ofcom / Virgin Media, December 2008 data The original cable franchisees concentrated their network roll-out in areas of high population density (in order to maximise the potential customer bases and therefore turnover from their network spend). As a result, 56% of households in urban areas were passed by Virgin Media s cable broadband network at the end of 2008, but only 22% of households in rural areas were. This can also be seen in Figure 5.3, which shows that cable broadband availability is concentrated around major cities and urban areas

85 Figure 5.3 Map of availability of Virgin Media cable broadband Source: Ofcom / Virgin Media, December 2008 data Household cable broadband availability in rural areas of Northern Ireland is the lowest among the nations Across all of the UK nations, households in urban areas were more likely than those in rural areas to be passed by Virgin Media s broadband network at the end of 2008 (Figure 5.4). The only area where this was not true was London, where 89% of those living in rural areas were passed by Virgin Media s broadband network, compared to 74% in urban areas. The analysis used in this report designates exchange areas as urban or rural according to where the exchange is cited. In some cases this designation will differ from that of the area covered by the exchange, and this creates the counter-intuitive result for London, as several urban areas there are classed as rural in our analysis. In Northern Ireland 40% of households in urban areas were passed by Virgin Media's broadband network - there was no rural coverage. These figures are both lower than average, with the urban figure being second lowest and the rural the lowest of the nations. 84

86 Figure 5.4 Proportion of households in urban and rural areas passed by Virgin Media broadband Proportion of households (%) Urban Rural UK England Scotland Wales N Ireland London SE SW EM WM EE Y&H NE NW Source: Ofcom / Virgin Media, December 2008 data Note: The urban rural split is based on the location of the local exchange rather than the area which it covers LLU broadband Over the past few years there has been significant growth in the use of local loop-unbundling (LLU) services, and this has changed the competitive dynamics of the telecoms landscape. With LLU, an alternative operator leases operator the twisted copper pair, which connects the local exchange to the customers premises from the incumbent. It then sites its own equipment in the local exchange and connects it to its own network to provide DSL broadband and (in the case of full LLU) fixed voice services to consumers. Using LLU allows operators to be more innovative in their product offerings and prices, as they are not constrained by the incumbent s wholesale products and tariffs. It also gives them access to economies of scale which are not available when buying a wholesale product on a per-unit basis. Consumers living in unbundled areas also benefit as they are likely to have a wider choice of suppliers and products. At the end of 2008 almost a third (32%) of non-corporate broadband connections were provided using LLU (up from 24% a year previously), and the net growth in the number of LLU broadband connections during the year (1.8 million) was 100,000 more than the total net broadband growth over the period. In Northern Ireland growth in the proportion of households able to get LLU broadband was the highest among the nations in the three years to December 2008 At the end of % of UK households were connected to an unbundled BT local exchange, up from 40% three years previously (Figure 5.5) and by four percentage points year-on-year. Growth in the proportion of households in Northern Ireland connected to an unbundled local exchange was the highest among the nations in the three years to December 2008, at 71 percentage points. However, the proportion of households connected to an unbundled exchange (71%) was the second lowest among the nations. 85

87 Figure 5.5 Proportion of households connected to an unbundled local exchange Proportion of households (%) UK England Scotland Wales N Ireland London SE SW EM WM EE Y&H NE NW UK Urban UK Rural Source: Ofcom / BT, December 2008 data Rural household LLU availability in Northern Ireland is the lowest among the UK nations The provision of LLU services is characterised by high up-front costs (the purchase of network equipment, the cost of installing it in the local exchange and the provision of backhaul) and low ongoing costs (the monthly rental of the twisted copper pair from BT, currently 1.30 for DSL broadband or 7.20 for voice and broadband 10 ). However, periodic network capacity upgrades will be required as the number of lines increases. This means that the LLU provider needs a large number of customers connected at each exchange, so that the per-unit cost of providing services using LLU is lower than that of using the incumbent s wholesale products. For this reason, LLU providers have tended to target exchanges with a large potential customer base, and these tend to be located in urban areas. In addition, the maximum distance over which LLU broadband equipment can be backhauled to an operators core network is approximately 40km (25 miles), so it is not possible to implement LLU in some isolated areas. These factors are reflected in Figure 5.6, which shows that in all of the UK nations and English regions except London the availability of LLU services was higher in urban areas than in rural ones at the end of Across the UK more than 80% of urban households were connected to an LLU-enabled local exchange, compared to less than 50% in rural areas. The pattern of higher urban than rural availability was particularly apparent in Northern Ireland, where 90% of urban households (the second lowest among the nations) and 11% of rural ones (the lowest) were connected to LLU-enabled exchanges at the end of

88 Figure 5.6 Proportion of households in urban and rural areas connected to an unbundled local exchange Proportion of households (%) Urban Rural UK England Scotland Wales N Ireland London SE SW EM WM EE Y&H NE NW Source: Ofcom / BT, December 2008 data Note: The urban/rural split is based on the location of the local exchange rather than the area which it covers The map below (Figure 5.7) illustrates the areas of the UK where LLU-based broadband and voice telephony services are available, and shows that these are concentrated in urban rather than rural areas. It should be noted that this map closely resembles that of cable broadband availability (Figure 5.3). Figure 5.7 Areas served by unbundled exchanges Source: Ofcom / BT, December 2008 data 87

89 5.1.6 Mobile In order to evaluate the availability of mobile telephony services across the UK we examine the number of mobile networks with second generation (2G) and third generation (3G) coverage in each postcode district. For an operator to be counted as having coverage its network footprint has to cover at least 90% of the postcode district, and by using these data in conjunction with population figures we are able to calculate the proportion of people living in such postcode districts. The 90% threshold is different to that used in the 2008 report (when we used 75% for 2G and 3G services). It is important to note that just because a postcode district does not have 90% mobile coverage, it does not necessarily follow that mobile services are not available there. 2G availability high across most of the UK For 2G services we identified postcode districts where a) at least one and b) all four of the 2G networks had area coverage above the 90% threshold. It is important to note that the figures for Q are not directly comparable with those published in the 2008 report as a result of the changes to the area coverage threshold, outlined above. The data show that across the UK almost all of the population (over 98%) lived in a postcode district where there was at least 90% 2G area coverage from one or more of the mobile networks in Q (Figure 5.8). In Northern Ireland the proportion living in an area with 2G coverage from at least one operator was, at 92%, lower than the UK overall (98%) and England (99%), but higher than Scotland (89%). There was greater variation in the proportion of people living in a postcode district with at least 90% coverage from all four 2G mobile networks. Across the whole of the UK, 83% of people lived in such an area, while in Northern Ireland less than two-thirds (57%) did. This was lower than in England (87%), Scotland (63%) and Wales (60%). Figure 5.8 2G mobile phone population coverage Proportion of population (%) UK England Scotland Wales N Ireland London SE SW EM WM EE Y&H NE NW % living in districts with four operators % living in districts with one or more operators Source: Ofcom/ GSM Association / Europa Technologies; Q Note: Figures show the percentage of population within postcode districts where at least one or four operators had at least 90% 2G area coverage; data not directly comparable to that published in the 2008 report. 2G geographic coverage high in Northern Ireland In addition to population coverage we also calculated geographic 2G coverage (using the same 90% area coverage threshold) in order to understand where there were gaps in coverage. Figure 5.9 below shows that, although 2G mobile geographic coverage was high across most of the UK in Q1 2009, it was not as high as population coverage. This is a result of the networks concentrating network build in areas of higher population density. 88

90 The majority of postcode districts in the UK (92%) had 2G area coverage from one or more mobile networks. Geographic 2G coverage in Northern Ireland was the second highest among the UK nations at 93%, above Wales (83%) and Scotland (68%). The proportion of postcode districts with 90% area coverage from all four 2G networks varied widely across the UK nations and English regions. In all of the nations except England (71%) less than half of postcode districts had 2G coverage at a 90% area threshold from all four 2G networks. Northern Ireland had the second highest level of geographic 2G coverage from all four providers, at 48% of postcode districts. Figure 5.9 2G mobile phone geographic coverage Proportion of population (%) UK England Scotland Wales N Ireland London SE SW EM WM EE Y&H NE NW % living in districts with four operators % living in districts with one or more operators Source: GSM Association / Europa Technologies; Q Note: Figures show the percentage of postcode districts where at least one or four operators had at least 90% 2G area coverage; data not directly comparable to those published in the 2008 report. Figure 5.10 shows that although most of the UK had at least 90% 2G area coverage, there were still sizeable areas where coverage was less than 90%, or where 2G services were available from only one or two mobile networks. These regions included the Scottish Highlands and Islands areas of Mid and North Wales, areas with low population density or poor coverage as a result of topographies that limit the range of cellular masts. Figure G mobile phone geographic coverage, by number of operators Source: Ofcom / GSM Association / Europa Technologies; Q Note: Map shows the number of 2G operators with at least 90% area coverage; not directly comparable to that published in the 2008 report 89

91 3G availability concentrated around urban areas The 90% postcode district network footprint threshold was also used when analysing 3G mobile availability. In the 2008 report a 75% area threshold was used for 3G services, to reflect ongoing network roll-out, ahead of the end-2007 deadline for achieving 80% population coverage, as stipulated in the five 3G licences. This means that the data in this year s report are not comparable to those published last year. Similarly, it should be noted that the methodology used to derive the coverage data in this report is different to that published in July 2009, alongside the second phase of Ofcom s mobile sector assessment. The data in this report are based on postcode district coverage estimates provided to a third party by the mobile networks, while the methodology used to create the maps published in July 2009 was based on Ofcom s theoretical predictions, further details of which can be found at: ps/coverage_maps.pdf In the case of 3G services there are five network operators (rather than four as there are for 2G) and we identified postcode districts where a) at least one and b) at least four of the 3G networks had area coverage above the 90% threshold. High proportions of areas have 90% coverage from at least one 3G network Across the UK, 3G coverage figures were lower than those for 2G services, the only exception being in London, where the proportion of postcode areas with 2G and 3G coverage from at least one network at the 90% threshold was the same (100%). The data show that 87% of the UK population lived in a postcode district with at least 90% area coverage from one or more 3G networks, and the proportion among the UK nations varied from 43% in Northern Ireland to 91% in England (Figure 5.11). Figure G mobile phone population coverage Proportion of postal districts (%) UK England Scotland Wales 7 43 N Ireland London SE SW EM WM EE Y&H NE NW % of postal districts with four or five operators % of postal districts with one or more operators Source: Ofcom/ GSM Association / Europa Technologies; Q Note: Figures show the percentage of population within postcode districts where at least one or four or five operators had at least 90% 3G area coverage; data not directly comparable to those published in the 2008 report. 90

92 Geographic 3G coverage varies widely across the UK Analysis of geographic 3G coverage showed that in Q three-quarters (75%) of UK postcode districts had 90% 3G area coverage from one or more of the mobile networks (Figure 5.12). Among the UK nations the geographic 3G coverage was highest in England at 87%, followed by Northern Ireland (41%), while it was lowest in Scotland and Wales at 39%. Across the UK, just under one-third of postcode districts (32%) had 90% 3G area coverage from at least four of the UK 3G networks. The proportion in England (39%) was, again, much greater than in the other nations, where it was highest in Scotland (14%) and lowest in Wales (7%) Figure G mobile phone geographic coverage Proportion of postal districts (%) UK England Scotland 7 39 Wales 9 41 N Ireland London SE SW EM WM EE Y&H NE NW % of postal districts with four or five operators % of postal districts with one or more operators Source: Ofcom/ GSM Association / Europa Technologies; Q Note: Figures show the percentage of postcode districts where at least one or four or five operators had at least 90% 3G area coverage; data not directly comparable to those published in the 2008 report. Figure 5.13 shows where the mobile operators have rolled out their 3G networks. Across the UK, 3G network roll-out has been concentrated in urban areas to enable the networks to meet the population coverage obligations outlined in the 3G spectrum licences. The result of this is that there are still large areas with a low population density where 3G services are not available. 3G coverage in Northern Ireland is concentrated around Belfast and the surrounding areas. 91

93 Figure 5.13 Map of 3G mobile phone geographic coverage, by number of operators Source: Ofcom / GSM Association / Europa Technologies; Q Note: Map shows the number of 3G operators with at least 90% area coverage; not directly comparable to that published in the 2008 report 92

94 Facilitating better mobile coverage In Ofcom s second consultation on the mobile sector published in July 2009 ( we committed to look more closely into the persistent 2G not-spot problem as well as the state of mobile broadband coverage and work where appropriate to facilitate better coverage. To address persistent 2G not-spots (or complete not-spots ) we intend to explore how we might encourage creative solutions. For example, we intend to work with mobile operators and with public bodies in the Nations, regions and localities to bring together relevant expertise as they consider initiatives to resolve not-spots in their areas (as we have done previously with local broadband initiatives). 5.2 Service take-up Household take-up of fixed-line telephony in Northern Ireland is in line with the UK average, at 87% (Figure 5.14) and higher than in Wales. There was a significant difference in fixedline take-up between Northern Ireland s urban (83%) and rural areas (94%). This is consistent with the higher use of fixed-line telephony in rural areas, found across the UK, with a greater proportion of homes in urban areas being solely reliant on mobile telephony. There is a greater proportion of rented and shared accommodation in urban areas, where residents are more likely to rely on mobile telephony alone. Homes in Northern Ireland s urban areas, particularly Belfast and Londonderry/Derry, were more likely than average to be without a fixed-line phone at home and to rely on mobile telephony. Mobile phone ownership, at 93%, was above the UK average, with ownership in the east of Northern Ireland (94%) higher than in the west (89%). Internet penetration, at 68% in Northern Ireland, was almost on a par with the UK average of 70%, although broadband take-up was slightly lower, at 64% of homes compared to the UK average of 68%. Take-up of the internet was higher than in both Scotland and Wales. Within Northern Ireland, broadband and internet take-up was highest in eastern and rural areas of Northern Ireland. This is consistent with higher take-up of the internet in rural areas across the UK. 93

95 Figure 5.14 Take-up of communications services, 2008 UK Wales England Scotland N. Ireland UK Urban UK Rural Individual Voice telephony Fixed line 87% 83% 88% 84% 87% 87% 92% Mobile 89% 85% 89% 86% 93% 89% 89% Internet PC 74% 65% 75% 65% 75% 73% 76% Total internet 70% 60% 72% 62% 68% 70% 71% Broadband (fixed 68% 58% 70% 60% 64% 68% 67% and mobile) Fixed broadband 65% 55% 66% 58% 62% 65% 64% Mobile broadband 12% 11% 13% 7% 8% 12% 10% NI West East West Urban East Urban West Rural* East Rural* Bfast L derr y/ Derry Small towns Brder NI Urban NI Rural Individual Voice Fixed line 87% 88% 86% 83% 83% 93% 95% 76% 80% 78% 83% 83% 94% telephony Mobile 93% 89% 94% 89% 93% 90% 98% 94% 88% 89% 90% 92% 94% Internet PC 75% 75% 75% 70% 76% 78% 73% 68% 72% 59% 73% 74% 76% Total internet 68% 65% 70% 69% 70% 68% 71% 64% 63% 52% 64% 67% 69% Broadband (fixed 64% 62% 66% 59% 66% 65% 66% 61% 62% 51% 61% 64% 65% and mobile) Fixed broadband 62% 58% 65% 55% 65% 60% 64% 60% 59% 49% 57% 63% 62% Mobile broadband 8% 9% 8% 7% 8% 10% 9% 5% 5% 13% 7% 8% 9% QC1. Is there a landline phone in your home that can be used to make and receive calls?/ QD2. Do you personally use a mobile phone? / QE1. Does your household have a PC or laptop computer?/ QE2. Do you or does anyone in your household have access to the Internet/ Worldwide Web at home?/ QE9. Which of these methods does your household use to connect to the Internet at home? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland) * Base size less than 100: Apply caution At 87%, there was no difference in fixed-line penetration between Northern Ireland and the UK as a whole. Within Northern Ireland, 17% of urban households did not have a fixed-line home phone, compared to just 6% of rural households Figure 5.15 Fixed-line take-up Figure above bar shows % point change in fixed line take-up from Q % +/ /-0 80% 60% 40% % 0% UK Northern Ireland West NI East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural QC1. Is there a landline phone in your home that can be used to make and receive calls? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland) * Base size less than 100: Apply caution 94

96 High take-up of mobile services By the end of Q1 2009, more households in Northern Ireland had a mobile connection than had a fixed-line connection, with 93% of households having a mobile connection (up eight percentage points on the previous year). The increase in mobile take-up has been strongest in rural areas, where just 6% of households do not have a mobile connection. Figure 5.16 Mobile take-up QD2. Do you personally use a mobile phone? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland) *Base size less than 100: Apply caution Rise in mobile-only households More than eight in ten households in Northern Ireland have both a mobile and a fixed-line phone connection (Figure 5.17). However, perhaps driven by falling mobile prices and perhaps driven by some consumers becoming increasingly cost-conscious in a time of economic downturn, the last year has seen an increase in the number of mobile-only households, where consumers have given up their home phone line and now rely on mobile connections for all their telephony needs. This is most evident in urban areas, and nearly a quarter of households in Belfast are mobile-only. 95

97 Figure 5.17 Cross-ownership of household telephony services 100% 80% 60% 40% 20% 0% +/ UK Figure above bar shows % point change in mobile only from Q /-0 Northern Ireland West NI East NI West Urban East Urban West Rural* 94 East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural Neither fixed or mobile Mobile only Fixed only Fixed and mobile QC1. Is there a landline phone in your home that can be used to make and receive calls?/ QD1. How many mobile phones in total do you and members of your household use? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland) *Base size less than 100: Apply caution Non-ownership of telecommunications services The reasons cited for not having a fixed-line or mobile phone at home can be categorised as voluntary or involuntary reasons. Voluntary reasons are predominantly due to people having no interest in getting the service, or being satisfied with their current communications arrangements. Involuntary reasons are predominantly connected to affordability. Consistent with the rest of the UK, non-owners of fixed lines and/or mobile phones in Northern Ireland were much more likely to say that they did not have these services because they were not interested. The second reason given, although with significantly fewer mentions, was not being able to afford the service. The survey suggests that involuntary exclusion from fixed telephony in Northern Ireland is in line with that for the UK as a whole (Figure 5.18). Involuntary exclusion is higher in urban than in rural areas, and in Belfast over two-thirds of the 24% of households which do not have a fixed-line connection say that this is for involuntary reasons, i.e. they say that they do not have a fixed-line connection because they cannot afford it. Recent changes in the market may be partially addressing this issue: in October 2008 BT launched BT Basic, which offers customers who receive Income Support, income-based Jobseeker s Allowance, Employment Support Allowance (income-based) or Guaranteed Pension Credit a reduced line rental (from 4.50 a month instead of the usual a month). 11 BT reported over 300,000 customers across the UK in May

98 Figure 5.18 Non-ownership of fixed-line services Figure above bar shows % point change in involuntary non-ownership from Q % +/ /-0 Don't know 20% 15% 10% 5% 0% UK Northern Ireland 4 West NI 6 5 East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural Involuntarily nonownership Voluntary nonownership Likely to buy fixed line QC7a. How likely is it that your household will get a landline phone at home in the next 12 months?/ QC7b. Why are you unlikely to get a landline phone at home in the next 12 months? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland) *Base size less than 100: Apply caution Figure 5.19 illustrates how thirty five per cent of people in Northern Ireland lived in a household without a broadband connection, compared to the UK average of around 31%. Involuntary non-ownership of broadband was higher in Northern Ireland (15%) than the UK average (11%) and higher still in urban areas (16%), in particular in Belfast (20%). Around a sixth of the households in Northern Ireland which did not have a broadband connection in Q expected to get one within the next 12 months. Figure 5.19 Non-ownership of broadband services 50% 40% 30% 20% 10% 0% UK Northern Ireland West NI East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry 5 Small towns Border area NI Urban NI Rural Don't know Involuntarily non-ownership Voluntary nonownership Likely to acquire QE26. How likely is it that your household will get a broadband internet access at home in the next 12 months?/ QE27. Why are you unlikely to get broadband at home in the next 12 months? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland) *Base size less than 100: Apply caution Involuntary ownership of a mobile phone was lower than for fixed-line or broadband services, probably reflecting the availability of pre-pay mobile services which require no fixed monthly payment. With 94% of households in Northern Ireland having a mobile connection (Figure 5.20), and less than one in six of those without a mobile connection stating that they expected to get one in the next 12 months, it appears that the mobile market in Northern Ireland has reached saturation in terms of take-up. 97

99 Figure 5.20 Reasons for not having mobile services Figure above bar shows % point change in involuntary non-ownership from Q % +/-0 +/-0-2 Don't know 10% 5% 0% UK Northern Ireland 7 West NI East NI 2 6 West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area 3 4 NI Urban NI Rural Involuntarily non-ownership Voluntary nonownership Likely to buy personal mobile QD27. How likely is it that you will get a mobile phone in the next 12 months?/ QD28. Why are you unlikely to get a mobile phone in the next 12 months? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland) *Base size less than 100: Apply caution Type of mobile subscription Pay-as-you-go more popular in Northern Ireland than in the UK as a whole A higher proportion of mobile phone users in Northern Ireland are on pay-as-you-go plans (68%) than in the UK as a whole (55%) (Figure 5.21). In the UK overall there was a 5% yearon-year increase in the proportion of mobile phone users on pay-monthly contracts, whereas in Northern Ireland there was no change, indicating that operators have been less successful in their efforts to convert people in Northern Ireland. During 2008, all the mobile network operators launched lower-rate pay-monthly plans, including SIM-only plans which offer a number of inclusive calls for monthly fees of 15 or less. Figure 5.21 Type of mobile subscription 100% 80% 60% Figure above bar shows % point change in prepay from Q /-0-1 +/ Other Contract unsure type 40% 20% 0% 55 UK Northern Ireland West NI 66 East NI 78 West Urban East Urban West Rural* East Rural* 71 Belfast Londonderry/ Derry* Small towns Border area NI Urban NI Rural Contract SIM only Contract with handset Prepay / Pay as you go QD11. Which of these best describes the mobile package you personally use most often? Source: Ofcom research, Quarter Base: Adults aged 15+ who personally use a mobile phone (n= 5273 UK, 587 Northern Ireland) *Base size less than 100: Apply caution 98

100 G take-up Take-up of 3G and broadband below the UK average Take-up of 3G phone services in Northern Ireland was below the UK average of 22%, at 14% of adults. It was higher in rural Northern Ireland (18%) than in urban areas (11%), despite the wider availability of a choice of 3G networks in urban areas. However, these numbers should be treated with some caution as it is uncertain whether consumers are accurately reporting the type of handset they have. Figure 5.22 Take-up of 3G telephony services Figure above bar shows % point change in use of 3G from Q % % 15% 10% 5% 22% 14% 14% 13% 11% 11% 17% 19% 11% 12% 16% 11% 11% 18% 0% UK Northern Ireland West NI East NI West Urban East Urban West Rural* QD24B: Do you personally use a 3G mobile handset third generation mobile phones allow you to send and receive data at high speeds, allowing you to carry out activities such as making and receiving video calls this might be for business or personal use? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland) *Base size less than 100: Apply caution Broadband Figure 5.23 shows that while broadband penetration in Northern Ireland remained lower than the UK average, the general trend in broadband take-up mirrored that of the rest of the UK, with the proportion of connected homes increasing significantly year on year, from 52% in 2008 to 64% in Seven per cent of homes in Northern Ireland have a PC that is not connected to the internet; this is the highest proportion of all of the UK nations, suggesting that there is scope for further internet take-up among these households. East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural 99

101 Figure 5.23 Broadband take-up trend in Q1, % 60% 40% 20% % UK N Ireland England Scotland Wales London SE SW QE9. Which of these methods does your household use to connect to the internet at home? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales) During 2008 take-up of mobile broadband also grew, as consumers increasingly accessed the internet via cellular networks by plugging a 3G mobile USB modem, or dongle, into their laptops. In Q1 2009, 8% of households in Northern Ireland claimed to be accessing the internet via mobile broadband, compared to 12% across the UK as a whole (Figure 5.24). However, just 2% of households in Northern Ireland (3% in the UK as a whole) used mobile broadband as their only means of accessing the internet; the majority of mobile broadband users also have a fixed-line broadband connection at home. Despite the large number of mobile-only households in Belfast (where 24% of households have no fixed-line connection), mobile broadband penetration in Belfast was lower (5%) than across Northern Ireland as a whole. In Q1 2009, just 4% of households in Northern Ireland had a dial-up connection (compared to 9% a year previously). However, dial-up is more widely used in Northern Ireland than across the UK as a whole, where only 2% of households use it. EM WM EE Y&H NE NW UK Urban UK Rural Figure 5.24 Internet take-up Proportion of hom es (%) 80 % 60 % 40 % 20 % 0 % UK Northern Ireland West NI East NI West Urban East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural Dial-up Mobile broadband only Fixed and mobile broadband Fixed broadband only QE9. Which of these methods does your household use to connect to the internet at home? Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland) *Base size less than 100: Apply caution and treat as indicative only The lower take-up of mobile broadband in Northern Ireland than in the rest of the UK may partly be due to lower awareness (Figure 5.25), with just 50% of people aware that they can access broadband services on their PC or laptop via a mobile network (compared to 58% of 100

102 people in England). Awareness of mobile broadband was higher in rural areas than in urban areas, despite urban areas having wider availability of high-speed networks that can support mobile broadband. Figure 5.25 Awareness of mobile broadband 80% 60% 40% 20% % UK N Ireland England Scotland Wales West NI East NI West Urban Source: Ofcom research, Quarter Base: All adults aged 15+ (n = 6090 UK, 652 Northern Ireland, 3437 England, 1014 Scotland, 987 Wales) QE21. Before now, were you aware that you can access broadband services on your PC or laptop by using a mobile network? * Base size less than 100: Apply caution Broadband users in Northern Ireland used the internet for a variety of online applications, as shown in Figure The most common internet use was sending/receiving (83%) and general surfing/browsing (78%). However, many of Northern Ireland s broadband users made use of faster connection speeds to stream video content (49%) and download audio and video files (44%). East Urban West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban NI Rural Figure 5.26 Use of online applications among NI broadband users Any 99% Sending and receiving 83% General surfing/brow sing 78% Purchasing goods/services 72% Banking 50% TV/ Video view ing 49% Dow nloading music/films/video clips 44% Finding/ downloading info for personal use 41% Using social netw orking sites 41% Finding/ dow nloading info for college 40% Watching video clips/ w ebscasts 39% Playing games 38% Finding/ dow nloading info for w ork 33% Instant messaging 33% Uploading/ adding content to internet 16% Listening to radio Realtime gambling/auctions 11% 10% Other 1% 0% 20% 40% 60% 80% 100% QE5. Which, if any, of these do you or members of your household use the internet for while at home? Source: Ofcom research, Quarter Base: Adults aged 15+ with a broadband connection at home (n= 406) 101

103 5.3 Take-up, by supplier Fixed-line suppliers Use of suppliers other than BT highest in Belfast and East Urban areas Over two-thirds (67%) of those with a fixed-line phone in Northern Ireland said that BT was their main supplier, although some of these may be taking call services from other operators using carrier pre-selection (CPS) or indirect access services (Figure 5.27). This figure was higher than the UK average (57%), partly as a result of a lower proportion of households in Northern Ireland being passed by Virgin Media s cable network or connected to an unbundled local exchange. Use of suppliers other than BT for fixed-line services was higher in Belfast (47%) and the East Urban region (41%) than the Northern Ireland average probably related to the reasons already given. In rural areas take-up of fixed lines from suppliers other than BT is lower than in urban areas at one in four, although this has increased from 15% in Q Figure 5.27 Fixed-line supplier use 100% 80% 60% 40% 20% 0% UK 67 Northern Ireland 74 West NI 64 East NI 72 West Urban 59 East Urban QC21b. Which of these do you consider is your main supplier? Source: Ofcom research, Quarter Base: Adults aged 15+ with a fixed line phone at home (n = 5151 UK, 567 Northern Ireland) *Base size less than 100: Apply caution West Rural* East Rural* Belfast Londonderry/ Derry Small towns Border area NI Urban 75 NI Rural Other TalkTalk/ Carphone Warehouse/ One.Tel Virgin Media BT Broadband As with fixed-line supplier use in Northern Ireland, BT was the main supplier to those with broadband (35%), higher than the UK average at 25%. Use of broadband from suppliers other than BT and Virgin Media was lower in urban areas (38%) than in rural areas (25%), probably due to the reasons outlined above, relating to differences in fixed-line service supplier penetration (Figure 5.28). Take-up of broadband services from alternative suppliers in Northern Ireland (47%) was slightly below the UK average of 51%, but above Scotland (46%). Use of suppliers other than BT for broadband was highest in Belfast and East Urban areas, largely in part to take-up of Virgin Media s cable service, particularly in Belfast, where nearly half of those with broadband said they were connected via Virgin Media s cable network. 102

104 Figure 5.28 Broadband supplier use 100% 80% 60% 40% 20% 0% UK 35 N Ireland England Scotland Wales 46 West NI 30 East NI 43 West Urban 27 East Urban 48 West Rural* 38 East Rural* 23 Belfast* Londonderry/ Derry* Shows suppliers nominated by 2% or more of all home broadband users Small towns* Border area 31 NI Urban 43 NI Rural Unsure Other Orange Tiscali AOL Talk Talk Sky Virgin Media *Base size less than 100: Apply caution Source: Ofcom research, Quarter Base: Adults aged 15+ with broadband at home (n = 3710 UK, 557 Wales, 2180 England, 567 Scotland, 406 Northern Ireland) QE7. Which Internet Service Provider (ISP) does your household currently uses as its MAIN supplier at home? BT Mobile As indicated in the 2008 report, O2 was by far the most commonly used mobile network operator in Northern Ireland, with 65% of mobile phone customers reporting that it was their main network (Figure 5.20). Use of O2 among mobile customers was highest in Londonderry/Derry (83%), West Urban (73%) and the Border area (76%). O2 was one of the first network operators to roll out mobile services in Northern Ireland and also the first to introduce a bolt-on for reduced roaming for its customers in the Republic of Ireland and Northern Ireland in Figure 5.29 Mobile network operator used 100% 80% 60% 40% 20% 0% UK Northern Ireland England Scotland Wales West NI East NI West Urban QD10. Which mobile network do you use most often? Source: Ofcom research, Quarter Base: Adults aged 15+ who personally use a mobile phone (n = 5273 UK, 587 Northern Ireland) *Base size less than 100: Apply caution East Urban West Rural* East Rural* Belfast Londonderry/ Derry* Small towns Border area NI Urban NI Rural Unsure Other Tesco 3 Virgin Mobile Orange O2 T-Mobile Vodafone 103

105 5.4 Telecoms spend Average reported fixed-line telephony spend was 24 per month in Northern Ireland (Figure 5.30). This was higher than the UK average ( 18) and increased to 25 in Northern Ireland s rural areas, possibly as those living in rural areas are more reliant on fixed telephony to keep in touch than are people living in urban areas. The 3% year-on-year decline in reported expenditure on fixed-line services in Northern Ireland was in line with average falls across the UK and in England. In rural areas of Northern Ireland spend fell by 6% from 2008, compared to a 1% decline in urban areas; this may be because falling prices in fixed-line services are having a larger impact on users within rural areas, who may be more likely to rely on their landline than those in urban areas. Figure 5.30 Average monthly household spend on fixed-line telephony Figure above bar shows % point change in monthly landline spend from Q / UK 24 Northern Ireland 18 England Scotland Wales 28 West NI 22 East NI 29 West Urban 22 East Urban 27 West Rural* 24 East Rural* 20 Belfast* 37 Londonderry/ Derry* 27 Small towns* 30 Border area QC3. Approximately how much would you estimate the total QUARTERLY bill is for your home landline phone service? Source: Ofcom research, Quarter Base: Adults aged 15+ with a landline phone at home (n = 5151 UK, 567 Northern Ireland, 2962 England, 804 Scotland, 818 Wales) *Base size less than 100: Apply caution Average reported spend on internet services in Northern Ireland was similar to the UK average, at 19 per month (Figure 5.31). Reported internet spend was marginally higher in urban areas than in rural areas. There was little difference in expenditure between rural and urban areas, although spend in the East Rural region was marginally higher, at 22 per month. NI Urban NI Rural 104

106 Figure 5.31 Average monthly household spend on internet UK 19 Northern Ireland 17 England 22 Scotland 16 Wales West NI East NI West Urban* East Urban West Rural* East Rural* Belfast* 17 Londonderry/ Derry* QE10. Approximately how much would you estimate your household pays each MONTH for your Internet service at home? Source: Ofcom research, Quarter Base: Adults aged 15+ with internet access at home, but excluding those with mobile broadband only (n = 3649 UK, 410 Northern Ireland, 2136 England, 551 Scotland, 552 Wales) *Base size less than 100: Apply caution Mobile phone users in Northern Ireland reported spending an average of 22 per month on their mobile phone service, similar to the UK average (Figure 5.23). Those with a mobile phone in Northern Ireland s urban areas claimed, on average, to spend more per month on mobile telephony ( 23) than did those in rural areas ( 19), in contrast to spend on fixed telephony. Again, this suggests that those in rural areas rely more on their landlines than people living in urban areas. Small towns* People in eastern rural and small town areas spent the least, while those in Londonderry/Derry and the Border areas spent the most. Border area NI Urban NI Rural Figure 5.32 Average monthly individual spend on mobile telephony 30 +/-0-1 +/-0 +/ UK Northern Ireland England Scotland Wales West NI East NI West Urban QD3. Approximately how much do you spend each MONTH on your main mobile phone network? Source: Ofcom research, Quarter Base: Adults aged 15+ who personally use a mobile phone n = 5273 UK, 587 Northern Ireland, 2973 England, 877 Scotland, 836 Wales) *Base size less than 100: Apply caution 5.5 Satisfaction Overall satisfaction with fixed-line services in Northern Ireland stood at 91%, in line with the UK average. However, the proportion who claimed to be very satisfied with their fixed-line service was lower in Northern Ireland (36%) than the UK average of 58% (Figure 5.33). This East Urban West Rural* East Rural* Belfast 28 Londonderry/ Derry* 19 Small towns 27 Border area 23 NI Urban 19 NI Rural 105

107 is possibly related to lower satisfaction with value for money of fixed-line services, as shown below. Satisfaction with fixed-line services was broadly similar across the different regions of Northern Ireland, although it was marginally lower in the urban areas of Belfast and Londonderry/Derry. Figure 5.33 Overall satisfaction with fixed-line services Figure above bar shows % point change in total satisfied from Q % 80% 60% 40% 20% 0% UK Northern Ireland England Scotland 91 Wales West NI East NI West Urban East Urban West Rural* East Rural* Belfast* Londonderry/ Derry* Small towns* Border area NI Urban NI Rural Fairly satisfied Very satisfied QC13a. Thinking about your home phone service only, how satisfied are you with (main supplier) for the overall service provided by (main supplier)? Source: Ofcom research, Quarter Base: Adults aged 15+ with a fixed line phone at home (n= 5151 UK, 567 Northern Ireland, 2962 England, 804 Scotland, 818 Wales) *Base size less than 100: Apply caution Note: Figures above chart columns indicate the proportion of people who were very or fairly satisfied with their overall fixed line service Fewer fixed-line telephony customers in Northern Ireland were satisfied with the value for money of the service (72%) than the UK average (84%), as shown in Figure This is perhaps related to the higher than average spend on fixed telephony in Northern Ireland. Satisfaction with value for money appeared to be lower in rural than in urban areas. 106

108 Figure 5.34 Satisfaction with value for money of fixed-line service 100% 80% 60% 40% 20% 0% UK Northern Ireland England Scotland Wales West NI East NI West Urban 30 East Urban West Rural* East Rural* Belfast* Londonderry/ Derry* Figure above bar shows % point change in total satisfied from Q /-0 Small towns* Border area NI Urban NI Rural Fairly satisfied Very satisfied QC13b. Thinking about your home phone service only, how satisfied are you with (main supplier) for the overall value for money from your service? Source: Ofcom research, Quarter Base: Adults aged 15+ with a fixed line phone at home (n= 5151 UK, 567 Northern Ireland, 2962 England, 804 Scotland, 818 Wales) *Base size less than 100: Apply caution Note: Figures above chart columns indicate the proportion of people who were very or fairly satisfied with their overall value for money Figure 5.35 shows that over three-quarters (78%) of broadband users in Northern Ireland were either very, or fairly, satisfied with the speed of their broadband connection, although this was lower than the UK average (81%). Broadband users in Northern Ireland were also much less likely to report that they were very satisfied with the speed of their broadband connection (29%) than the UK average (45%). Satisfaction with broadband speed in Northern Ireland was lowest in rural areas, particularly those in the East. This is possibly because the longer distances from the exchanges to consumer premises are affecting connection performance, and the lower availability of cable services in rural areas (such as Virgin Media's 50Mb/s cable broadband service). 107

109 Figure 5.35 Satisfaction with speed of fixed broadband connection 100% 80% 60% 40% 20% 0% UK Northern Ireland England Scotland Wales West NI East NI West Urban* QE18b. Thinking about your fixed broadband internet service, how satisfied are you with (main supplier) for the speed of your service while online (not just the connection)? Source: Ofcom research, Quarter Base: Adults aged 15+ with a fixed broadband connection at home (n= 3491 UK, 388 Northern Ireland, 2048 England, 528 Scotland, 527 Wales ) *Base size less than 100: Apply caution Note: Figures above chart columns indicate the proportion of people who were very or fairly satisfied with their speed of service while online East Urban West Rural* East Rural* Belfast* Londonderry/ Derry* Small towns* Border area NI Urban NI Rural Fairly satisfied Very satisfied Levels of satisfaction with the value for money of broadband services mirrored satisfaction with broadband speeds in Northern Ireland, with the overall level (76%) lower than the UK average (84%) as shown in Figure However, there was little difference in satisfaction levels between urban and rural areas. Figure 5.36 Satisfaction with value for money of fixed broadband service QE18c. Thinking about your fixed broadband internet service, how satisfied are you with (main supplier) for the overall value for money of your service? Source: Ofcom research, Quarter Base: Adults aged 15+ with a fixed broadband connection at home (n= 3491 UK, 388 Northern Ireland) *Base size less than 100: Apply caution Note: Figures above chart columns indicate the proportion of people who were very or fairly satisfied with their overall value for money. Less than seven in ten customers in Northern Ireland were satisfied with their mobile broadband service, significantly lower than the UK average (83%), and only 12% were very satisfied with the service, compared to the overall UK figure of 42%. 108