UK consumers spending less on phones

The average household spend on telecoms services in the UK fell during 2006, despite the fact that households with a mobile connection exceeded those with a fixed line connection for the first time.

A report by UK communications watchdog Ofcom, released Thursday, reveals that the average household spend on telecoms services fell by nearly a pound to £64.73 per month.

For the first time ever, the average spend on mobile services also fell by 70p to £31.72, with falling prices compensating for an increase in the total number of connections and the average number of calls and messages sent per subscriber.

However, UK households with a mobile connection rose to 93 per cent, just topping the 90 per cent of households with a fixed connection for the first time in 2006. Cheaper mobile prices and bigger bundles of minutes also suggest a growing trend of fixed mobile substitution, with average calls per mobile rising to above 100 minutes per month, while average calls per fixed line connection fell below 300 minutes.

By the end of 2006 there were nearly 70 million active mobile phone subscriptions in the UK, Ofcom said, with growth being driven by multiple handset or SIM ownership. The number of contract connections increased just slightly, to 35 per cent and 3G moved into the mainstream with connections growing 70 per cent to reach 7.8 million.

In the fixed line space, more than half of UK households had broadband by March and the average headline speed was 4.6Mbps – although Ofcom expects actual speeds to be considerably lower. Local loop unbundling accelerated, so that by the end of March 2007, 72 per cent of UK premises were connected to an unbundled exchange, with the proportion of premises in unbundled areas taking LLU services rising from 3 per cent in 2006 to 9 per cent in March 2007.

Bad news for BT, which found that its share of fixed voice volumes fell below 50 per cent, for the first time. Indirect operators became the main beneficiaries as their share of fixed line voice calls rose from 25 per cent in 2005 to 28% in 2006.

Ofcom said that the total telecom industry revenue in 2006 reached £47bn, of which £38.5bn came from retail, but although this was an increase of 1.4 per cent on 2005 it represents significantly slower growth than previous years as fixed line revenues declined and growth in mobile and broadband revenues slowed.

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