Market Trends of united kingdom data center Industry
Increase smartphone penetration rate, emergence of 4G and 5G services to boost market growth
- The number of smartphone users in the country was 63.46 million in 2022 and is expected to witness a CAGR of 1.01% during the forecast period to reach a value of 68 million by 2029.
- The smartphone penetration rate in the United Kingdom has increased each year, reaching an overall figure of 93% in 2022. Among the age group of 16-24, the smartphone ownership rate was 99% in 2022. The number of mobile internet users in the United Kingdom reached 62.3 million, a figure which is projected to increase by approximately 2.86 million and amount to over 65 million by 2026 with the emergence of 4G and 5G. Further, since the COVID-19 pandemic hit, people have increased their smartphone usage and spent more time on online gaming or media streaming platforms. As a result, in April 2020, the industry increased the spending limit on individual contactless card payments from GBP 30 to GBP 45 to help with online payments. Such a scenario has increased smartphone penetration and is currently following the same trend.
- The growth of the user base positively boosted the market demand for data centers. The increasing rate has positively upheld its growth in the e-commerce, media and entertainment, and BFSI sectors, where a large chunk of data has been generated. Since smartphones necessitate real-time processing on having a large data chunk, they mostly require a data center for storage. During the historical period, when smartphone usage penetration increased from 72% in 2017 to more than 90% in 2022, the number of racks in the data center increased from around 215k in 2017 to 388k in 2022. This trend is further expected to be witnessed during the forecast period.
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Phase out of 2G and 3G and adoption of 4G and 5G network and increase in use of mobile devices to drive market growth
- The United Kingdom's first 5G network was activated in May 2019, and 4G was launched in October 2012. Since being commissioned, both networks have shown an increment in their data speed. 4G speed increased from 12 Mbps in 2012 to 36.40 Mbps in 2022. Similarly, 5G speed increased from 139.5 Mbps in 2019 to 160.15 Mbps in 2022. In May 2022, according to an industry survey, around 67% of respondents in the United Kingdom (UK) had a 4G service on their smartphone, while about 25% had a 5G service.
- The UK will phase out 2G and 3G mobile services by 2033. The major strategy for all the operators is to turn off their 2G and 3G networks, allowing them to focus investments and spectrum resources on further improving the 4G customer experience while rolling out 5G. The UK government has outlined its intentions to invest in driving 5G and 6G development with the support of GBP 110 million (USD 135 million) worth of investment. Moreover, the switch-off date for 2G and 3G has been agreed upon with mobile-network operators Vodafone, EE, Virgin Media, O2, and Three.
- The growth in speed and better overall connectivity is paving the way for other end-user industries. In 2021, users in the United Kingdom spent an average of four hours per day using their mobile devices. This was an increase of 0.3 hours up from 2020. The number of social media users in the United Kingdom at the start of 2022 was equivalent to 84.3% of the total population, and it increased by 4.6 million between 2021 and 2022. Overall, this will increase the mobile data speed, increasing the data traffic, which thereby requires data centers for storing and processing data.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Emergence of 5G network, adoption of OTT services and digital connectivity to boost market growth
- Increase in full fiber connectivity network and fiber roll out in both urban and rural areas to drive market growth
- The Openreach Network and Virgin Media are the major fiber optic broadband networks in the United Kingdom
