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The UPC Report on Ireland’s Digital Future
Driving Economic Recovery
Researched & produced by
www.upc.ie
3
Designed by
UPC Report on Ireland’s Digital Future Contents Foreword Dana Strong, Chief Executive, UPC Ireland 2 Executive Summary 4 Introduction 6 Chapter 1: Life Online 9 Chapter 2: The Digital Consumer 24 Chapter 3: The Digital Business 33 Conclusion: Towards a Digital Future 45 © 2012 UPC Ireland and Amárach Research, the content of this report may be used and republished freely once The UPC Report on Ireland’s Digital Future is credited.
Foreword
Driving Economic Recovery
The shared goal of transforming Ireland into The report puts current online consumer spending at €3.7 billion and
a knowledge based society and a competitive forecasts it to rise to €5.7 billion, an increase of more than 40% by
economy is critically dependent on our 2016. It also predicts a doubling of Ireland’s ‘Internet economy’ by 2016
capacity not only to deliver a world class digital bringing its total value to €11.3 billion. A challenge for Irish businesses
infrastructure but also on our ability to maximise will be to ensure that these increases are met by Irish based productivity
engagement with that infrastructure. and innovation with a corresponding benefit for jobs and the economy.
For the past 3 years, UPC has been a key change agent in Ireland The evidence is clear. Ireland is well capable of grasping the
leading a surge in broadband adoption and raising awareness of the opportunity presented by new media, digital developments, broadband
benefits of going digital for households and businesses. and the Internet and this will contribute to restoring the health of
our economy. In turn, all stakeholders must play their part in the
This independently conducted research, commissioned by UPC, is
development of our digital economy to create jobs growth, economic
part of our continued contribution to transforming Ireland into a
growth, and enhanced competitiveness.
global digital leader. The report presents findings of surveys across a
sample of the Irish consumer and business population. It provides a I would like to thank Amárach for their research expertise and
comprehensive snapshot of Ireland’s current position and seeks to look everyone who has participated in this groundbreaking report for
ahead to the future where digital uptake can drive economic recovery Ireland. UPC is proud to be playing its part in delivering the digital
and create new jobs which will underpin national competitiveness. future and we will continue to work with Government, business and
society in general to ensure that we all collectively realise this potential
The Internet is clearly having a profound impact on the way we live
for Ireland to succeed to the maximum extent possible.
and work. The Amárach research shows that Irish society is ready and
confident for the digital future. Ireland performs well in many criteria Why not help us track Ireland’s progress? We would like to invite all
in comparison with OECD and EU indicators. Consumer investment in individuals and businesses to participate in the UPC Digital Index at
digital products and services is strong and is equally matched by the www.upc.ie/digitalindex
skills to use them.
Crucially, Irish businesses are already making strong progress towards
the digital future and they are very aware of the opportunities it
presents for efficiencies and growth. Most telling is the firm belief on
the part of the majority of companies that getting their online strategy Dana Strong
right will translate into real and significant revenue growth. Chief Executive Officer, UPC Ireland
2 UPC Report on Ireland’s Digital Future
€11.3Bn
Projected Value of the Irish
Internet Economy (Ireland 2016)
€5.7Bn
Projected Online Consumer
Spending (Ireland 2016)
€3.7Bn
Online Consumer Spending
(Ireland 2012)
UPC Report on Ireland’s Digital Future 3
Executive Summary
Seize the Future The Surveys
Ireland is in the middle of a revolution – a digital revolution. For all UPC commissioned Amárach Research to carry out two, parallel
the economic difficulties and challenges we have faced in recent surveys in August 2012: the first was an online survey comprising
years, the story of digital technology in Ireland is a story of success. 1,000 adults aged 16 and over, representative of Ireland’s population;
Comparisons with other countries show that Ireland is on par or and the second comprised a telephone and web survey of 201
even ahead of OECD and EU nations when it comes to several key IT decision-makers in Irish SMEs and larger corporations, with quotas
measures of digital adoption. to ensure a cross-section of companies by size. The surveys were
carried out on an entire market wide basis and included customers
Ireland’s future progress towards the digital future will help us solve
of all telecommunications providers.
some of the economic problems we now face. Improving access to
higher broadband speeds in households and businesses opens up new Life Online
opportunities for citizens, consumers, employers and employees. By Already, 8 in 10 adults use the Internet in Ireland, up from fewer than
seizing the digital future, Ireland can secure a higher standard of living 5 in 10 in 2007. Indeed, broadband take-up in Ireland matches the EU
through faster economic growth, as well as tackling the scourges of average at two thirds of homes.
unemployment and emigration through the creation of new jobs, new
The Internet is now a vital part of our everyday lives, and shapes how
services and new businesses.
we work, relax, learn and shop. Internet users spend 156 minutes
The Size of the Prize (2.6 hours) online on a typical weekday, rising higher at the weekend. On
If Ireland simply follows the trend in other countries at a similarly average there are two or more people using broadband in every home,
advanced stage of digitisation, then the Internet’s contribution to our with two or more devices connected at the same time – as smartphones
economy will grow from about 3% of GDP at present to 6% by 2016. become more common, more people and devices will be connected.
That’s an increase in the value of Ireland’s digital economy from under
Shopping and social networks are the most popular online activities,
€5 billion this year to over €11 billion in 2016, creating new jobs and
while a third of adults already use the Internet at home for work
new businesses along the way.
purposes. 6 in 10 workers are expected to work from home some or
As for jobs potential, raising the level of digitisation in Ireland to that of all of the time by 2016.
our nearest neighbour, the UK, would reduce the numbers unemployed
The Irish are digital optimists, and look forward to a host of new
in Ireland by nearly 18,000; with even bigger reductions possible if the
services that will enable them to study, shop, work and share from
level rose to that of the leading Scandinavian countries.
the comfort of their home in future. Indeed, half of all adults would be
interested in running their own business from home at some stage,
facilitated by digital technologies.
4 UPC Report on Ireland’s Digital Future
The Digital Consumer The Digital Business
The impact of digital technology on the Irish economy is significant. Ireland’s digital revolution is not just good for consumers, it’s
Already there are 2.6 million online shoppers in Ireland, who will spend good for business. It appears that Irish businesses have ‘moved
€3.7bn in 2012 across a range of product and service categories. Irish on’ from the recession, with 8 in 10 now optimistic about their
consumers will spend €5.7bn online by 2016, or 7% of all consumer growth prospects for the next 2 years. Two thirds expect to expand
spending in the economy. in Ireland in the coming years, and nearly half plan on expanding
abroad. Furthermore, a majority of businesses intend hiring
Some 8 in 10 Internet users use the web to research products they are new staff in the next 2 years, with a strong emphasis on IT and
interested in buying, but then buy them locally in Irish shops. It goes digital skills.
the other way too: 6 in 10 Irish Internet users use their local shops to
Digital technology has delivered productivity increases and cost
research products they are interested in, but then buy them online,
savings to a majority of businesses. One key area for future
often at significant cost savings.
improvement is the application of digital technology to employee
There are significant opportunities for Irish businesses – including engagement and management. Already, 6 in 10 companies enable
retailers – to respond to these trends. Over 6 in 10 online shoppers their staff to work from home to varying degrees during contracted
would buy from an Irish website if they knew about one that matched hours – a practice that is expected to grow.
equivalent offers from international sites.
The UPC Digital Business Index – also created for this study –
The UPC Digital Consumer Index – specially created for this study – tells us that 3 in 10 Irish businesses are ‘Digital Leaders’, while 1 in 7
tells us that some 30% of Irish adults are ‘Digital Leaders’, while 8% are ‘Digital Laggards’; with the balance falling into the category of
are ‘Digital Laggards’: the balance are what we call ‘Digital Followers’. ‘Digital Followers’.
We have much to gain from the digital future in terms of higher
standards of living, a better quality of life, improved consumer welfare,
greater business productivity and lower unemployment. This report
shows the road ahead to the digital future: together we must take the
next steps.
UPC Report on Ireland’s Digital Future 5
Introduction
What is the one service in your home that you couldn’t live without? From a European standpoint, the EU has identified a number of Digital
The number 1 choice, for over a third of Irish adults in 2012, is Agenda targets (EU Targets) aimed to “help reboot the EU economy and
broadband. Number 2 is electricity (for over a fifth of adults), enable citizens and businesses get the most out of digital technologies”.1
with television in the number 3 position. These findings are a More locally, the Irish Government recently published its National
remarkable indication of how embedded the Internet has become Broadband Plan which aims to better the EU’s broadband speed targets
in our daily lives (leaving aside the matter of how broadband could during the lifetime of the current government.2
work without electricity!).
But even more remarkable is just how quickly the ‘digital revolution’ EU Digital Agenda targets
has happened in Ireland, and how much more we have to look forward By 2013
to in the years ahead. This report is designed to help Irish citizens and Basic broadband for all
businesses prepare for the digital future. We think you will be surprised
and inspired by the findings from our research and by the changes By 2015
we can expect in how we live, work and play. The good news is that, 50% of population to buy online
despite the tough economic challenges we face, Ireland is well placed 33% of SMEs to make online sales
to be a winner on the road to the digital future. 60–75% of the population to use the Internet regularly
Our Surveys
UPC commissioned Amárach Research to carry out two, parallel By 2020
surveys in August 2012: the first was an online survey comprising 30Mbps for all citizens
1,000 adults aged 16 and over, representative of Ireland’s population; 50% of population to subscribe to 100Mbps
and the second comprised a telephone and web survey of 201 IT
decision-makers in Irish SMEs and larger corporations, with quotas Ireland’s National Broadband Plan targets
to ensure a cross-section of companies by size. 70Mbps for 50% of population
The key findings from both surveys are explored in the rest of this report. 40Mbps for 70-85% of population
30Mbps for 100% population
Digital Targets for a Digital Future
The importance and benefits of being digitally connected and engaged
along with having access to high speed broadband services are 1 EU Digital Agenda scoreboard for Ireland: https://ec.europa.eu/digital-agenda/en/
globally recognised. Given this, there is growing interest in measuring scoreboard/ireland
2 ‘Delivering a Connected Society: A National Broadband Plan for Ireland’, Department
the performance of countries in terms of digital trends and their
of Communications, Energy and National Resources, http://www.dcenr.gov.ie/NR/
economic and social impact. rdonlyres/1EA7B477-741B-4B74-A08E-6350135C32D2/0/NBP.pdf
6 UPC Report on Ireland’s Digital Future
The good news is that Ireland rates very favourably not just among its The comparative picture for Irish businesses is, if anything, even more
EU counterparts but also at a global level. Irish consumers are broadly positive.
equal to their OECD and EU counterparts when it comes to measures
The percentage of businesses (employing 10 or more) with broadband
such as the percentage of households with broadband – in fact Ireland
in Ireland is slightly over the OECD average (90% vs 88%), as is the
has already met the first of the EU’s Targets, universal broadband. 3, 4
proportion of employees using the Internet at work. The biggest
Ireland also compares very well in relation to other indicators such as (positive) gap in terms of these businesses relates to selling online,
the percentage of Irish consumers who shop online (slightly above the where Irish businesses are nearly 30% more likely to sell online than
OECD average and significantly in excess of future EU Targets). the OECD average.
With respect to the availability of high speed broadband services the most International targets and comparisons are an important indicator
recent Akamai State of the Internet report shows that Ireland ranks 15th in of Ireland’s progress. There have been several efforts to gauge the
the world – and 9th in Europe – in terms of average measured broadband progress of nations towards the digital future:
speed 5. The Akamai report shows that Irish households are surfing faster
»» IBM and the Economist Intelligence Unit have published a report
than advanced markets such as the UK and Germany. Indeed, in the two
on Digital Economy Rankings 20108 which places Ireland 17th in
year period from Q2 2010 to Q2 2012, the share of residential broadband
the world, based on a composite score across six indices, including
subscribers with contracted download speeds greater than or equal to
broadband speeds as well as consumer and business digital
10Mbps tripled: from 7.3% to 22.9%6. As a result, not only has the first
adoption.
of the EU Targets been met but with 35% of Irish households already
today able to receive 150Mbps7, Ireland is well on its way to meeting its »» The World Economic Forum’s Global Information Technology Report
ambitious targets as set out in the National Broadband Plan. 20129 ranks Ireland 25th in the world in terms of a Networked
Readiness Index (derived from economic, social, political as well as
technological measures).
3 Available from the Organisation for Economic Co-operation and Development (OECD):
http://www.oecd.org/sti/Interneteconomy/ieoutlook.htm
Both reports help us track our digital progress and the strength of our
4 National and Rural Broadband Plans: digital economy.
http://www.dcenr.gov.ie/Communications/Communications+Development/
National+Broadband+Scheme/National+Broadband+Scheme.htm and It is important to stress, however, that Ireland still has some way to go in
http://www.dcenr.gov.ie/Communications/Communications+Development/ terms of securing the maximum benefits for its citizens and businesses
Rural+Broadband+Scheme/
from digital technology. One indication of the ‘digital gap’ is measured
5 Akamai State of the Internet: http://www.akamai.com/stateoftheInternet/
6 ComReg’s latest commentary: http://www.comreg.ie/publications/quarterly_report_
q2_2012.583.104195.p.html 8 IBM/EIU: http://www-935.ibm.com/services/us/gbs/bus/html/ibv-digitaleconomy2010.html
7 UPC Press Release http://www.upc.ie/pdf/UPCbreaksIrishInternetSpeedBarrier.pdf 9 WEF: http://www.weforum.org/reports/global-information-technology-report-2012
UPC Report on Ireland’s Digital Future 7
by Booz & Company’s Digitisation Score10. Their measure is a composite index, derived from national data for the ubiquity of digital services and products, affordability, usage and broadband speeds, etc. Although Ireland scores well in terms of its Digitisation Score – putting it in the advanced group of countries among the 150 surveyed – we clearly have room for improvement. Booz estimates a score of 47 for Ireland while the highest scoring nation is Norway at 6411. The crux of the Digitisation Score is that it shows a clear relationship between higher scores and higher economic growth – and lower unemployment. The Booz analysis of the links between digitisation and the wider economy shows that among digitally advanced countries like Ireland, every 10 point increase in digitisation scores increases GDP per capita by 0.62%. Furthermore, an increase of 10 points in digitisation reduces a nation’s unemployment rate by 0.84%. To put this in context, simply raising Ireland’s digitisation score from 47 to the equivalent UK score of 54 (a 7 point increase) would reduce the numbers unemployed in Ireland by nearly 18,000 – based on the Live Register in September 201212. 10 Booz & Co: http://www.booz.com/global/home/what_we_think/digitisation/megatrend 11 Booz & Co article on Digitisation and Prosperity: http://www.strategy-business.com/ article/00127 12 Central Statistics Office: http://cso.ie/en/releasesandpublications/labourmarket/ 8 UPC Report on Ireland’s Digital Future
1 | Life Online
» 8 in 10 adults use the Internet in Ireland, up from fewer
than 5 in 10 in 2007
» Broadband takeup in Ireland matches the EU average at
two thirds of homes
» On average there are two or more people using broadband in
every home, with two or more devices connected at the same time
» Broadband users spend 2.6 hours online on a typical weekday
» Shopping and social networks are the most popular online activities
» A third of adults use the Internet at home for work purposes
» Half of all adults would be interested in running their own
business from home at some stage in the future
UPC Report on Ireland’s Digital Future 9Cast your mind back five years to 2007. It was the height of the Celtic Connected Nation
Tiger in Ireland, following a decade of remarkable growth, and we But before we look ahead to the digital future, let’s take a closer a look at
had one of the highest standards of living in Europe. Nowadays we the digital present. The UPC consumer survey shows that Irish people are
are painfully aware of what has been lost since the peak, but we are confident users of digital technology already. Indeed, there is widespread
perhaps less aware of what we have gained. Take digital technology ownership of a range of technologies, as summarised in Fig 2:
- the table below contrasts the % of Irish adults owning and using
each technology then and now (Fig 1). Digital Technology in the Home %
Fig 2: Digital Technologies at Home: % of Irish Adults
%
Fig 1: % of Irish adults owning and using digital technology Laptop 85
since 2007 Digital Camera 75
Landline Telephone 71
% of All Irish Adults* 2007 2012 Flat Screen TV 70
Internet at Home 48 78 Paid for TV Service 67
Broadband at Home 24 65 Ordinary Mobile Phone 64
Shopping Online 15 59 Smartphone/iPhone 61
Banking Online 18 42 WiFi 60
Mobile Phone 90 98 MP3/iPod 57
Smartphone 5Ownership and adoption is not evenly distributed, however, and some European context, the chart below (Fig 3) shows the percentage of
significant differences emerge from our study: households with broadband across the European Union. Average take-
up runs at 67% in the EU, with Ireland just slightly below at 65%.
»» Laptop ownership declines with age, after peaking among 25–34s
Among those with broadband at home, almost half in our survey
»» Landline phone ownership rises with age, peaking among over 55s (49%) say that broadband access is more important than having a
»» Smartphone ownership is highest among 25–34s, and higher for telephone, and 1 in 5 (19%) say broadband is more important than TV
men than women (rising to 31% of under 25s). Though only 1% considered their home
broadband more important than their car!
»» HDTV ownership peaks among 45-54s
One of the key reasons for the appeal of broadband is that it enables
»» Internet enabled games peak among under 24s; tablets/iPads
multiple users in a household to benefit from the technology at the same
among 35-44s
time. Indeed, our research shows that only 1 in 4 broadband users is the
Broadband is a key enabling technology facilitating a diverse number sole user in their household; while among the 76% with multiple users,
of digital devices in the home. To put Ireland’s performance in a there are typically two or more other users as well (Fig 4).
Household Broadband Europe %
Fig
% 3: Broadband take-up: % of Households having a Broadband Connection
100
80
European Union – 27 countries
60
40
United Kingdom
Slovak Republic
Czech Republic
Luxembourg
Netherlands
Lithuania
20
Germany
Denmark
Romania
Portugal
Hungary
Slovenia
Bulgaria
Belgium
Sweden
Norway
Estonia
Austria
Finland
Iceland
Cyprus
Greece
Ireland
Poland
France
Latvia
Spain
Malta
Italy
0
Source: Digital Agenda for Europe: https://ec.europa.eu/digital-agenda/en/scoreboard
UPC Report on Ireland’s Digital Future 11Fig 4: Number of Broadband Users in the household One key gap in evaluating broadband speed sufficiency is that a
significant minority of Irish broadband users simply don’t know their
Five or home broadband speed. Indeed, almost 1 in 4 (23%) home broadband
more
Yes 13%
users is unsure of the speed they are supposed to have at home (rising
24% to a third of under 25s). The picture that emerges from our research
shows future room for improvement: typical broadband speeds are, on
Four Number Two
Only user balance, not considered sufficient for the future.
19% of users 42%
No
76% Digital Time Use
Three
26%
Inevitably, access to and usage of digital technologies have resulted
in profound shifts in how Irish people spend their time. In the UPC
consumer survey we asked broadband users about the amount of
time they spend accessing the Internet a) on a typical weekday, and
Of course, it is not just people who connect to broadband in the b) on a typical weekend day. The answers by demographic groups are
home - it’s devices as well. The average broadband household has summarised in minutes per day in Fig 6 below.
two devices connected at the same time, rising to three devices in
households containing 16-24 year olds, and falling to under two Fig 6: Minutes per day spent online
devices in broadband households among over 55s. Weekend Increase at
Weekday Day Weekend
Speed Check All Adults 156 167 11
But we are only at the beginning of a user and device explosion. The
15-24 179 187 8
average number of users and devices connected to broadband in Irish
25-34 173 189 16
homes will grow sharply in the near future, thanks to smartphones,
35-44 155 166 11
tablets and the emergence of the ‘Internet of things’ (e.g. your fridge
connected over the web to your online shopping list). This raises a 45-54 147 160 12
fundamental question about broadband capacity. 55+ 133 140 7
Higher Income 152 166 14
In our research we asked broadband users whether the speed of their
broadband was a) sufficient for their current needs and b) sufficient Lower Income 159 168 9
for their likely future needs (Fig 5, on facing page). At present some
69% of home users consider their broadband speed to be sufficient.
However, looking to the future, only 44% of home users expect their
existing broadband speed to be sufficient for their likely future needs.
12 UPC Report on Ireland’s Digital FutureFig 5: Sufficiency of Broadband Speeds: Present & Future
Yes No Don’t Know
3%
Only
44%
17%
28% Is your
Sufficient
broadband
for future 44%
speed
likely needs?
sufficient?
69%
39%
of people feel their broadband
speed is sufficent for future needs
UPC Report on Ireland’s Digital Future 1369%
63% Use Soclal Networks
55%
Bank online
44% Read the news
Use On Demand TV
33%
Play games
14 UPC Report on Ireland’s Digital FutureFig 6 indicates that age is an important driver of time spent online, The Broadband Explosion UPC Insight
though at an average of over 2.6 hours per weekday it is clear that
The consumption of data and content has exploded around the world
Internet usage now occupies a lot of people’s leisure and work time. and no less so in Ireland. Data from INEX shows an 800% increase
Accessing the Internet at home is the main way in which people access in total traffic per month in Ireland since 2009. While all forms of
the web. On a typical weekday, consumers say that over three quarters data consumption are going up, the largest driver of this increase is
(79%) of their access takes place at home, only 13% at work and the coming from the continuing massive growth in video viewing across
balance while out and about (e.g. via their mobile phone). Nowadays, the web – from professional output to self-published content. In
meeting these changing demands, UPC is enabling consumers to
Irish people use the Internet for a wide range of activities and services,
access increasing volumes of content at higher speeds and at a
ranging from entertainment to work to simply keeping in touch. Fig 7
constantly reducing cost per megabit ratio. The market has been
shows the proportion of adults who use broadband at home for
responding to affordable broadband and UPC is leading this change.
each activity.
Fig 8: Ireland Year-on-Year Traffic Growth – Petabytes*
Fig 7: Online Activities and Services used at Home
40
% 30
Shopping online 70 20
Social networking 69 10
YouTube 68 0
Sept 09 Sept 10 Sept 11 Sept 12
Search/research 63
Banking 63 65%
News 55 Irish households have a broadband connection
Music 46
70%
On demand TV 44
Reduction in the price per Mbps in UPC’s service since 2010
Skype/video conversation 39
Movies 33 50 Mbps
Sports 33 The entry level speed for UPC broadband customers
Games 33
1.4 Gbps
Instant Messaging 30
The record breaking consumer Irish Internet speed set by UPC
iTunes 25
(September 2012)
Streaming TV 24
Total Users: source Comreg quarterly reports (www.comreg.ie)
Education 23
Peering Traffic Volume: source INEX (www.inex.ie)
Streaming radio 21 Total Traffic: assumption that 20% of total broadband traffic is INEX peering while
Betting 14 remaining 80% is Transit
* 1 Petabyte = 1 million gigabytes
0 10 20 30 40 50 60 70 80
UPC Report on Ireland’s Digital Future 15Of course, there aren’t enough hours in the day to fit in all of the
above activities. Sure enough, many people are now doing different Fig 10: Media Multi-Tasking: EU countries % incidence
activities in tandem with one another. Some 3 in 10 in our consumer %
80
survey are surfing the web while watching TV. And young people are
70
leading this trend (Fig 9).
60
50
Fig 9: Media Multi-Tasking in Ireland: % using laptop/tablet/ 40
30
smartphone all the time/almost always, while watching TV
20
Ireland
10
%
NO
HU
HR
UA
RU
UK
RO
GR
CH
DK
BG
EU
RS
SK
NL
CZ
TR
DE
BE
FR
PT
PL
SE
AT
ES
SI
IT
FI
0
50
40
30
20
54
69
10
30 43 44 31 27 13
58
0
Total 15–24s 25–34s 35–44s 45–54s 55+ 56 66
59
Indeed, the Irish generally are leading the way, as the incidence of 62 58 47 48
58
what some call media multi-tasking in Ireland is already above the EU 59
60 62
average as reported in a recent IAB Europe survey (Fig 10). 71
62 53
31
We can expect media multi-tasking to grow in future as more users 37
41
with more devices - linked to faster broadband - enjoy the benefits of
52 53
a more interactive TV experience, enhanced by the capabilities of real 47 55
time participation, feedback and commentary via Twitter etc.
Source: IAB Europe: http://www.iabeurope.eu/research/mediascope-europe/
media-multi-tasking-means-more-active-consumers-bulletin.aspx
16 UPC Report on Ireland’s Digital FutureGaming Partner %
80
70
60
50
Digital Entertainment »» Nearly 1 in 5 (17%) have used their TV to view Facebook
40
Television, as we have seen, is still the dominant leisure time activity (27% of under 25s)
30
in the home for most Irish people. But television is no longer confined »20
» Nearly 1 in 2 (44%) use On Demand TV (such as RTÉ and TV3 Players)
to the television set. In our survey we found that significant minorities
of adults use their TV - or a device connected to their TV - to access a One
10 activity that has traditionally combined the television set with
71 21 14 21 1
range of web services: another
0 device has been gaming. 1 in 3 (33%) of all those with
Alone
At home with friends
Other players in Ireland
Other players abroad
Other
broadband in the home use the Internet to play online games. Most
»» Nearly 1 in 4 (23%) have used their TV to watch YouTube play alone or with other household members, but over a third play
(35% of under 25s) with players elsewhere in Ireland or even abroad (Fig 11).
Fig 11: Online Gamers: Players and Devices
Gaming Partner % Device Used %
80 25
70
20
60
50
15
40
30 10
20
5
10
71 21 14 21 1
0 0
Alone
At home with friends
Other players in Ireland
Other players abroad
Other
XBox 360
Playstation
PC
Laptop
Nintendo Wii
Nintendo DS
iPhone/smartphone
Other
N/A
Don't know
Device Used %
25
UPC Report on Ireland’s Digital Future 17
20The Digital Viewer – On Demand UPC Insight Working from Home
Of course, people use the Internet at home for work purposes as well -
There is an ongoing proliferation of information devices in Irish
and the incidence is quite remarkable, as illustrated in Fig 12.
homes. Consumer bandwidth and content requirements are growing
constantly and this is being driven primarily by an explosion in video
content, ranging from the use of iPlayers to all other streaming, Fig 12: Incidence of Working from Home
viewing and downloadable content.
These trends are also impacting across wider society as social
networking communities grow specifically around TV and online
content. TV itself is being totally transformed where the advent of Do you use
On Demand TV is changing habits by putting viewers in full control the Internet For what
at home activities?
of their personal TV schedule. They can watch whatever they want, for work?
whenever they want it.
Since launching our free On Demand TV service, UPC has gleaned
some unique insights into this “anytime” phenomenon.
8m Yes 34% Check Emails 89%
The number of views of UPC On Demand content in 5 months No 40% Work on reports/
77% Don’t Know 26% presentations 56%
The percentage of UPC’s On Demand capable customers who have Planning/scheduling 48%
Skype with colleagues/
used the service since launch
clients 21%
45% Research 3%
of the 8 million views of On Demand TV to date are views of Other 6%
domestic Irish TV
A third of adults in our survey are already working from home to
70%
varying degrees, rising to 46% of 35-44 year olds. Although most
The proportion of Irish households with a pay TV subscription
are using it for ‘bandwidth-lite’ activities such as checking email, a
minority are also using it for more collaborative work such as video-
conferencing and report preparations.
18 UPC Report on Ireland’s Digital FutureKnowledge vs Benefits
All of us use many different technologies – and most would struggle
to explain how they work, even though we benefit every day from
their capabilities. In our research we asked consumers to rate a)
their knowledge of digital technology, and b) the benefit from digital
technology on a scale of 1 to 10, where 1 is low and 10 is high. Fig 13
summarises the overall findings, and points to a clear difference
between knowledge and benefits.
Fig 13: Digital Technology: Knowledge & Benefits
Rating of Rating of
knowledge benefits
of digital from digital
technology technology
A recent report by IDC forecasts that mobile workers will
represent 57% of the total Irish working population – or 1.4 Low 11% Low 4%
million workers – by 2016*, driven by the communications tools Medium 42% Medium 30%
and channels now increasingly available. This future dynamic High 47% High 67%
between home and work is a theme we return to in Chapter 3
when we explore how Irish businesses are responding to the
digital opportunity.
* Source: IDC Report for O2 Ireland: http://www.o2online.ie/o2/uploads/pdfs/
terms/business/O2-7801-G-Joined-Up-IDC-Inserts.pdf
UPC Report on Ireland’s Digital Future 19There are a number of demographic differences in relation to the
digital knowledge/benefit gap, as summarised in Fig 14.
Fig 14: The Digital Knowledge/Benefit Gap – Mean Score
out of 10
Digital Digital Digital
Knowledge Benefits K/B Gap
TOTAL 6.2 7.2 1
15-24s 7.2 7.7 0.5
25-34s 6.6 7.3 0.6
35-44s 6.2 7.3 1.1
45-54s 5.6 6.9 1.3
55+s 5.3 6.8 1.4
Higher Income 6.3 7.2 0.9
Lower Income 6.0 7.1 1.1
» Nearly 3 in 4 agree the Internet allows them to make smarter
purchasing decisions (rising to 77% of 35–44s)
The gap is bigger for some than for others, but most people clearly
feel they benefit from digital technologies, indicating a generally » Nearly two thirds agree the Internet opens up new career,
positive, even optimistic outlook on the contribution of digital educational and social opportunities (rising to 69% of under 25s)
technology today and in the future. » Over half agree they wouldn’t be able to buy many of the things
they want without the Internet (rising to 60% of 25–34s), and 4
Digital Optimists in 10 say they wouldn’t be able to afford many of the things they
Given the positive dynamic in consumer adoption of digital technology want without the Internet (also higher for 25–34s)
– despite weak domestic demand – we might assume that Irish people
» Over 4 in 10 (44%) agree their family life is better because of
are optimistic about the digital future. Indeed they are, and not just
the Internet (rising to 50% of 35–44s)
the future. In our survey we asked people about the impact of digital
technologies on their lives today – whether they agree or disagree » Nearly 4 in 10 (38%) agree they wouldn’t be able to do their
about the different impacts of technology. The responses overall are job without the Internet (rising to 45% of 25–34s)
very positive (Fig 15).
20 UPC Report on Ireland’s Digital FutureFig 15: Life Online: Impact of Digital Technology Nowadays Fig 16: The Digital Future: Likelihood and Appeal
Disagree Agree Likelihood of future outcome Appeal of future outcome
Unlikely Likely Unwelcome Welcome
The Internet allows me to make 7
smarter purchasing decisions 13
73 People will get more of their shopping 58
delivered to their home after ordering
The internet opens up new career it online, including groceries 15
8 49
opportunities, educational
opportunities, social opportunities 64
People won’t need to go to the 21
22 cinema or rent DVDs. They will pay to 51
I wouldn’t be able to buy many of the
watch movies using online services 27
things I want without the Internet 52 available via broadband 35
My family life is better because 23
19
of the Internet 44 Faster Internet services will have 48
improved my life 10
26 60
I wouldn’t be able to afford many of
the things I want without the Internet 41
People will be able to work abroad 24
and not have to leave Ireland because 45
28 technology will enable them to stay
I wouldn’t be able to do my job 19
without the Internet 38 at home while doing their job 49
My internet speed at home isn't fast 46 31
People won’t need to physically go to 40
enough for all my family requirements 28 universities/colleges because they will
be able to do all course work online 33
% 0 10 20 30 40 50 60 70 80 34
29
People won’t need to go to work in 39
Irish people look forward with considerable optimism to the future offices because they will be able to 28
effects of digital technologies. work from home most of the time 41
In our survey we asked people to consider a range of possible future % 0 10 20 30 40 50 60
trends driven by technology. They were asked to say a) to what extent
they thought each trend is likely or unlikely to happen; and b) whether
or not they would welcome each trend in the future. The results are
summarised in the chart on the right (Fig 16).
UPC Report on Ireland’s Digital Future 21»» Home Shopping: the majority (58%) of consumers think it likely
In terms of expected and welcome futures, over half of Irish
that people will use the Internet to do more shopping, with
adults (53%) think it likely that ‘the adoption of better digital
deliveries to their home, while almost half (49%) would welcome
technologies will speed Ireland’s economic recovery’. An even
such a scenario.
bigger majority (63%) would welcome the digital-led recovery.
»» Home Movies: just over half of all adults (51%) expect that movies
via broadband will replace going to the cinema, though fewer
When asked, more people were interested in availing of lifestyle,
welcome this development (35%).
learning and employment changes if technology made it possible
»» Faster Services: just under half of all adults (48%) expect faster (Fig 17).
Internet services to improve their lives in future, and even more
The most popular change is that of working from home for 1 to 2 days
(60%) would welcome such improvement.
per week. Over 6 in 10 (62%) of all adults are interested in such an
»» Migration: under half (45%) of people in Ireland think it likely that arrangement, rising to 67% of 25–34s. This is followed by the prospect
we will be able to become ‘virtual emigrants’, using technology of running your own business from home: attractive to half the
to work abroad but stay at home, while nearly half (49%) would population (51%). Moving to the countryside while still working from
welcome this. home also has broad appeal for 43% of all adults (and even more so
»» College: some 4 in 10 (40%) think it likely that future students will among 25–34s).
do all their course work online.
»» Working: 4 in 10 (39%) think that office work will become a thing
of the past, with the same proportion welcoming such a trend.
One interesting demographic difference that emerges in our study
is that over 55s are typically more positive and welcoming about the
potential changes that the digital future might bring – suggesting that
the ‘generation gap’ in relation to technology will soon be gone.
22 UPC Report on Ireland’s Digital FutureFig 17: The Digital Home: Interest in Future Services
One area that will see considerable change being driven by digital
Not interested Interested technology is that of health care and medical services. Half the
population (51%) is open to diagnoses and treatments by foreign
15
Working from home 1 or 2 days a week experts, delivered via digital technology, rising to 57% of over
62
55s (inevitably a key target market).
20
Running your business from home
51 Exploiting the full capacity of the web to create fulfilling lives and
Receiving full medical
23 satisfying work is not all a one way street. Our assessment of future
diagnoses/treatment by world class
health/medical experts in different 51 scenarios included the idea of ‘digital mentoring’ – enabling people to
hospitals and centres around the world use their skills and experience to coach and advise young people and
Getting further qualifications from an 25 even businesses in Ireland and in other parts of the world. There is
Irish university 50 very considerable interest in this idea: with 45% of adults expressing
Using your skills/experience to an interest. This type of initiative is indicative of the transformative
24
coach/advise young people in other parts potential of the web, and another sign of how Ireland’s economic
of the world or even business/ organisa- 45
tions like ones you have worked in
recovery might come about.
Learning a foreign language by receiving 26
lessons via Skype from a native speaker 45
Getting further qualifications from a 30
European University 44
Moving to the countryside while still 29
being able to work from home 43
% 0 10 20 30 40 50 60 70 80
UPC Report on Ireland’s Digital Future 232 | The Digital Consumer
The previous chapter examined
technology usage and time spent online
by Irish consumers. In this chapter we
focus on money.
» 2.6 million Irish online shoppers will spend
€3.7bn in 2012
» Travel related spending and clothing and
footwear are the biggest purchases
» 8 in 10 Internet users use the web to
research products but buy in local shops
» 6 in 10 Internet users use local shops to
research products but buy online
» Over 6 in 10 online shoppers would buy from
an Irish website if they knew about it
» Irish consumers will spend €5.7bn online
by 2016, or 7% of all spending
» 30% of Irish adults are ‘Digital Leaders’,
while 8% are ‘Digital Laggards’
24 UPC Report on Ireland’s Digital FutureOnline Spending
Fig 18 summarises the current state of play of the online market in Our estimates for the value of online expenditure are derived from
Ireland. Irish consumers will spend €3.7 billion online this year. Just to answers to our consumer survey. We asked consumers to estimate
put that in context, total consumer spending is forecast to reach €80.9 their average monthly expenditure online. The average stands at
billion in 20121, which means that nearly 5% of all consumer spending €116 per adult per month, rising from €61 per month among 15-24
will be online this year – compared to less than 1% in 2007. year olds to €168 per month among over 55s.
We have profiled the market by age group – and it tells us something
very interesting about the distribution of digital spending power. For Online spending is driven by travel and hotels – as shown in the next
example, 15-24s represent just 15% of the adult population but nearly chart (Fig 19) – though other items also figure prominently, especially
20% of Internet shoppers. However, when it comes to spending power, clothing/footwear, and books and music.
their combined spending is just over 10% of the total. On the other
hand, over 55s make up 28% of the population but just 14% of Internet
shoppers. But their spending power is over 20% of the total.
Fig 18: Online Consumer Spending by Age Group
Internet Online Share Share Share
Population Shoppers 000s expenditure of adult of Internet of online
Age Group 000s 2012* 2012** €m 2012*** population Shoppers spending
15–24 553.4 509.1 €371.8 15.4% 19.8% 10.1%
25–34 733.5 669.0 €926.5 20.4% 25.1% 25.2%
35–44 700.0 604.8 €721.6 19.5% 22.5% 19.6%
45–54 586.3 418.9 €622.9 16.3% 15.9% 16.9%
55+ 1,017.8 369.2 €746.1 28.3% 14.2% 20.3%
Total 3,591.0 2632.9 €3,680.5 100.0% 100.0% 100.0%
* QNHS CSO ** Amárach Survey *** Amárach Calculations
1 ESRI Quarterly Economic Commentary, Autumn 2012: http://www.esri.ie/UserFiles/
publications/QEC2012AUT_ES.pdf
UPC Report on Ireland’s Digital Future 25Fig 19: Items Purchased Online in past 6 months Clicks & Bricks
% of adults
Though nearly 5% of all Irish consumer spending is now online,
Travel/hotel related bookings 61
95% is not. However, a significant proportion of offline spending
Clothing/footwear 53 is influenced by the web, even if that is not where the transaction
Books 51 ultimately takes place. Indeed, most Irish Internet users use
the web to help find better deals and to inform their purchase
Music/CDs MP3 tracks 29
decisions; ‘always’ in the case of 41% of all users, and ‘often’ in
Movies/DVD/film rental 28
the case of an additional 50% of users.
Electronic goods (e.g. ipod) 26
Medical/health related 21
Some consumers use the web to research products and choices online
Toys/baby products 19 but ultimately buy offline in local stores, perhaps because it is more
Electrical goods (e.g. toaster) 19 convenient (‘clicks and bricks’). Consumers also research products
Groceries 19
and choices in local stores and then buy online, perhaps because it
is cheaper (‘bricks and clicks’). The chart on the next page (Fig 20)
Perfumes/cosmetics 18
summarises this situation: 8 in 10 (80%) Internet users research online
Flowers 10 and buy local, while 6 in 10 (58%) research local and buy online.
Furniture 7
How does this impact on different markets and sectors? The table on
Tickets/concert tickets 1 the next page (Fig 21) shows the channel preferences of consumers
Other 4 who have purchased online in each category over the past 6 months,
0 10 20 30 40 50 60 70 80 in terms of whether they prefer to buy in a shop or prefer to buy
online, or have no preference.
Perhaps not surprisingly, price is a key motivation for Ireland’s 2.6 Clearly a number of markets have effectively gone ‘virtual’: booking
million Internet shoppers (45% of the total). The importance of price for flights, buying music and ordering movies, to name the most obvious
shopping online falls slightly with age, while convenience (32% of the from the chart. Others still show a strong preference for ‘bricks’:
total) rises with age. A better range or selection is important too (21%). clothing, groceries and furniture for example.
26 UPC Report on Ireland’s Digital Future67%
Fig 20: Clicks vs Bricks
Yes No Don’t Know
5% 5%
15%
Of people prefer to buy Research
Research
music online online 37% locally but 58%
buy locally buy online
80%
Fig 21
Doesn’t
Prefer to matter
Prefer to buy in a or no
buy online shop preference
Travel/hotel related services 87% 2% 11%
Music/CDs/mp3 tracks
67% 12% 21%
(e.g. iTunes)
Medical and health related
60% 14% 26%
(e.g. insurance, equipment)
Movies/DVDs/film rentals
59% 16% 25%
(e.g.iTunes)
Electronic goods (e.g. iPad) 48% 19% 33%
Flowers 48% 19% 33%
Books 42% 28% 30%
Electrical goods (e.g. toaster) 40% 37% 23%
Perfumes and cosmetics 35% 33% 32%
Toys/baby products 30% 30% 40%
Clothing/footwear 19% 55% 26%
Furniture 19% 53% 28%
Groceries, food or alcohol 16% 55% 29%
UPC Report on Ireland’s Digital Future 27If You’re Irish Not shown is the percentage shopping across a mix of Irish/
There are, though, some interesting differences when it comes to the international websites, which is the experience of nearly half of
provenance of websites themselves, specifically in relation to whether shoppers in categories like baby products and cosmetics. Nevertheless,
a website is Irish or international. Fig 22 shows the location of websites there are some stark differences. When it comes to groceries, timing
used by shoppers in each category. is everything so a ‘local’ site is vital to ensure fresh produce is still
fresh when it arrives. On the other hand, the more digital a product
Fig 22: eTailers: Irish Vs Foreign Websites or service becomes then the less important would appear to be a
Irish Website International website site’s provenance. Hence music and movies are predominantly being
65 purchased via international websites.
Groceries/food/alcohol 11
Over 55s tend to have a bias towards Irish websites – though it is by no
46
Medical/health related 12 means uniform across all categories. Nevertheless, this is important
44 given their share of total online spending noted above. Of course,
Flowers 15 many consumers may feel they simply have no choice about where
33 to buy products and services online. As Fig 23 shows, when those who
Furniture 17
purchased from international websites were asked if they knew of any
30 equivalent Irish websites selling the same products, between half and
Travel/hotel 19
three quarters said no or simply didn’t know, depending on the category.
23
Electrical goods 23 But sizeable minorities in most categories were aware of alternative,
Toys/baby products
17 Irish websites selling the products or services they were buying. They
23
chose not to ‘buy Irish’ mainly because of price, but also because
17
Clothing/footwear 25
of perceptions about range and choice. Curiously, price tends to be
more motivating to middle aged shoppers (35-44s and 45-54s), while
7
Perfume/cosmetics 29 range is more important to younger (under 25s) and older (over 55s)
13 shoppers.
Electronic goods
31
However, a key finding for Irish website operators is that the majority
12
Books
42 (61%) of those not aware of equivalent Irish sites when shopping would
purchase from an Irish site if they knew about it.
9
Movies/DVD/film rental
47
8
Music/CD’s/MP3 tracks
47
% 0 10 20 30 40 50 60 70 80
28 UPC Report on Ireland’s Digital FutureFig 23: Deal or No Deal: Reasons for Choosing Irish Bank & Switch
Aware of Irish Site No Yes Don’t Know Spending nearly €4 billion online would not be possible without access
to payment and banking systems. Over three quarters (78%) of Irish
17 49 34 Internet users use Internet banking, ranging from 58% of under 25s to
Travel/hotel related services
86% of 35-44s.
21 39 40
Toys/baby products Fig 24 shows that Internet banking is used for a variety of ecommerce
activities, including money transfers, bill payments and mobile phone
31 37 32
Clothing/footwear top-ups.
34 31 34
Books Fig 24: Main Internet Banking Activities
%
31 26 43
Music/CDs/MP3 tracks View bank balance/management 97
Money transfer 86
32 21 47
Movies/DVD/Film rentals
Bill payment 85
% 0 20 40 60 80 100 Mobile top-up 67
Reason for Choosing Savings 61
International Site
Account opening 29
Price 55
Setting up direct debit/standing order 1
Credit card application 1
Better/broader product range 32 Purchased insurance/travel insurance 1
Viewed statements 1
Easier to search for/
5 Loan application 1
find individual products/services
Other 2
Better/easier to use web site 4 0 20 40 60 80 100
Better delivery/return terms 2
There are few significant differences by age in relation to the type of
banking activity, though bill payment is more common among 35–44
Other 3
users of Internet banking. This latter point is important, not least
% 0 10 20 30 40 50 60 because thirty-somethings and forty-somethings are under the
UPC Report on Ireland’s Digital Future 29greatest financial pressure due to dependent children and high levels Indeed, 35–44 year olds are the age group most likely in our survey to
of borrowings2. use the web to switch in the majority of categories – in keeping with
their wider financial priorities and pressures. Furthermore, men are
Another consequence is that Ireland’s financially stressed consumers are
significantly more likely to use the Internet to switch in virtually all the
more willing than ever to switch suppliers for meaningful savings. Needless
categories covered in our survey.
to say, the Internet plays a key role in switching behaviour, with Fig 25
showing the percentage of Internet users who have used the web to switch
each type of service provider in the past 3 years.3 Consumer Preferences UPC Insight
Increasingly, Irish consumers favour online interaction for
Fig 25: The Big Switch: Using the Internet to Switch Provider purchases of goods and services. It’s also a convenient way for
% people to make personal changes to their account administration
Car insurance 56 requirements and overall it saves time and resources. UPC
Electricity/gas provider 40 changed its business model to meet the needs of customers
Mobile phone network 40 who prefer to interact online.
Home insurance 39
Broadband provider 38 31%
Landline telephone provider 27 of all UPC customers purchase their products via our
TV service provider 22 online channel
Main bank 18 47%
Refuse collection 1 choose to manage their UPC account online
Health insurance 1 19%
Other 1 of our digital cable customer base use the remote record app
N/A None 22 150,000
0 10 20 30 40 50 60 Number of customers who have downloaded information and
support videos to help them in setting up their services in the
past 15 months
2 For more information about the financial circumstances of Irish consumers see
Amárach’s monthly Economic Recovery Index: http://www.amarach.com/resources/
economic-recovery-index.htm
3 More detailed information on consumer switching behaviour is available from the
National Consumer Agency: http://corporate.nca.ie/eng/Research_Zone/Reports/
switching-behavour-aug-2012.html
30 UPC Report on Ireland’s Digital FutureThe Size of the Prize could be online in the UK by 20224). Ireland will undoubtedly follow this
We have established the significant scale of Internet shopping in trend, as consumers embrace the digital future and the better value
Ireland today. But we are only at the beginning of a major shift in and choices it will bring.
consumer spending patterns. Fig 26 shows Amárach’s forecasts for But we must add a note of caution: there is no guarantee that Irish
the value of online spending to 2016. Despite weak growth overall, product and service providers will benefit from this increase in online
the value of spending will grow from under 5% of total expenditure to spending. As we have seen, Irish consumers are open to shopping
7% by 2016; an increase of €2 billion per annum in the value of online online at Irish sites, but it is not necessarily their ‘default’ choice.
spending by the end of the forecast period. Therefore it will be vital for Irish businesses to scale up as appropriate
for the opportunities that lie ahead, in a timely and convincing manner.
Fig 26: Online Consumer Spending
UPC Digital Consumer Index
€Bn Value of online spending Share of total consumer spending %
In order to measure our progress we need a benchmark against which
6 8
we can compare future performance. In this regard we have created
a UPC Digital Consumer Index which will track progress towards the
5
digital future, for individuals and for groups.
7
4 The Index is based on answering the following five questions for all
those with broadband in the home:
3 6
»» whether or not you have wifi at home (score 0 if no, 20 if yes)
»» average broadband download speed (scores 0, 10 or 20 depending
2
on speed)
5
1 »» whether or not you ever do work from home (score 0 if no, 20 if yes)
€3.7Bn €4Bn €4.5Bn €4.9Bn €5.7Bn »» how often you use the web to help with shopping (score 0 if rarely,
0 4 10 if occasionally, 20 if regularly)
2012 2013 2014 2015 2016
»» average amount of time spent online on a typical weekday (scores
Already, some markets such as the UK have seen online spending rise 0, 10 or 20 depending on hours)
to double digit figures relative to total retail sales (with forecasts by
the Economist Intelligence Unit suggesting that a third of retail sales
4 EIU Retail 2022: http://www.eiu.com/
UPC Report on Ireland’s Digital Future 31The Index is based on the combined scores derived from the answers Fig 27: UPC Digital Consumer Index
to these questions, with the range running from a minimum of zero
to a maximum of 100. From this we have identified three groups using Total 61.4
the UPC Digital Consumer Index:
15-24 73.3
»» Digital Leaders: those who score 70–100 25-34 70.9
»» Digital Followers: those who score 30–60 35-44 61.7
»» Digital Laggards: those who score 0–20 45-54 59.8
Based on the above, our analysis shows that just 30% of the adult 55+ 49.6
population are Digital Leaders in Ireland, while 8% are Digital Laggards. Male 60.9
The balance – 62% – are Digital Followers. The table on the right
Female 62.1
(Fig 27), shows the average Index scores by different demographic
groups derived from our consumer survey. Higher Income 64.9
The table tells us that only two demographic groups – under 25s and Lower Income 58.3
25-34s – are in the Digital Leaders category (though individuals in all
other groups are as well), most segments are in the Digital Followers
Digital Leaders 30%
group. Fortunately no one demographic group can be categorised as
Digital Laggards 8%
Digital Laggards!
Digital Followers 62%
You can measure your own UPC Digital Consumer Index by answering
a few simple questions on our special website: www.upc.ie/digitalindex
Why not see how your family scores?
32 UPC Report on Ireland’s Digital FutureYou can also read
