Broadband prices plunged by 60 per cent last year as a new "networked generation" turned away from television to tap into internet blogs and social networking sites, regulator Ofcom today said.
The media watchdog’s annual report on Britain's £50 billion communications sector said the number of households with a high-speed Internet connection surged by nearly two thirds to 9 million last year as the younger generation turned their backs on television.
It added that there was a significant fall in the number of 16-24 year olds who watched at least 15 minutes of TV, in one session, a week.
Ofcom said 16-24 year olds, a key demographic for advertisers, watched an average of just 18 hours 20 minutes of TV a week, compared with 25 hours 30 minutes for the average viewer.
In contrast, 70 per cent of 16-24 year olds used a social networking website, such as MySpace, which is owned by News Corporation, the parent company of Times Online. MySpace said yesterday that it had signed up 100 million users worldwide.
More than a third of young people contributed to a blog or website message board. This was the first Ofcom annual report to track the use of networking sites.
The regulator said: "Breaking down reach by age reveals that there were pronounced reductions [in TV viewing] among younger people."
The number of 25-34 year olds who tuned in for at least 15 minutes a week in 2005 fell by 2.5 percentage points from 2004 while the comparable figure for 16-24 year olds was 2.9 percentage points.
Of the television young adults did watch, only 58 per cent came from the terrestrial channels BBC1, BBC2 ITV1, Channel 4 and five, compared with 74 per cent a year earlier.
It was also found that more than a quarter of people read newspapers less because of the web's influence.
Ofcom’s chief operating officer Ed Richards said: "Our research reveals dramatic and accelerating changes across all communications industries.
"The sector is being transformed by greater competition, falling prices and the erosion of traditional revenues and audiences."
Internet user growth pushed total revenues from broadband up 70 per cent to £1.9 billion in 2005 as the average monthly cost of broadband dropped from £41 to £16.
Consumer groups have said further falls in broadband prices can be expected this year following the entrance of "free broadband" deals from groups such as Carphone Warehouse.
The report also confirmed the plight of terrestrial television broadcasters such as ITV1, which has suffered an advertising revenues slump and today learned from a separate report that it has lost the lead in peak-time viewing figures to BBC1.
However, the traditional broadcaster’s digital-only channels performed strongly, with ITV3 leading the pack.
Subscription revenue remained the largest source of funding for commercial television, with 2005 revenues up by 8.5 per cent to £3.9 billion - £343 million more than total net television advertising revenues for the same period.
Overall, television revenues were up 4 per cent year-on-year to more than £10.6 billion.
Mobile phones continued to jostle for market share with traditional landlines. For the first time, the proportion of houses which only have a mobile phone – 10 per cent – was the same as that using only landlines.
Mobile revenues grew by 9.7 per cent year-on-year, to £13.1 billion. Landline revenues fell 7.5 per cent to £10.1 billion.
The average household's spending on telecoms services dipped slightly in 2005, to £76 a month from £80 in 2004.
According to Ofcom, some 31 per cent of consumers consider their mobile to be their main telephone, up from 21 per cent a year ago.
In radio, the gap between the BBC’s audience shares and that of its commercial rivals continued to widen in 2005. In March, the BBC led the commercial sector by a margin of 30 per cent, up from 24 per cent a year earlier.
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