OVER-THE-TOP SERVICES (OTT):

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OVER-THE-TOP SERVICES (OTT):

Use of Internet-based instant messaging,

voice calls and TV in Portugal and the

European Union

(data from residential population surveys)

November 2014

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1. Use of Over-the-top (OTT) services

 According to the Survey on Information and Communication Technologies Usage in Households and by Individuals produced by INE - Instituto Nacional de Estatística (Statistics Portugal)1, among individuals in Portugal aged 16-74 who used the

Internet in the first three months of 2014, 37.4 percent made Internet-based voice or video calls (+1.1 percentage points versus the same period of 2013)2.

Graph 1 – Trend in percentage of Internet users making Internet voice or video calls

Unit: %.

Source: INE - Instituto Nacional de Estatística (Statistics Portugal), Survey on Information and Communication Technologies Usage in Households and by Individuals (2003-2014)

Base: Individuals aged 16-74 years who used the Internet in the first 3 months of the year

1 _{The Survey on Information and Communication Technologies Usage in Households and by Individuals is an}

annual survey based on a representative sample of households in Portugal containing at least one person aged between 16 and 74 years. The sample consists of 7,186 households with at least one person aged between 16 and 74 years and the same number of people in this age group. The data reference period is the first quarter of each calendar year. The sample was sized and stratified by NUTS II, in order to produce representative estimates for Portugal and the Autonomous Regions of the Azores and Madeira.

2 _{Internet voice and video calls made between January and March of each year (excludes calls made for}

professional purposes). 9,7 10,7 10 15,6 21,6 29,3 25,4 26,2 25,1 31,1 36,3 37,4 0 10 20 30 40 50 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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- 2 -  According to Marktest's Barómetro de Telecomunicações (Telecommunications Barometer)3, among mobile phone users aged 10 years or more, 14.3 percent made

Internet voice calls in 3Q2014 - a percentage that has been increasing in recent quarters. Instant messaging services have seen even more use (a quarter of mobile phone users use these services)4.

Graph 2 – Trend in percentage of mobile phone users who use OTT services (voice calls and messaging)

Unit: %.

Source: ICP-ANACOM based on miucrodata from Marktest's Barómetro de Telecomunicações (Telecommunication Barometer), 2Q2013 - 3Q2014

Base: Individuals aged 10 years or more with mobile phone.

 Individuals aged up to 34 are those most likely to use the Internet for instant messaging and voice calls.

3_{The Barómetro de Telecomunicaçõe (Telecommunications Barometer) is a regular study by Marktest for the}

telecommunications sector. The universe of the Barómetro de Telecomunicações - Rede Móvel comprises people aged 10 and over living in mainland Portugal or in the Autonomous Regions of Madeira and the Azores; a sample is compiled on a monthly basis which is proportional to and representative of the study's universe, corresponding to 1200 interviews per month (sample size of 3500 interview per quarter).

4_{Survey question refers to "services customarily used on mobile phone".}

11,7 12,4 13,8 17,8 21,2 25,3 8,0 9,1 8,8 10,8 12,7 14,3 0 5 10 15 20 25 30 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 Instant Messaging services (e.g.: WhatsApp, Imo, Facebook Messenger)

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Graph 3 – Percentage of mobile phone users who use OTT services (voice calls and messaging) by age group

Unit: %.

Source: ICP-ANACOM based on microdata from Marktest's Barómetro de Telecomunicações (Telecommunication Barometer), 3Q2014

Base: Mobile phone users according to age group

 The social class of the household to which the individual belongs is also associated with different levels of use of these services. The likelihood of using Internet instant messaging and voice call services decreases among lower social classes.

Graph 4 – Percentage of mobile phone users who use advanced Internet services by social class of individual's household

Unit: %.

Source: ICP-ANACOM based on microdata from Marktest's Barómetro de Telecomunicações (Telecommunication Barometer), 3Q2014

Base: Mobile phone users aged 10 years or over according to household's social class

Note: Class A/B (upper class/middle class); Class C1 (middle class); Class C2/D (lower/lower-middle class).

50 58 43 27 13 7 2 30 29 25 17 7 4 0 15 30 45 60

10/14 Years 15/24 Years 25/34 Years 35/44 Years 45/54 Years 55/64 Years +64 Years Instant Messaging services (e.g.: WhatsApp, Imo, Facebook Messenger)

Voice calls made using VOIP applications - Skype, Viber

35 ₃₂ 19 24 19 9 0 15 30 45 60 A/B C1 C2/D

Instant Messaging services (e.g.: WhatsApp, Imo, Facebook Messenger) Voice calls made using VOIP applications - Skype, Viber

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2. Portugal in the European context

 The surveys on information and communication technologies usage in households and by individuals conducted by the different national statistics institutes of the European Union and compiled and harmonised by Eurostat show that, at the beginning of 2014, the percentage of individuals who made voice or video calls over the Internet (among individuals aged 16-74 years who used the Internet in the first three months) is identical in Portugal to the percentage reported in the EU28 (37 percent).

Graph 5 – Percentage of Internet users who make Internet voice or video calls, Portugal and EU28, 2009-2014

Unit: %.

Source: EUROSTAT - Survey on ICT Usage in Households and by Individuals (2009-2014)

Base: Individuals aged 16-74 years who used the Internet in the first 3 months of the year.

 The age structure of Internet voice and video-call use in Portugal is similar to the EU28 average. Portugal exceeds the average in the 65-74 years and 16-24 years age groups, where penetration of these services is reported above the European average (among individual Internet users).

37 0 10 20 30 40 50 2009 2010 2011 2012 2013 2014 EU28 PT

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Graph 6 – Percentage of Internet users who make Internet voice and video calls, by age group, Portugal and EU28, 2014

Unit: %.

Source: EUROSTAT - Survey on ICT Usage in Households and by Individuals (2014)

Base: Individuals who used the Internet in the first 3 months of the year by age group

 In Portugal, individuals with medium or higher levels of education are more likely to make Internet voice and video calls versus the EU28.

Graph 7 – Percentage of Internet users who make Internet voice and video calls, by level of education, Portugal and EU28, 2014

Unit: %.

Base: Individuals aged 16-74 years who used the Internet in the first 3 months of the year, by education level

 In terms of income, the likelihood of voice and video Internet call use in Portugal is similar to the EU28 average. In Portugal, higher income population groups are more likely to use this type of service.

53 34 49 27 0 10 20 30 40 50 60 16-24 25-34 35-44 45-54 55-64 65-74 Portugal EU28 31 39 46 34 ₃₃ 45 0 10 20 30 40 50

Lower level of education Medium level of education Higher level of education Portugal EU28

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Graph 8 – Percentage of Internet users who make Internet voice and video calls, by income quartiles of individual's household, Portugal and EU28, 2014

Unit: %.

Base: Individuals aged 16-74 years who used the Internet in the first 3 months of the year, by income quartile

 Students in Portugal are more likely to use Internet voice and video compared to the EU28 average.

Graph 9 – Percentage of Internet users who make Internet voice and video calls, by employment status, Portugal and EU28, 2014

Unit: %.

Base: Individuals aged 16-74 years who used the Internet in the first 3 months of the year, according to employment status

35 ₃₃ ₃₄ 42 33 34 35 42 0 10 20 30 40 50

1st quartile 2nd quartile 3rd quartile 4th quartile Portugal EU28 59 36 29 30 54 36 ₃₅ 29 0 10 20 30 40 50 60

Student Employed Unemployed Retired / other inactive Portugal EU28

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- 7 -  According to the survey carried out by the EC (E-communications and telecom single market household survey)5, at the beginning of 2014, around 9 percent of

Portuguese individuals with a mobile phone made cheaper calls using the Internet (via smartphone, tablet or other device), 12 percentage points below the EU28 average. Around ¾ of mobile phone users in Portugal responded that they did not need this type of service.

Graph 10 – Use of mobile phones to make cheaper calls over the Internet (via smartphone, tablet or other device)

Unit: %.

Source: EC, E-Communications and telecom single market household survey – TNS Opinion & Social, January 2014

Base: All respondents with mobile phone (multiple choice)

 The same survey also reports on the type of television access used by households. In Portugal, there were no respondents who reported having access to television over the Internet (versus an EU28 average of 4 percent).

5_{Study conducted by EC, with field work carried out by TNS Opinion & Social during January 2014. The}

study's sample size for Portugal is 1023 respondents aged 15 years or above.

9 21 76 59 6 ₈ 0 20 40 60 80 100 PT EU28

Don't know/No response No, other reasons

No, do not have these types of applications due to restrictions of mobile network provider

No, didn't know this was possible No, don't know how it works No, do not need

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Graph 11 – Type of access to television by household

Unit: %.

Source: CE, E-Communications and telecom single market household survey – TNS Opinion & Social, January 2014

Base: All respondents with television in household (multiple choice)

 In a survey conducted by ANACOM in April 2013, it was estimated that 0.2 of households in mainland Portugal had another preferred means of watching TV other than on a television. 38 37 3 25 30 19 18 11 10 7 6 4 0 10 20 30 40 50 60 70 80 90 100 110 PT EU28

Don't know/No response Internet (Wi-Fi connection through TV, PC or other device) Analogue signal xDSL Analogue cable Digital cable DTH DTT