In 2004/2005 and 2005/2006, the market's growth was slowed by radical changes to pricing structures and the development of a price war. Any growth in the market's value came from sectors such as cellular or mobile services, and Internet and broadband services. Cellular or mobile services is now the largest sector of the market in terms of revenue, while revenue from fixed-line telephony has declined since 2001/2002.
There is growing competition and convergence between fixed-line and cellular networks. This is beginning to lead to the consolidation of services, with access to both the fixed-line and mobile infrastructure being offered by some suppliers. Although this has opened up new market opportunities for telecommunications providers, it has also created new competitive threats.
Third-generation (3G) mobile services entered the mainstream market in 2006, with the number of UK connections increasing by 70%. In 2007, according to the Office of Communications (Ofcom), the total number of 3G customers on the O2, Orange, T-Mobile and Vodafone networks combined exceeded the number of subscriptions to the 3G-only operator 3.
We forecast a continued decline in fixed-line revenues between 2006/2007 and 2010/2011, while growth in mobile revenues is expected to slow as a result of price reductions. Cellular or mobile services are forecast to continue to account for the largest share of revenue.
