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Bundled Communications Services - UK - March 2018

“Investment in fibre-to-the-premises will dramatically increase broadband speeds for consumers, and lead to increased revenue for operators as they charge more for ultrafast connections. Meanwhile, providers have also been benefitting from increasing uptake of mobile as part of a bundle of services, and effective handling of competition from over-the-top media. By improving and diversifying their own video content, pay-TV can continue to cater to households expecting shows suitable for the whole family.”

– Andrew Moss, Consumer Technology Analyst

This report will look at the following areas:

  • A battle for premium TV content
  • The rise of ultrafast broadband
  • Quad-play bundles on the rise

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Speed upgrades drive revenue growth
              • Figure 1: Forecast value of operator revenue from sale of communications services, 2012-22
            • Landline usage continues to plummet
              • Superfast broadband ownership continues to increase
                • Government legislation brings faster internet to rural homes
                  • OTT streaming services increasing pressure on pay-TV
                    • Figure 2: Use of paid-for services, June 2017
                  • Key players
                    • Comcast prompts a potential bidding war for Sky
                      • BT increases broadband market share
                        • Figure 3: Retail fixed broadband market share, 2011-16
                      • Fibre-to-the-premises (FTTP) picks up speed
                        • Sky and BT to supply channels across services
                          • The consumer
                            • More than 90% of landline owners take at least one other product from their provider
                              • Figure 4: Services bought as a bundle, 2016-17
                            • A quarter of bundles now contain mobile
                              • Two thirds of bundles purchased from Sky, Virgin, or BT
                                • Figure 5: Bundle service provider, November 2017
                              • Over half of bundles include a TV service
                                • Over half of customers are loyal to their provider
                                  • Figure 6: Consumer activity related to their home bundle service, November 2017
                                • Set-top boxes commonly used to access streaming services
                                  • Internet in every room of the house a strong selling point
                                    • Figure 7: Consumer attitudes to home bundle services, November 2017
                                  • Consumer knowledge of Ultra HD/4K is still low
                                    • Some resistance to adding mobile to a bundle
                                      • Variety of content the most important factor for TV
                                        • For mobile, consumers want a familiar network
                                          • Figure 8: Important factors when taking a TV package as part of a bundle, November 2017
                                          • Figure 9: Important factors when taking a mobile package as part of a bundle, November 2017
                                        • What we think
                                        • Issues and Insights

                                          • A battle for premium TV content
                                            • The facts
                                              • The implications
                                                • The rise of ultrafast broadband
                                                  • The facts
                                                    • The implications
                                                      • Quad-play bundles on the rise
                                                        • The facts
                                                          • The implications
                                                          • The Market – What You Need to Know

                                                            • Speed upgrades drive revenue growth
                                                              • Broadband and TV segments grow whilst fixed-line remains stable
                                                                • Landline usage continues to plummet
                                                                  • Superfast broadband ownership continues to increase
                                                                    • Government legislation brings faster internet to rural homes
                                                                      • OTT streaming services increasing pressure on pay-TV
                                                                      • Market Size and Forecast

                                                                        • Speed upgrades drive revenue growth
                                                                            • Figure 10: Forecast value of operator revenue from sale of communications services, 2012-22
                                                                            • Figure 11: Operator revenue from sale of communications services, 2012-22
                                                                          • Segment forecasts
                                                                            • Figure 12: Forecast value of operator revenue from sale of internet services, 2012-22
                                                                            • Figure 13: Forecast value of operator revenue from sale of pay-tv services, 2012-22
                                                                            • Figure 14: Forecast value of operator revenue from sale of fixed voice services, 2012-22
                                                                          • Forecast methodology
                                                                          • Market Drivers

                                                                            • Landline usage continues to plummet
                                                                              • Figure 15: Fixed landline usage by number of minutes, and average monthly revenue per voice connection, 2011-16
                                                                            • Superfast broadband ownership continues to increase
                                                                              • Figure 16: Superfast (≥ 30Mbps) broadband connections in the UK
                                                                            • Government legislation brings faster internet to rural homes
                                                                              • OTT streaming services increasing pressure on pay-TV
                                                                                • Figure 17: Use of paid-for services, June 2017
                                                                                • Figure 18: Ownership of set-top boxes and streaming devices, October 2017
                                                                              • Comcast prompt a potential bidding war for Sky
                                                                              • Key Players – What You Need to Know

                                                                                • Comcast prompts a potential bidding war for Sky
                                                                                  • BT increases broadband market share
                                                                                    • Fibre-to-the-premises (FTTP) picks up speed
                                                                                      • Sky and BT to supply channels across services
                                                                                      • Market Share

                                                                                        • BT increases broadband market share
                                                                                          • Figure 19: Retail fixed broadband market share, 2011-16
                                                                                        • Sky remains dominant in the pay-TV market
                                                                                          • Figure 20: UK household TV platforms, 2017.
                                                                                      • Launch Activity and Innovation

                                                                                        • Fibre-to-the-premises (FTTP) picks up speed
                                                                                          • BT to offer guaranteed 100Mb broadband
                                                                                            • Automatic compensation for poor service
                                                                                              • Sky and BT to supply channels across services
                                                                                                • Premier League rights for 2019-22 seasons raise less than expected
                                                                                                • Brand Research

                                                                                                    • Brand map
                                                                                                      • Figure 21: Attitudes towards and usage of selected brands, December 2017
                                                                                                    • Key brand metrics
                                                                                                      • Figure 22: Key metrics for selected brands, December 2017
                                                                                                    • Brand attitudes: BT a well-known and trusted brand, but lacks the innovation of Virgin Media and Sky
                                                                                                      • Figure 23: Attitudes, by brand, December 2017
                                                                                                    • Brand personality: Sky maintains a fun and exclusive image
                                                                                                      • Figure 24: Brand personality – macro image, December 2017
                                                                                                    • Sky and Virgin lead the way with desirable qualities
                                                                                                      • Figure 25: Brand personality – micro image, December 2017
                                                                                                    • Brand analysis
                                                                                                      • Sky’s image of exclusivity and innovation attracts an affluent market
                                                                                                        • Figure 26: User profile of Sky, December 2017
                                                                                                      • Virgin Media’s cool brand image continues to appeal to a younger market
                                                                                                        • Figure 27: User profile of Virgin Media, December 2017
                                                                                                      • BT viewed as a low-risk option with strong efficiency and reliability
                                                                                                        • Figure 28: User profile of BT, December 2017
                                                                                                      • TalkTalk seen as unexciting, but a cheap option
                                                                                                        • Figure 29: User profile of TalkTalk, December 2017
                                                                                                    • The Consumer – What You Need to Know

                                                                                                      • More than 90% of landline owners take at least one other product from their provider
                                                                                                        • Two thirds of bundles purchased from Sky, Virgin, or BT
                                                                                                          • Over half of bundles include a TV service
                                                                                                            • Over half of customers are loyal to their provider
                                                                                                              • Set-top boxes commonly used to access streaming services
                                                                                                                • Consumer knowledge of Ultra HD/4K is still low
                                                                                                                  • Variety of content the most important factor for TV
                                                                                                                    • For mobile, consumers want a familiar network
                                                                                                                    • Ownership of Bundled Communications Products

                                                                                                                      • More than 90% of landline owners take at least one other product from their provider
                                                                                                                          • Figure 30: Ownership of a landline phone service in the home, November 2017
                                                                                                                          • Figure 31: Services bought from the same company that supplies landline phone service
                                                                                                                          • Figure 32: Bundles of services without a landline bought from a single provider, November 2017
                                                                                                                        • Landline with only internet the most popular choice
                                                                                                                          • A quarter of bundles now contain mobile
                                                                                                                            • Figure 33: Services bought as a bundle, 2016-17
                                                                                                                        • Bundle Providers and Internet Speeds

                                                                                                                          • Two thirds of bundles purchased from Sky, Virgin, or BT
                                                                                                                            • Figure 34: Bundle service provider, November 2017
                                                                                                                          • Superfast broadband take-up increases
                                                                                                                            • Figure 35: Consumers’ internet speed, 2016-17
                                                                                                                          • Virgin Media leads the way with internet speeds
                                                                                                                            • Figure 36: Proportion of consumers who report being on a superfast broadband connection, by bundle provider, November 2017
                                                                                                                        • Pay-TV Services

                                                                                                                          • Over half of bundles include a TV service
                                                                                                                            • Figure 37: Proportion of consumers with/without TV in their bundle service
                                                                                                                          • Key Driver Analysis – Inclusion of pay-TV in bundles
                                                                                                                            • Methodology
                                                                                                                              • Families look to pay-TV to meet their varying needs
                                                                                                                                • Sky and Virgin Media dominate the pay-TV market
                                                                                                                                  • Figure 38: Key drivers of having TV in a bundle of services, November 2017
                                                                                                                              • Bundled Service-related Activities

                                                                                                                                • The bulk of consumers are satisfied with internet reliability
                                                                                                                                  • Figure 39: Consumer activity related to their home bundle service, November 2017
                                                                                                                                • Over half of customers are loyal to their provider
                                                                                                                                  • Figure 40: Proportion of bundle owners researching a new bundle service, by age, November 2017
                                                                                                                                • Upgrades more common than removing services
                                                                                                                                  • Set-top boxes commonly used to access streaming services
                                                                                                                                  • Attitudes to Bundled Services

                                                                                                                                    • Internet in every room of the house a strong selling point
                                                                                                                                      • Figure 41: Consumer attitudes to home bundle services, November 2017
                                                                                                                                    • Consumer knowledge of Ultra HD/4K is still low
                                                                                                                                      • Streaming services a draw for younger consumers
                                                                                                                                        • Figure 42: Consumer attitudes to pay-tv and streaming services, by age, November 2017
                                                                                                                                      • Some resistance to adding mobile to a bundle
                                                                                                                                      • Uptake of Pay-TV and Mobile in Bundle

                                                                                                                                        • Variety of content the most important factor for TV
                                                                                                                                          • 4K content isn’t on consumers’ radar
                                                                                                                                            • Figure 43: Important factors when taking a TV package as part of a bundle, November 2017
                                                                                                                                          • For mobile, consumers want a familiar network
                                                                                                                                            • A third want perks from bundling mobile with household services
                                                                                                                                              • Figure 44: Important factors when taking a mobile package as part of a bundle, November 2017
                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                              • Abbreviations
                                                                                                                                                • Consumer research methodology
                                                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                                                  • Forecasts
                                                                                                                                                    • Figure 45: Forecast value of operator revenue from sale of communications services, 2017-22
                                                                                                                                                    • Figure 46: Forecast value of operator revenue from sale of internet services, 2017-22
                                                                                                                                                    • Figure 47: Forecast value of operator revenue from sale of pay-tv services, 2017-22
                                                                                                                                                    • Figure 48: Forecast value of operator revenue from sale of fixed voice services, 2017-22
                                                                                                                                                  • Forecast methodology
                                                                                                                                                  • Appendix – Key Driver Analysis

                                                                                                                                                      • Interpretation of results
                                                                                                                                                        • Figure 49: Key drivers of having TV in a bundle of services – key driver output, November 2017

                                                                                                                                                    Bundled Communications Services - UK - March 2018

                                                                                                                                                    US $2,693.85 (Excl.Tax)