Ofcom Strategy Chief Predicts An On-Demand Future

Delivering the first Ofcom Annual Lecture to the Westminster Media Forum yesterday, Ed Richards, Ofcom’s senior partner for strategy and market development, laid out his vision of the UK’s future media landscape, highlighting the fast development of digital technology and predicting a boom in on-demand services.

“The UK is seeing more digital, more broadband and more mobile – some very important trends,” Richards explained.

“Last year, net advertising revenue in TV was overtaken by subscription revenues for the first time ever. This year, mobile revenues have outstripped fixed calls and access revenues. Digital television is growing at the rate of 250,000, the population of Sheffield, every month and now for the first time ever, more people are accessing the internet through broadband than narrowband,” (see Broadband Penetration Exceeds Dial-Up For First Time).

Richards stated that the development of advanced digital technology was seeing a speedier uptake than its analogue predecessors. “There is a compression of timescale, as technologies move up the adoption curve,” he explained. “Colour television took 30 years to establish, GSM or second generation mobile phones took 10 years. Now there are signs that broadband will take 5 to 7 years at the most.

“So there is a wave of change being led by digital technology, and intriguingly, what permeates many of these changes is the gradual unfolding of convergence. I don’t want to suggest we get carried away again; these are green shoots, far from fully mature developments.”

Charting the development of PVRs, which combine digital television and computer hard disk technology, as well as commenting on the growth of 3G mobile phones, the Ofcom boss explained that media owners are now less likely to specialise in one area, with convergence creating technology such as interactive television, video on-demand and VoIP, where telecommunication infrastructures are used for multiple purposes.

The result of convergence, and increased options for communication, is that consumers are now spending more. Richards stated that “people are now consistently spending more on communication, essentially it is now at around £20 per week.”

Explaining that household communications spend had outstripped inflation over the past five years, Richards detailed a 35% rise in TV spend, 75% rise in mobile spend and a whopping 250% increase in internet expenditure from the average household.

According to Ofcom, the increased availability, and speed, of broadband is a principal driver in these rises, with more growth set to develop over the coming years. “Remember – these capacities are fairly low in comparison to what will come on stream,” said Richards.

With the onus now on consumers to choose content that suits their needs and personal tastes, Richards described the shift as a “gentle, gradual, evolving, historic act of liberation” rather than “a revolution,” citing on-demand viewing and listening as the ultimate demonstration of consumer choice.

Highlighting on-demand television, he said: “In many countries television over DSL is already well advanced; in this country HomeChoice are already offering an attractive service to 15,000 users. In Italy, Fastweb has more than 150,000 TV over DSL subscribers. In France, Neuf and Free together have around 350,000 TV over DSL, triple play subscribers. It is a liberation of consumers, viewers and listeners to determine their own viewing, their own listening, their own schedule, their own compilations, their own content and even their own services.

“What’s going on here, and in so many other areas, is a gradual transfer of power from broadcaster, distributor and supplier, to viewer, listener and consumer.

“The traditional means of control have rested squarely on spectrum and distribution systems, and are gradually facing challenges. The increasing flexibility of different distribution systems, either through network enhancement (DSL, cable, mobile), reception device capability (PVRs, PCs, televisions) or through a combination of these systems and devices.”

However, Richards was quick to qualify his predictions, stating that a “fixed view about what will or will not prevail” was impossible to deliver. “We are making no such predictions,” he stated. “What we see is a welcome period of change, of new technologies forcing established ones to respond. For consumers, viewers, listeners we see real benefits.”

Ofcom: 020 7981 3040 www.ofcom.org.uk