Slides from presentation given to students at Staffordshire University. Includes: 1) Ofcom ‘s proposed priorities for 2011-12. and 2) Consumer Trends in the UK - looking at both usage and take up. All data and slides are culled from previous presentations which are all in the public domain.

1. Presentation to Staffordshire University Faculty of Arts Media and Design Damian Radcliffe, Manager, Nations & Communities 1st March 2011

2. Running Order Ofcom ‘s proposed priorities for 2011-12. Consumer Trends in the UK The Broadcasting Code Benchmarking the UK against the rest of the world

3. Ofcom’s Draft Annual Plan 2011/12 Damian Radcliffe, Manager Nations & Communities 1st March 2011

4. About Ofcom Ofcom is the regulator for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services It is independent of Government but accountable to Parliament Ofcom’s sponsoring Departments of State are: the Department for Business, Innovation & Skills (BIS) the Department for Culture, Media & Sport (DCMS) Set up - and its powers and duties defined – by the Communications Act 2003

5. Where we came from

6. 5 Ofcom’s statutory duties Under the Communications Act 2003 “It shall be the principal duty of Ofcom, in carrying out their functions;(a) to further the interests of citizens in relation to communications matters; and(b) to further the interests of consumers in relevant markets, where appropriate by promoting competition" Ofcom’s specific duties fall into six areas: Ensuring the optimal use of the electro-magnetic spectrum Ensuring that a wide range of electronic communications services - including high speed data services - is available throughout the UK Ensuring a wide range of TV and radio services of high quality and wide appeal Maintaining plurality in the provision of broadcasting Applying adequate protection for audiences against offensive or harmful material Applying adequate protection for audiences against unfairness or the infringement of privacy

7. What we don’t do

8. Ofcom’s Annual Plan 2011/12 7 Draft Annual Plan Final Annual Plan Published end of March along with budget for the financial year Published for consultation which closes 1 March 2011

9. Ofcom’s Annual Plan 2011/12 is published in the context of a changing environment… 8 Deregulation where appropriate Addressing disputes and appeals Government’s public policy Challenging public finances UK and EU legal framework Increasing internationalisation 8

11. Traditional media is still important

12. Spectrum demand increasing

13. New consumer challenges

19. Considering new regulatory approaches to content regulation

20. Implementing online copyright infringement provisions

21. Reporting on Ch. 3 and 5 licensing arrangements

22. Preparing for postPublic policy

24. Promoting competition and investment in the delivery of superfast broadband12

26. Auctioning of the 800 MHz and 2.6 GHz spectrum bands

27. Delivering the Government’s spectrum guarantee for the London 2012 Olympic & Paralympic Games

28. Developing a future-looking spectrum policy work programme taking account of market developments and future demand for spectrum13

30. Developing and implement policies that will improve the ease of switching between Communications Providers for consumers 14

32. Considering new regulatory approaches to content regulation

33. Content regulation remains relevant for the protection of adults, minors, the democratic debate and individuals as subjects of the media15

35. Prepare statutory report to Government on licensing arrangements for Channels 3 & 5 after 2014

37. …and we are undertaking substantial work to improve our services for citizens, consumers and stakeholders Licensing access to spectrum and keeping it free of interference Offering more online tools to stakeholders Protection from and enforcement against unfair terms and practices by communications providers Conducting and publishing market research and analysis 18

38. Summary 19 New responsibilities 28.2% savings Legislative reform Delivering our purposes and priorities

39. 20 Q&A

40. Trends Damian Radcliffe, Manager Nations & Communities 1st March 2011

41. We’re going to explore 22 The UK Communications Consumer The changing world of Public Service Broadcasting (PSB) Benchmarking the UK against the Rest of the World (if we have time)

42. 23 The 2010 Communications Market Report Damian Radcliffe, Manager, Nations & Communities

45. Internet access in your pocket

46. Mind the generation gap

47. Traditional media is holding up

49. 27 One fifth of time spent using media is simultaneous We cram over 3 hours of multi-tasking activity into 1 hour 23 minutes Source: Ofcom research

51. Internet access in your pocket

52. Mind the generation gap

53. Traditional media is holding up

55. 30 More than a quarter now own a smartphone Number of smartphone users has more than doubled in last two years Penetration of mobile users aged 13+ Source: comScore, Mobilens, December 2007 - May 2010

56. 31 Facebook is the most popular site on the mobile web It accounts for nearly half of mobile web use Source: GSMA Mobile Media Metrics, December 2009

58. Internet access in your pocket

59. Mind the generation gap

60. Traditional media is holding up

62. 34 16-24s are more likely to use their mobiles for text-based communications Over 55s still use mobiles primarily for voice calls Social networking Text messaging Phone calls Text messaging Phone calls Email Source: Ofcom research

63. 35 Half of over 55s now have broadband They are the fastest growing age group Proportion of respondents (per cent) Q1 2009 Q1 2010 Q1 2009 Q1 2010 All adults aged 15+ All aged 55+ Source: Ofcom research, data as at Q1 of each yearBase: All adults aged 15+

64. 36 Over-55s more likely to use a computer for email 16-24s spend more time social networking or instant messaging Social networking Instant messaging Emails Social networking Emails Source: Ofcom research

65. Use of social networking has grown among all age groups It is growing more rapidly among over 25s Proportion of adults who access social networking sites on the internet at home Source: Ofcom research 37

67. Internet access in your pocket

68. Mind the generation gap

69. Traditional media is holding up

71. 40 Popularity of TV driven by strong growth of DVRs and HDTV Over 5 million HDTV homes and over 24 million HD-ready sets sold DVR penetration HD broadcast homes 2005 2009 Q1 2009 Q2 2010 Source: Ofcom research/industry data

72. 41 Growth in texting and mobile voice as well as mobile data Traditional means of mobile communications still growing Texting 2009 104 billion 2004 27 billion Mobile data volumes 2009 (+240%) Mobile voice minutes 2009 118 billion 2007 2004 64 billion 2004 6 Source: Ofcom research

74. Internet access in your pocket

75. Mind the generation gap

76. Traditional media is holding up

78. 44 The UK PSB Scene Damian Radcliffe, Manager, Nations & Communities

79. PSB purposes 45 Informing our understanding of the world - To inform ourselves and others and to increase our understanding of the world through news, information and analysis of current events and ideas Stimulating knowledge and learning -To stimulate our interest in and knowledge of arts, science, history and other topics through content that is accessible and can encourage informal learning Reflecting UK cultural identity - To reflect and strengthen our cultural identity through original programming at UK, national and regional level, on occasion bringing audiences together for shared experiences Representing diversity and alternative viewpoints - To make us aware of different cultures and alternative viewpoints, through programmes that reflect the lives of other people and other communities, both within the UK and elsewhere

80. PSB characteristics 46 High quality - well-funded and well-produced Original - new UK content rather than repeats or acquisitions Innovative - breaking new ideas or re-inventing exciting approaches, rather than copying old ones Challenging - making viewers think Engaging - remaining accessible and attractive to viewers Widely available - if content is publicly funded, a large majority of citizens need to be given the chance to watch it

81. 47 The UK TV market is experiencing a period of rapid change Penetration of digital technologies rising Audience share for the five main channels falling 78% 69% 84% 64% 51% 54% 47% 11% 2003 2007 2003 2007 2007 2003 2007 2003 Source: Ofcom Source: BARB

82. 48 The central challenge – the move from analogue to a digital model of Public Service Broadcasting

83. 49 Impact of Digital TV Over 90% of households now have access to Digital TV Digital Switchover means all homes will be multi-channel by 2012 Digital homes have access to around 40 channels on Freeview and over 400 channels on multichannel subscription – representing huge choice for viewers. By 2012 the 5 channel home will be moribund. For many it already is.

84. Market changes

85. UK sample that are self-claimed regular viewers Any PSB Channel 2006 Shows direction of significant differences from 2006/2008 to 2009, 99% level) 2008 Base: All respondents 7603, 7192, 6845, 6981 Source: Ofcom PSB Tracker, GfK NOP 51 51

86. Average hours of daily viewing, 2005-2009 All TV viewing PSB channels only Source: BARB 2005 and 2009, Network Average hours of viewing per day, all PSB channels vs. Total TV (all TV channels)

87. 53 Summary: hours watched and weekly reach Hours of viewing* While the average hours of total daily TV viewing increased by 3% between 2005 and 2009, the average hours of daily viewing to all PSB channels** dropped by 15% over the same period: the steepest decline in viewing of the PSB channels was among viewers aged 16-24, for whom viewing fell by 25% over the past five years (although this age group was still watching as much television overall in 2009 as they were in 2005); the smallest decrease in viewing to the PSB channels occurred among viewers in the 45-54 age group, who watched 8% less of the PSB channels than they did in 2005. *Hours of viewing is defined as the average hours of television viewed per day, either live , or recorded in the past 7 days. ** The PSB channels are defined as BBC One, BBC Two, ITV1, Channel 4/S4C, Five, BBC Three, BBC Four, BBC News, BBC Parliament, BBC HD, CBeebies and CBBC. ***Average weekly reach is defined as the proportion of the population that watched at least 15 consecutive minutes of a channel in an average week. ****’Portfolio channels’ is comprised of the PSBs’ affiliated channels, such as ITV2, BBC Three, E4 etc. It excludes the main five PSB channels. The actual number of channels that make up the PSB portfolios has increased over the years, and the proportion of people with multichannel television has also grown substantially year on year. Not all of these channels are PSB channels.

88. Channel shares in all homes, 1986 - 2008 Source: BARB

89. Peak time channel share in all homes, 1993 - 2009 Source: BARB, 18:00 – 22:30 55

90. Total viewing of UK/national News, all individuals, main 5 PSB channels only Total hours per year watched by average individual (4+) 88 92 92 90 100 Source: BARB, 2005-2009

91. Total viewing hours of National News, main PSB channels only, by age group Total hours per year watched by average individual (4+) 103 28 50 195 71 143 Source: BARB, 2008

92. 58 PSBs face declining income as well as audiences Increased competition for advertising revenue from other TV channels and internet 2007 TV advertising 1993 TV advertising Other channels Otherchannels Channel 4 ITV1 ITV1 Channel 4

93. 59 Summary: Audience profiles Of the main five PSB channels in 2009, the two BBC channels had the oldest viewing profiles; viewing that came from viewers aged 55 or older stood at 54% for BBC Two, and 52% for BBC Two (See Figure D8). For both channels, this represented a shift towards viewing from viewers aged 55+ compared with 2008, of 1% and 3% respectively. BBC Parliament, BBC News and BBC Four also tended to attract an older audience; 62% of BBC Parliament‘s audience fell in to the 55+ age group in 2009, while 54% of BBC News’ and 51% of BBC Four’s audience was in this age group. BBC Three, Channel 4 and Five had the youngest viewing profiles in 2009; 31% of BBC Three’s viewers were 24 years old or younger, while 18% of Five’s and 14% of Channel Four’s viewers fell into this younger age group. Nearly a quarter of the viewing to BBC HD came from viewers in the 35-44 age group, considerably higher than for any other PSB channel in 2009. All 5 of the main PSB channels attracted a lower proportion of their viewing from viewers in the DE socio-economic group than they did in 2008. Five remained the channel which attracted the highest proportion of these viewers at 44% in 2009 (See Figure D9). BBC HD and BBC Four gained the highest proportion of viewers from audiences falling in AB socio -economic groups; 33% and 30% respectively.

94. Age profile of channel viewers, 2009 Source: BARB 2009, Network Profile data calculated on a base of all individuals 4+ 60

95. Socio-economic profile of channel viewers, 2009 Source: BARB 2009, Network Profile data calculated on a base of all individuals 4+ 61

96. 62 Summary: hours watched and weekly reach Weekly reach*** Weekly reach for BBC Two remained relatively stable comparing July 2005 and July 2009, dropping by 1%. BBC One and Five experienced minor declines, average weekly reach falling by only 2% and 3% respectively. I TV1 and Channel 4 both had slightly greater declines in weekly reach, with ITV1 falling by 9%, and Channel 4 falling by 11%. BBC Three’s weekly reach also rose by 11% in July 2009, while BBC Four’s rose by 6% (See Figure D2). The average weekly reach of all of the PSB portfolio channels combined**** increased by 2% from 2008 to 2009, but the rate of increase has slowed down significantly from previous years (See Figure D3). The BBC’s portfolio channels, ITV channels, and Channel 4 channels all saw an annual increase of around 1%. Five’s portfolio channels increased their average weekly reach by less than 1% since 2008. ***Average weekly reach is defined as the proportion of the population that watched at least 15 consecutive minutes of a channel in an average week. ****’Portfolio channels’ is comprised of the PSBs’ affiliated channels, such as ITV2, BBC Three, E4 etc. It excludes the main five PSB channels. The actual number of channels that make up the PSB portfolios has increased over the years, and the proportion of people with multichannel television has also grown substantially year on year. Not all of these channels are PSB channels.

97. Sum’s new chart Average weekly reach of PSB portfolio channels, 2005 - 2009 15+ minute consecutive reach Source: BARB, all individuals 4+ Note: The actual number of channels that make up the PSB portfolios has increased over the years, and the proportion of people with multichannel television has also grown substantially year on year. Not all of these channels are PSB channels

98. Broadcaster shares in multichannel homes Source: BARB, all day, all Multichannel Individuals (4+). Portfolio channels are the PSB channels, excluding the main 5 PSB channels. The actual number of channels that make up the PSB portfolios has increased over the years, and the proportion of people with multichannel television has also grown substantially year on year. Not all of these channels are PSB channels 64

99. 65 Rise of Digital TV Digital television At the end of 2009, take-up of digital television in UK households stood at 91.4%: almost 40% of UK homes (39.6%), have DTT on their main TV set. Satellite TV is the main TV set in 38.3% of homes. Cable television accounted for 12.4% of homes. Consumers are continuing to convert additional sets in the home. Almost 69% of all secondary TV sets had been converted to digital by the end of 2009, up 8.5% y-o-y Digital switchover Nearly 19% of UK households had been covered by digital switchover at the end of 2009** In December 2009, the North West of England became the biggest single region to complete switchover. A total of 3.04m homes are served by the Winter Hill transmitter in the Granada region, which covers the major cities of Liverpool and Manchester. *http://www.ofcom.org.uk/research/tv/reports/dtv/dtv_2009_q4/dtv_2009_q4.pdf ** Ofcom’s UK Communications Market Report, 2009

100. Household take-up of television services: 1999 - 2009 Source: Ofcom Note: GfK and Ofcom research from Q1 2007 onwards; previous quarters use platform operator data, research and Ofcom estimates. Note: TV over ADSL take-up is too low a percentage to register on this chart.

101. Universe of television sets, by platform, Q4 2009 Total TV sets = 60 million Source: GfK research

102. 68 The rise of High Definition television (HDTV) Nearly 3.5m homes had reception equipment capable of receiving high definition television (HDTV) channels at the end of 2009, up from around 1.5m at the end of 2008. Sky+ HD accounted for the majority of these, with 2.1m subscribers. Virgin Media and Freesat platforms accounted for about 1.4m homes with access to HD channels at the end of 2009. Other TV services offer HD content on demand, such as BT Vision, TalkTalk TV. The increased adoption of HD-ready TV sets is creating a growing market for HDTV. By the end of 2009, around 22m HD-ready sets had been sold in the UK Note: While a home may have a HD-ready TV, this does not mean that they automatically receive HDTV channels. They must also have the relevant HD decoder equipment too (unless that have bought a Freesat HD or Freeview HD TV, which include HDTV tuners).

103. 69 UK homes with equipment for HDTV channels: Sky, Virgin Media and Freesat Source: BSkyB/Virgin Media/Freesat. Note: *Freesat data based on HD equipment sold, which does not mean this device necessarily represents the principal means of viewing TV on the main set (for example, Freesat IDTVs could be used to access other HD services). The cumulative number of HD homes, therefore, is indicative only. Figures represent latest available data.

104. HD-ready sets - sales volumes as a % of all set sales HD ready sets as % of all sets sold (c. 22 million HD sets sold to date) HD-ready sets sold (000s) Source: GfK sales data (EPOS data)

105. 71 The rise of non-linear television c.12m digital video recorders (DVRs) had been sold or rented to UK consumers by the end of 2009, up by 1.7m devices in the year. Around 7.8m were homes with Sky, Virgin Media or BT Vision platforms. At the end of 2009, Virgin Media’s video-on-demand (VoD) service was available to nearly 3.7m digital cable TV homes in the UK*. In the fourth quarter of 2009, the company registered 74m VoD uses, more than double the 33m seen in the same period two year earlier.

106. Virgin Media Video-on-Demand usage statistics Average VoD view per month (m) Source: Virgin Media VoD = Video-on-demand, DTV = Digital television

107. Sales and rentals for digital video recorders (DVR) 73 Units sold / rented (m) Source: Operator results, GfK sales data and Ofcom estimates Note: Figures represent sales and not homes. Freeview+andFreesat+ data based on GfK and sales data. BT Vision, V+, Sky+ and Sky+ HD based on operator data. Sky+ figures include the Republic of Ireland. V+ boxes are rented to Virgin Media customers. Data for Freeview, freesat, Top Up TV is based on sales and consumer data so will include replacement devices.

108. Proportion of Live vs. time-shifted viewing by channel, main 5 PSB channels, 2009 Source: BARB 2009, all individuals with DVRs, main 5 PSB channels 74

109. 75 The rise of Online TV services Online TV services, which allow consumers to catch-up with programmes ‘on demand’ via the internet continued to attract new users in 2009; Nearly a third (31%) of all adults with the internet at home claimed to watch online catch-up TV at Q1 2010, up from 23% in Q1 2009. The 15-24 age group was the most prolific viewers, with 40% saying that they or their household watched online catch-up TV, while the proportion of over 65s using catch-up TV nearly doubled in a year, from 10% to 18% in 2009. The BBC’s iPlayer online TV service registered a unique audience of just over 7m users in December 2009, up from 5m a year earlier In January 2010, 68.2m TV programmes were requested by iPlayer users across different platforms; this had risen from 30.8m in January 2009. Both ITV Player and Channel 4’s 4oD also increased their unique audiences in December 2009, to reach 1.4m and 1.3m users respectively (up from 0.7m and 0.2m a year earlier). Demand Five and Sky Player attracted similar sized audiences at the end of 2009, with 0.4m and 0.5m unique users respectively. (see Figure B9). * Virgin Media results, Q4 2009.http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzMxMjl8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

110. 76 Proportion of households with home internet who watch online catch-up TV Proportion of households (%) Source: Ofcom research Q1 2010. QE5A “Which, if any, of these do you or your household use the internet for whilst at home?”.Base: All adults who have the internet at home (2010, n=6163; 15-24 n=1048, 25-34 n=1100, 35-54 n=2464, 55-64 n=860, 65+ n=691; male n=3015, female n=3148).

111. 77 BBC iPlayer, TV programme requests BBC iPlayer TV requests (m) Source: iPlayer monthly press pack/ BBC iStats

112. 78 UK online TV and video services, unique audiences Unique audience (000s) Source: Nielsen NetView

113. 79 Break When we come back we’ll look at the Broadcasting Code. And if there’s time – and interest - compare the UK with other markets…

114. 80 Thanks for listening. damian.radcliffe@ofcom.org.uk @mrdamian76