Technology, media and telecoms: playing to the UK's strengths

Technology, media and telecoms: playing to the UK's strengths

Sector Overview

  • Gross Value Added: £126 billion[107]
  • Jobs: 2,336,000[108]
  • Exports: £65 billion
  • Exports to EU: 44%

The technology, media and telecoms sector combines both the manufacturing of goods (especially in the technology subsector) as well as the provision of services (in media and telecoms). The UK today has the EU’s largest creative and computing sectors and the second-largest telecoms sector after Germany.[109]

Over the past decade, the sector has seen strong FDI flows into the UK. In telecoms, three of the UK’s four major mobile operators and the second-largest fixed-line operator are now foreign owned. In 2010, FDI in the UK telecoms sector accounted for 5% of total UK inward FDI.[110]

The UK historic strength in manufacturing and recent strength in services have attracted a variety of global technological players creating a high-tech subsector that employs almost 1.3 million people in the UK and generates £65 billion of value added.[111]

Global Trends

New business models are transforming the sector at a staggering pace. Technologies like cloud computing are enabling providers and customers to adopt new approaches. These changes in turn are driving a new wave of innovation and investment.

A value creation shift towards services is underway. Global revenues in hi-tech services and applications are expected to grow by 18% and 22% annually respectively, whereas manufacturing revenues are expected to decline by 3% per annum throughout the next decade.[112] For the UK, with its historic strength in services, this transformation offers potentially huge opportunities.

Internet usage and new services will increase 13-fold over the next five years: data is forecast to reach 50% of mobile revenues by 2020 as customer usage increases to 1 gigabyte per day in 2020.[113]

The growth in developed markets is expected to be more than matched by growth in emerging markets. Mobile data traffic in India rose by over 90% in 2012 alone[114] and demand in Africa is growing  rapidly.

Cluster formation continues around industry anchors. The Silicon Fen cluster near Cambridge has to date given birth to 12 companies with market capitalisations of more than bn. Today it contains more than 1,500 technology companies, employing more than 53,000 people.[115]

Regulatory policies such as fibre-access, service and content export, roaming pricing and spectrum policy are forecasted to impact the telecom industry in the near future. The current regulatory focus is considered by many operators to have prioritised short-term retail consumer concerns (e.g. roaming pricing, contractual requirements, network neutrality) over the need to create an environment conducive to multi-billion Euro fast Internet networks deployment.

Case Studies: the UK has a diverse range of media and technology companies exporting globally

BT: One of the world’s leading communications service companies, serving the needs of customers in more than 170 countries in both the EU and the rest of the world. The company serves around 7,000 large corporate and public sector customers worldwide, including 94% of the FTSE 100 companies, 74% of the Fortune 500 companies and national and local government organisations and other public sector bodies in 26 countries.

Premier League: The Barclays Premier League is the biggest continuous annual global sporting event in the world. Last season more than 13.6m fans attended matches with average stadium occupancy in excess of 95%.  Across nine months of the year 380 matches are viewed in 212 territories worldwide. Coverage of the matches is available in 804m households around the world.

PRS for Music: PRS represents over 100,000 writers, composers and publishers whose musical work is licensed for use all over the world. While the US and Europe remain the most important overseas markets (accounting for 76% of international income), growth in income from Brazil, for instance, doubled between 2008 and 2012.

Amino Technologies plc: A world-leading IPTV/OTT innovator, bringing new entertainment products and solutions to a global market. With more than five million devices sold to 850 customers in 85 countries, the company’s key markets include North America, Latin America and Western Europe. Recently, Amino has announced a significant contract with a major operator in South Eastern Europe, where EU funding to improve broadband networks has created a new market for digital media

Red Kite Animation: A multi-award winning children's animated production company, Red Kite produces content for channels in countries including France, the US, Germany, Canada and Australia.

Sophos: A leading developer of computer security, anti-virus, mobile security and network security headquartered in the UK with subsidiaries in countries including Canada, France, Germany, Italy, Japan, Singapore and the US.  The company currently has more than 1,700 employees working in dozens of countries around the world

Redwood Technologies: Suppliers of cloud communications solutions for a range of sectors based in over 50 countries, including financial services and media.

Vodafone: The creation of a single European market and a single set of standards was fundamental to Vodafone’s success. The opening up of national telecoms markets to new competitors enabled Vodafone to expand across the EU. Vodafone now has operations in nearly 30 countries including 13 EU markets and is transforming itself into a unified communications company offering fixed line services as well as mobile, broadband and cable TV in selected markets. Vodafone recently announced a £6 billion investment programme to establish further network and service leadership across all of its markets, including accelerating its 4G network build to cover 90% of its five main European markets (Germany, UK, Italy, Spain, Netherlands) by 2017.

Advantages of EU membership: the EU has helped liberalise markets while protecting rights

The creation of a single market in many areas of the sector has been a vital enabler of the UK’s export success. The EU’s 500 million consumers purchase 44% of the UK’s exports.

The EU has played a valuable role in supporting global efforts to improve copyright enforcement as part of trade negotiations around the world as well as harmonising regulations across the EU. For the UK’s highly successful music industry, where annual exports exceed £17 billion and account for 12% of the global market,[116] action against IP theft is vital to the industries ongoing success.

Industry has benefitted from EU investment in R&D and infrastructure. In sectors with high R&D intensity such as TMT, the creation of pan-European standards and co-ordinated R&D has been a significant driver of the UK’s competitiveness in many parts of the sector.

Challenges of EU membership: funding priorities are not always right

Cuts to EU broadband expenditure damaged UK interests. While the agreement to reduce the EU’s overall budget that was struck earlier this year in many ways represented a positive development, the impact on the TMT sector was less positive. The budget for the Connecting Europe Facility was cut from €9.2 billion to €1 billion.[117] This represents a setback for the UK as a leader in e-commerce and content development.

44 %

Percentage of exports from the TMT sector going to the EU

Forward Agenda: The TMT sector needs a sensible completion of the Single Market

While the sector contains divergent opinions on the shape of reform, there is broad agreement that increasing the level of cross-border e-commerce systems by increasing harmonisation in areas such as payments, merchandising requirements and legal systems would offer significant benefits for UK companies.

The TMT sector would benefit substantially from further high-quality FTAs providing access to third country markets around the world.

EU research funding offers the potential for UK companies to participate in pan-European clusters both in the UK and abroad and ensure that the UK’s policy priorities shape the research environment.


References

[107] ONS, 2010

[108] ELMR

[109] UKTI, UK Creative and Media Sector Profile; and UKTI, UK ICT Market

[110] OECD Stat

[111] ELMR; ONS, 2010

[112] McKinsey analysis

[113] Converge! Network Digest, ‘Nokia Siemens Networks Envisions 1GB per User per Day by 2020’, 27th September 2012, available at 

[114] The Times of India, ‘Mobile data traffic in India nearly doubles in 2012’, 22nd May 2013, available at

[115] Wired.co.uk, ‘A meeting of minds in Cambridge: key figures from Silicon Fen’s tech economy’, 17th May 2013 

[116] British Embassy Beijing, ‘Iconic band Travis’ performance shows UK’s culture of creativity’, 29th April 2013, available at

[117] Broadband stakeholder group, ‘BSG responds to reduced EU spending commitment on broadband’, 12 February, available at