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As television and radio ad revenues decline, the online sector continues to grow, according to figures from Ofcom.

In its annual communications report, the telecoms regulator said that revenues from online advertising grew from £0.17 billion in 2001 to £1.3 billion in 2005, reflecting growth in the number of home broadband connections – up from four million in 2004 to 11.1 million last year.

The report claimed that revenues had risen so much that they had begun to dwarf radio ad spending by three times, unchanged in real terms from 2001’s figure of £0.5 billion.

"Our research reveals dramatic and accelerating changes across all communications industries," said Ofcom chief operating officer Ed Richards.

"The sector is being transformed by greater competition, falling prices and the erosion of traditional revenues and audiences. A new generation of consumers is emerging for whom online is the lead medium and convergence is instinctive."

The report also cited figures showing local loop unbundled (LLU) services to now be available to 44 per cent of the UK population, up from 34 per cent in 2005.