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.
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.
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.
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. 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.
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 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.
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.
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, 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.
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. This represents a setback for the UK as a leader in e-commerce and content development.
Percentage of exports from the TMT sector going to the EU
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.
 ONS, 2010
 UKTI, UK Creative and Media Sector Profile; and UKTI, UK ICT Market
 OECD Stat
 ELMR; ONS, 2010
 McKinsey analysis
 Converge! Network Digest, ‘Nokia Siemens Networks Envisions 1GB per User per Day by 2020’, 27th September 2012, available at
 The Times of India, ‘Mobile data traffic in India nearly doubles in 2012’, 22nd May 2013, available at
 Wired.co.uk, ‘A meeting of minds in Cambridge: key figures from Silicon Fen’s tech economy’, 17th May 2013
 British Embassy Beijing, ‘Iconic band Travis’ performance shows UK’s culture of creativity’, 29th April 2013, available at
 Broadband stakeholder group, ‘BSG responds to reduced EU spending commitment on broadband’, 12 February, available at