Consumers spending less and using more

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Ofcom report says consumers are spending less but using more, as subsidies on 24-month contracts put smartphones into the hands of the masses and operators offer increased value

A price war on the high street has seen network operators offer increased value to UK consumers in the past 12 months, enabling households to cut their mobile spend and increase consumption at the same time.

Ofcom’s annual Communications Market Report said average UK expenditure on communications was 4.4 per cent of total household expenditure in 2009, compared with 4.6 per cent in 2008.

Ofcom said deals from mobile network operators in particular have offered consumers huge comparative value. The report said media consumption in the home has increased, particularly via mobile phones.

Ofcom polled nearly 1,200 UK residents aged over 16. It found 63 per cent of new mobile contracts signed in the second quarter of 2010 were 24-month deals, compared to just three per cent in the second quarter of 2008.

Ofcom said longer-term contracts have made smartphones more affordable for consumers as subsidies are spread over a longer period.

Smartphone numbers are up 81 per cent from 7.2 million users in May 2009 to 12.8 million in May 2010 in the study.

In June 2010, just over a quarter of people in the UK said they had a smartphone, more than double the number two years previously.

Ofcom said media multi-tasking now accounts for 20 per cent of all media consumed through the day. Among 16-24 year olds, 29 per cent of their media activity is simultaneous, compared to just 12 per cent for people aged over 55.

Ofcom’s research found 16-24 year olds to be the most efficient users of communications services and fit 9.5 hours of media consumption into just over 6.5 hours actual time, spending the largest time on computers and mobiles. However, just a quarter of the time they spend on their mobiles is on voice calls.

In the first quarter of 2010, 23 per cent of those surveyed accessed content or sent emails on their mobile phones, up from 20 per cent in the first quarter of 2009. Among 16-24 year olds this was 45 per cent.

Ofcom’s report showed mobile web browsing is the fastest growing mobile media activity with one million new users during the first quarter of 2010, taking the total to 13.5 million compared to nine million in the first quarter of 2009.

Facebook was the most popular mobile internet site in terms of time people spend on it, accounting for 45 per cent of total time spent online on mobiles in December 2009. A fifth of time 16-24 year olds spend social networking is done through a mobile.

UK mobile users also sent a record number of texts, 104 billion, in 2009; up 25 per cent on 2008 and 290 per cent on 2004.

Bundles and operator deals in light of the recession mean half of all UK households now buy two or more services from a single provider compared to 29 per cent in 2005. Seventy per cent of people with a bundle said that the main reason for taking one was because it was cheaper.

Ofcom strategy and market developments partner Peter Phillips said: “Consumers are using communications services more: phone calls, texting and the internet.

“Yet they are paying less despite getting more, partly through buying in bundles.”

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