Revenue growth from telecoms services slowed in the UK last year, as declining wholesale sales offset rising demand for faster broadband.

The telecoms industry netted £35.6 billion in 2016, up from £35.4 billion in 2015, according to Ofcom’s annual Communications Market Report.

Growth from fixed, mobile and wholesale services slowed last year, however, having risen by £300 million in 2015.

The strongest performing area was fixed retail, where revenues were up 4.3 percent to £14.2 billion.

Fixed internet revenues were £5.7 billion, up 9.9 percent, while fixed access and call revenues were flat at £8.5 billion.

Households spent an extra 11.8 percent on average on fixed internet access last year as they switched to “superfast” services, which the regulator said are around £4 per month more expensive than a comparable standard package.

The number of fibre broadband connections, including FTTP and FTTC, grew by 21.4 percent in the year to hit 6.7 million, leading to an increase in the average download speed, from 28.9MBps in 2015 to 36.2MBps.

The rise in fixed broadband services helped to offset a 7.6 percent decline in wholesale services to £6 billion.

Ofcom said it did not know why there had been a fall, but as BT noted in its financial report for the last three months of 2016, its wholesale division registered an 8.6 percent year-on-year decline following its acquisition of EE.

Revenues from mobile services were flat at £15.3 billion for the third year in a row.

An increase in sales from access and bundled services offset a fall in out-of-bundle calls and out-of-bundle messaging, Ofcom said.

Average household spend on mobile voice and data fell two percent to £45.60 per month as pricing continued to move away from voice towards data services.

The number of SMS and MMS messages sent fell 5.9 percent to 96 billion, while the number of M2M connections rose 13 percent to 7.6 million.

Overall, the average UK household spent £85.26 per month in real terms in 2016, an increase of 0.9 percent year on year.

The promising performance in fixed broadband services comes as Ofcom attempts to address concerns over competition in the sector.

This has included forcing BT to make its infrastructure arm Openreach a legally separate company, with BT branding also being removed from its logo.

Meanwhile, the UK’s mobile industry is facing a spectrum auction later this year, which smaller players O2 and Three hope will allow them to compete better with Vodafone and BT, which have bigger holdings of spectrum.

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