| KN32043 |
| KEY NOTE TELECOMMUNICATIONS : NOVEMBER 2003 |
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This report covers: telecommunications, fixed-line services, cellular services, residential telecommunications, business telecommunications, fixed telephones, exchange lines, cellular telephony, telex, private leased line, terminating calls, local calls, national calls, international calls, calls to mobiles, special local rate, party, payphones, premium rate, DQ/IDQ, freephone, chargecard calls, VPN OFFNET calls, paging operators, speaking clock, phonebase, connections, subscribers
Companies covered include: BT,Cable & Wireless, MMO2, Ntl Group, Orange Personal Communications Services, Telewest Communications, Vodafone Group,
| Executive Summary |
| 1. Market Definition |
| REPORT COVERAGE |
| MARKET SECTORS |
| By Method of Delivery |
| Fixed-Line Telephony |
| Cellular Telephony |
| By Key Customers |
| Residential Telecommunications |
| Business Telecommunications |
| MARKET TRENDS |
| Growing Need for Communications |
| New and Cheaper Telecommunications Technology |
| More Competition |
| Convergence |
| ECONOMIC TRENDS |
| Population |
| Table 1: UK Resident Population Estimates by Sex (000 and percent), Mid-Years 1998-2002 |
| Gross Domestic Product |
| Table 2: UK Gross Domestic Product at Current and Constant 1995 Prices (£m), 1998-2002 |
| Inflation |
| Table 3: UK Rate of Inflation ( percent), 1998-2002 |
| Unemployment |
| Table 4: Actual Number of Unemployed Persons (million and percent), 1998-2002 |
| Household Disposable Income |
| Table 5: Household Disposable Income (£ and percent), 1998-2002 |
| MARKET POSITION |
| The UK |
| Table 6: Telecommunications' Share of the UK Information and Communications Technology Market ( percent), 1999-2003 |
| 2. Market Size |
| THE TOTAL MARKET |
| Table 7: The UK Telecommunications Market by Sector by Value (£m), 1999/2000-2003/2004† |
| Table 8: The UK Telecommunications Market by Volume (million call minutes), 1999/2000-2003/2004† |
| By market sector |
| Cellular Telephony |
| Call Revenues |
| Table 9: The UK Cellular Telephony Sector by Value (£m and percent), 1999/2000-2003/2004† |
| Call Minutes/Subscribers |
| Table 10: The UK Cellular Telephony Sector by Volume (million call minutes, million SMS messages and million subscribers), 1999/2000-2003/2004† |
| Market Shares |
| Table 11: Market Shares in the UK Cellular Sector ( percent), 2002 and 2003† |
| Fixed-Line Telephony |
| Call Revenues |
| Table 12: The UK Fixed-Line Telephony Sector by Value (£m and percent), 1999/2000- 2003/2004† |
| Call Minutes |
| Table 13: The UK Fixed-Line Telephony Sector by Volume (million call minutes and percent), 1999/2000-2003/2004† |
| Market Shares |
| Table 14: Company Share of Fixed-Line Telephony Call Revenue and Call Minutes ( percent), 2002 and 2003† |
| Table 15: Company Share of Fixed-Line Telephony Call Revenue by Target Market ( percent), 2002 and 2003† |
| Exchange Lines |
| Table 16: Revenue from Connections and Line Rental and Number of Fixed Exchange Lines (£m, percent and 000), 1999/2000-2003/2004† |
| Market Shares |
| Table 17: Company Share of the Exchange Line Sector by Value and Volume ( percent), 2002 and 2003† |
| Leased Lines |
| Table 18: Revenue from Leased Line Rental (£m and percent), 1999/2000-2003/2004† |
| 3. Industry Background |
| Recent History |
| INDUSTRY SYNOPSIS |
| Table 19: Average Financial Performance of Companies Engaged in Telecommunications (£000, percent and £), Latest Financial Accounts |
| NUMBER OF COMPANIES |
| Table 20: Number of UK VAT-Based Enterprises Engaged in Telecommunications by Turnover Sizeband (£000), 2003 |
| EMPLOYMENT |
| Table 21: Number of Full-Time Employees in the UK Telecommunications Market, Years Ending March 1999-2003 |
| DISTRIBUTION |
| HOW ROBUST IS THE MARKET |
| LEGISLATION |
| KEY TRADE ASSOCIATIONS |
| The Communications Management Association |
| Federation of Communication Services |
| The Institution of Electrical Engineers |
| The Institution of Incorporated Engineers |
| Intellect |
| Office of Communications |
| The Telecommunications Industry Association |
| The Telecommunications Users Association |
| 4. Competitor Analysis |
| THE MARKETPLACE |
| MARKET LEADERS |
| British Telecommunications PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Cable & Wireless PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| MMO2 PLC |
| Company Structure |
| Current and Future developments |
| Financial Results |
| NTL Group Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Orange Personal Communications Services Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Telewest Communications PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| T-Mobile Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Vodafone Group PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| OUTSIDE SUPPLIERS |
| Telecommunications Equipment Manufacturers |
| Support Equipment |
| Bought-in Services |
| marketing activity |
| Table 22: Main Media Advertising Expenditure on Residential and Business Telecommunications Services by Broad Category (£000), Year Ending June 2003 |
| Table 23: Main Media Advertising Expenditure on Residential and Business Telecommunications Services by Company Category (£000), Year Ending June 2003 |
| Exhibitions |
| 5. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 6. Buying Behaviour |
| Importance of Residential and Business Users |
| Table 24: The UK Residential and Business Telecommunications Market (£m and percent), Year Ending March 2003 |
| CUSTOMER PROFILE |
| The Residential Market |
| Table 25: Ownership of Telephone Lines Among Residential Customers (000 and percent), April 2002-March 2003 |
| Table 26: The Penetration of Fixed and Mobile Telephony in UK Homes ( percent), May 2001-May 2003 |
| Table 27: The Penetration of Mobile Telephony in UK Homes and Among UK Adults ( percent), May 2002, February 2003 and May 2003 |
| Table 28: Main Method of Making and Receiving Calls ( percent of adults), May 2003 |
| Table 29: Residential Telephone Usage by Destination of Calls Made in a Week ( percent), 1996-1998, 2001 and 2003 |
| Table 30: The Mobile Tariffs Used by Residential Cellular Subscribers ( percent), May 2001-May 2003 |
| Table 31: Residential Telephone Usage by Number of International Calls Made in a Month ( percent), 1997-1999, 2001 and 2003 |
| The Business Market |
| Table 32: Use of Mobile Packages by UK SMEs ( percent), Combined Data November 2002 and February 2003 |
| Table 33: Business Telephone Usage by Number of Calls in a Week ( percent), 1997, 1998, 1999, 2002 and 2003 |
| 7. Current Issues |
| Continuing Heavy Losses |
| Table 34: Profitability of Major Telecommunications Groups (£000), 2002/2003 |
| The Roll-Out of Broadband |
| Table 35: Number of Broadband Internet Subscribers (000), March 2002-March 2003 |
| Are 3G Services Viable? |
| WI-FI — An end to 3G? |
| Directory Enquiries |
| The Communications Act 2003 |
| Changes to Market Regulations |
| New Regulatory Framework Under New EC Directives |
| Mobile Call Termination Charges — Competition Commission |
| Mobile Call Termination Charges — Oftel |
| Oftel Lightens Mobile regulation |
| A New Telecommunications Ombudsman |
| 8. The Global Market |
| introduction |
| International Price Comparisons |
| Mobile |
| Table 36: Price Index For Mobile Services (base: UK=100), June 2003 |
| Table 37: Price Index For Mobile International Roaming Services by Visited Country (base: UK=100), June 2004 |
| Fixed Line |
| Table 38: International Price Index For Residential and Business PSTN Services (base: UK=100), June 2004 |
| 9. Forecasts |
| INTRODUCTION |
| The Economy |
| FORECASTS 2004/2005 to 2008/2009 |
| Table 39: The Forecast UK Telecommunications Market by Sector by Value (£m), 2004/2005-2008/2009† |
| future trends |
| Fixed-Line Telephony |
| The Cellular Future |
| 10. Company Profiles |
| British telecommunications PLC |
| Cable & Wireless Plc |
| MMO2 PLC |
| Ntl Group Ltd |
| Orange Personal Communications Services Ltd |
| telewest Communications Plc |
| Vodafone Group PLC |
| 11. Further Sources |
| Associations |
| General Sources |
| Bonnier Information Sources |
| Government Publications |
| Other Sources |
| In the year ending March 2003, the UK telecommunications market was worth £27.27bn and is expected to grow by 6.3 percent to reach £28.99bn in the year ending March 2004. Between 1998 and 2003, intense competition, price regulations and the struggle for market share between service providers have kept prices low and slowed the rate of market value growth. |
| There are two main types of telecommunications service, which are based on the method of delivery: the fixed-line sector, which relates to the revenue generated from calls and the rental of exchange and leased lines; and cellular telephony. An increasingly mobile society and falling charges have made the mobile telephone a viable alternative to a fixed-line handset in the UK and, in 2003, cellular services accounted for almost half the telecommunications market. |
| The structure of the telecommunications market is radically changing and the area of the market that relates to cellular services, which includes calls from fixed lines to cellular telephones, and data transfer, such as calls to Internet service providers (ISPs), virtual private networks (VPNs), leased-line charges, and text and picture messaging, is the fastest-growing market sector. |
| A number of the major companies in the telecommunications market, such as Vodafone, MMO2 and, until recently, British Telecommunications (BT), are undergoing major financial restructuring, which reflects the past accumulation of debts, either to finance expansion and develop new services, such as third generation (3G), or previous network building, such as in the case of cable companies. Even successful players, such as Vodafone, have had to write off huge amounts of their asset value in order to reflect the reduction in the value of 3G licences. The situation is further troubled by an intensely competitive market, which has seen end-user prices falling in real terms, as a result of moves to make the market more competitive, such as the unbundling of the local loop (allowing competition in the supply of fixed telephony on the final stage of the network to the customer's home). |
| The telecommunications market is highly regulated and 2003 saw a radical change in the regulatory framework. The Office of Communications (Ofcom) assumed control of regulation and a new Communications Act, which sets the framework for legislation, was introduced. |
| Between 2003 and 2007, Key Note expects cellular and data services (especially Internet protocol [IP] networks) to continue to grow at a much stronger rate than the rest of the telecommunications market. Market revenue is expected to show improved rates of growth compared with 2002 and 2003, which will reflect stable economic conditions in the UK. |
| Convergence between mobile and fixed services is expected to be a growing theme in the telecommunications market, with companies such as BT already introducing hybrid, fixed and mobile handsets and services. |
Text © 2003 Key Note
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Last updated by Amanda Porteous July 2003
