Ofcom reports the surge in Internet usage hurts telcos

GUARDIAN OF TELECOM COMPANIES Ofcom claims that telecoms operators have seen revenues fall even though public figures suggest otherwise.

According to the UK telecoms regulator, operators' reported revenue fell from £31.2 billion in 2008 to £30.4 billion in 2009. Before rumours of another Government bailout reach fever pitch, according to the accounts of Vodafone, O2 and T-Mobile, revenue in 2009 rose from the previous year. Only BT and Orange suffered relatively small declines in the amounts of cash they raked in, though still managing to take tens of billions.

It's not all doom and gloom in the report. While operators are apparently feeling the pinch, consumers are incorporating more current technology than ever before to connect to the Internet. These include femtocells and 'powerline' technology along with more traditional means such as WiFi and Ethernet.

Ofcom said that broadband speeds are increasing thanks to ADSL2+ rollouts, though it says that the take-up is "very low". The number of punters who can avoid BT's equipment altogether has increased, with 84.5 per cent having access to unbundled telephone exchanges with the average speed now hitting the heady heights of 5.2Mbps.

It's no big surprise that Ofcom reported that a surge in smartphone adoption has led to mobile operators' revenue from data growing to £11.1 billion, while revenue from calls fell to £19.3 billion in 2009. Perhaps what is more surprising is Ofcom reported that as mobile data consumption has skyrocketed, the revenue generated only nudged higher. It will be interesting to see if mobile operators pounce on this as a reason to charge even more for mobile data packages.

In more general terms, Ofcom, citing figures from Cisco's Visual Networking Index, attributed just under 30 per cent of total UK Internet traffic to filesharing with a further 45 per cent shared evenly between Internet video, web surfing and what it terms 'business Internet'. The rest included video on demand and 'business WAN'. Overall access through mobile devices, not including laptops, accounted for just one per cent of all UK Internet traffic.

Apparently software such as BBC's Iplayer and Skype offer the greatest challenges to telecoms operators with Ofcom saying, "Operators face a challenge as they attempt to ensure that they receive a return on investment for the infrastructure upgrades they need to make in order to address the growing demand for bandwidth." Expect any broadband price rises to be met with little opposition from Ofcom, then.

Most of the figures in Ofcom's report are either for 2009 or the first quarter of 2010. It is not known whether the recent limitations on mobile broadband and data tariffs will curb usage or merely serve to increase operators' profits. However the report does give a distinct feeling that the regulator is feeling that telecoms firms and their balance sheets are being put under stress from 'new' network applications.

Ofcom's figures show that thanks to new technologies, Brits are consuming more data, one way or another. All that's left is to wait until telecoms operators use Ofcom's data to further cripple users with price rises and usage caps. µ