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| CUSTOMER PERCEPTIONS OF COMPETITION IN THE INTERNATIONAL CALLING MARKET (July 1999) | |
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Prepared for Oftel by NOP Consumer ContentsIntroduction Residential
findings Business
findings Appendices This study was commissioned by Oftel to investigate customer perceptions of competition in the IDD (International Direct Dial) market in the light of increased levels of the entry of telecommunications into the market over the last few years. A series of formal research objectives was outlined in the brief:
Research methodology A telephone survey was conducted, within two discrete markets – residential and business. We will describe the sample design for each below. One initial general point may be made first. The sample was obtained for the survey using a purposively disproportionate and unrepresentative sampling procedure. The resultant data have been post-weighted in order to report a properly representative sample of all IDD call users using the "Top 23" routes. This procedure was adopted so that robust numbers of small penetration groups were obtained. A good example of this is large establishments, which form a tiny proportion of the overall market, but they are heavy IDD users and have very distinctive views about the market. Residential customers The residential sample comprised persons who have made at least one international telephone call to a ‘top 23’ route in the last 12 months. A total of 519 interviews was obtained between 22nd April – 2nd May 1999. An additional 66 interviews were conducted with individuals that make calls exclusively to non ‘top 23’ routes. The sample was designed to obtain similar numbers of those who make an IDD call at least once a month and those who make such a call less often. The actual numbers of interviews obtained and the impact of the post-weighting are described in the table below:
The universe for the business survey was all establishments where there is a person who has decision-making authority in the matter of selecting an IDD supplier. The brief described the relevant structure of the IDD calling market, which was used as the basis for sampling. This structure described the market in two different, but related ways; by size of establishment and by quarterly IDD spend. The categories were as follows: Size of establishment:
IDD spend
The actual numbers obtained and the effect of the post-weighting procedure are shown in the chart opposite which describes the sample profile for the business sample. The sample for this project was provided by The Business Database / Yellow Pages. A total of 817 interviews with establishments making calls to at least one ‘top 23’ route in the previous 3 months was conducted between 24th April – 11th May 1999. An additional 37 interviews were conducted with establishments that make calls exclusively to non ‘top 23’ routes.
3. MAIN FINDINGS - RESIDENTIAL 3.1.1 Sample profiles In broad terms, the sample profile described in the two charts opposite might be best described as middle-aged and middle class. Nearly one half of the sample (46%) is aged 35-54 years compared with an all-adult figure of 35% and the figures for social groups AB and C1 are each 10% higher than the all-adult figure. Just over one half (51%) of the sample was female. 5% of the sample described itself as ‘non-white’, which is in line with the national average. 3.1.2 Telecoms and IDD usage The chart opposite shows the estimated quarterly spend of the sample, and indicates that over one half (52%) of the sample has a quarterly bill size between £50 and £150. There is a marked relationship between size of overall bill and frequency of making IDD calls – 34% of those who make weekly IDD calls have a bill of £200 + per quarter, compared with 4% of those who make very infrequent IDD calls. Overall, as the second chart opposite indicates, just under three fifths (58%) of respondents make an international telephone call at least once a month. This proportion increases among those who use a company apart from BT (73%) and among those who use more than one company (72%). The main countries called represent a combination of English speaking nations (USA, Australia and Canada) and Western European nations. In addition, those respondents who had mentioned more than one country were asked which country they called most often. Thus, it was possible to generate a list of countries that were only called (where a respondent had mentioned one country only) or mainly called. The order of this list is very similar, with the same seven countries dominating, with the list again headed by USA (mentioned by 25%) and Australia (15%). Overall, these seven countries accounted for 73% of the countries only called or mainly called. A full list of all countries mentioned is included in appendix A. 
3.2 Methods and companies used for making calls 3.2.1 Awareness of methods of making IDD calls Spontaneously, just over four fifths (81%) of respondents specified their own telephone at home when asked which methods of making internationals calls they had heard of. This method is clearly the most common method in the chart below with a mobile phone being the only other method mentioned by more than one in ten respondents. Older respondents were more likely to mention their own telephone at home (88% of 55+ year olds) but less likely to mention any other method. There is a clear distinction on ethnic lines for some methods with the small sample of ‘non-white’ respondents more likely to mention pre-paid calling cards (31%), calling shops (15%) and indirect access (12%). 15% of respondents gave no answer at all. After prompting, all respondents mentioned their own telephone at home and figures for several of the other methods increased substantially, while the general observations regarding older respondents and ‘non-white’ respondents still pertain. 3.2.2 Awareness of companies providing IDD calls The chart opposite shows which companies respondents have heard of in the context of providing IDD services. Again this is shown on both a spontaneous and prompted basis. Even when prompted, however, figures for many companies remained rather low, with five of the specified companies failing to achieve a figure of 15%. Again, the non-white respondents stood out with substantially higher figures for all the less well-known companies. The exceptions to this pattern were First Telecom and Onetel, with figures in excess of one-third of respondents. Looking across all the companies, 29% of respondents have heard of just one or two companies, (BT and Cable & Wireless in most cases), just under one half (49%) have heard of three or four companies. This leaves just over one fifth (22%) who claimed to be aware of five or more of the nine specified companies.
3.2.3 Methods used in the last 12 months Almost every respondent has used their own telephone at home in the last 12 months, while just under one quarter (23%) has used the next most common method, a mobile phone. Mobile phone use is more common among younger people, mentioned by 28% of those aged under 45 years and mobile phone companies account for over one half of all the mentions of non-BT companies used for IDD calls in the last 12 months. Pre-paid calling cards were particularly used by non-white respondents, mentioned by 42% of this group. Similarly, an account was used by 13% of non-white respondents. Those who make more frequent calls (at least once a month) are particularly likely to use a mobile phone. 30% of this group said they have used a mobile phone in the last 12 months and 11% also mentioned a charge card. The second chart opposite indicates that while almost everyone uses their own telephone at home, the other methods mentioned are almost exclusively used by those using two or more methods – these would appear to be additional to the core method. 3.2.4 Companies used in the last 12 months The previous section indicated that use of own telephone at home is easily the most common method of making IDD calls and as the chart indicates, BT is, by far, the most used company for this method. Cable and Wireless is the only other company that can be measured, with predominance for direct access. Appendix B provides a chart that describes the number of respondents that fell into each combination of method and company. It shows, for example that 470 respondents, that is 91% of the total sample have used BT / telephone at home in the last 12 months and that the next most common combination is BT / chargecard, used by 38 respondents, just 7% of the total sample.
3.2.5 Summary of usage patterns We can provide two different ways of summarising usage patterns over the last 12 months.
The pie chart indicates that just over three fifths (61%) of respondents have used BT and no other company in the last year and just under one in ten (9%) have not used BT at all in the last 12 months. The balance, 31%, has used both BT and another company. Overall, usage of a company other than BT stands at 39%. Such usage is higher among younger respondents (45% of those aged below 44 years) and those in social group C1 (44%). These trends are largely as a result of higher usage of mobile phones among these groups. Finally, because of their higher usage of the less common methods, 59% of non-white respondents used a non-BT company. Among those who use more than one combination of company / method, it is most common for these combinations to be spread across two different companies rather than using a single company for several different methods. Nearly four fifths (78%) of this group stated that they use both BT and another company, leaving small proportions that use BT only (17%) or only use another company (ies) (5%). In terms of combinations of company / method, the chart opposite illustrates that just under two fifths (39%) have used two or more such combinations in the last 12 months. As the chart also indicates, those who make more frequent calls are more likely to fall into this category, as were those with larger bills (58% of those with a quarterly bill in excess of £150), younger respondents (51% of 18-34 year olds), and those in social groups AB (also 51%). In about three quarters of cases, the 39% of persons who use a company other than BT and the 39% of persons who use more than one combination of method / company are the same people, so it is not surprising that the demographics of these groups are similar.
3.3 Calling history and motivations 3.3.1 A summary of current awareness / usage of competition The previous section described that approximately two fifths of respondents currently use two or more suppliers. In addition, those respondents who currently use one supplier were asked some additional questions to measure their levels of awareness of competition in the market. A summary of the responses to these questions is shown in the pie chart opposite, and indicates that similar proportions fell into the following three categories:
Among those that use only one supplier, those exhibiting higher levels of awareness tended to belong to ABC1 social groups, be younger and make IDD calls more frequently. The second pie chart on the opposite page showing the results for more frequent IDD callers supports this final point (only 14% fall in the totally unaware category) and also shows that just over one half of these persons currently use two or more suppliers. The reasons that respondents gave to explain why they are ignorant of competition were not particularly enlightening. About one half (49%) said they could not be bothered to find out and smaller proportions said that they had never changed (21%) or did not expect to change (12%).
3.3.2 Length of time using existing suppliers For each combination of company / method ("supplier"), respondents were asked to say how long they had been using that supplier. Across all suppliers used by the residential sample, the chart opposite shows that over one fifth (23%) of the sample has started using their supplier in the last 12 months. This does not necessarily mean that this is a new supplier in addition to or replacing an existing supplier and findings over the following pages would suggest that in many cases these will be persons starting to make IDD calls over this period. At the other end of the scale just over one third (34%) have used a supplier for over 10 years. There are considerable differences between those using BT for their telephone at home and those using another company. While those who started using this method of making calls more than 10 years ago used only BT, the BT share of persons starting to use this method has declined over the last decade. In the last year, BT was the selected company for 44% of those starting to use their telephone at home for international calls. Across all different methods, the BT share of new accounts is somewhat lower and it was within the last three years that BT began to claim less than one half (43%) of new accounts, and in the last year, BT obtained a share of 37% of new accounts. The substantial difference between the figures for 3 years and the figures for 5 years would suggest that it was in this period that consumers in the residential market became aware of competition and alternative suppliers.
3.3.3 Attitudes of those who currently use one supplier only As reported above, approximately three-fifths (61%) of the total sample fell into this category. The main reasons that respondents gave for using just one supplier indicated a general lack of interest in this market. The reasons suggest apathy and a lack of motivation to move. Looking at these main reasons, only one – price and value for money – departs from this general pattern. Across all those who use only one supplier, this was mentioned by 18%, but that proportion was a little higher among those in social groups ABC1 (21%) and among those who make IDD calls at least once a month (23%). There was only a small number of respondents (30) in this group who use a company other than BT. Among this small group, price / value for money was a more important motivator, cited by 40%. Apart from a lack of interest in the market, it should be added that there is a high level of satisfaction with the supplier that respondents use, illustrated in the chart opposite. Nearly three fifths (58%) specified that they are very satisfied with the service provided and of the remainder only a tiny minority (4%) expressed some level of dissatisfaction. Older respondents were more likely to be very satisfied (66% of those aged 45+ years), although who make more frequent calls gave slightly lower figures (55% of those who make IDD calls at least once a month). There is only one thing that is likely to persuade respondents to change supplier in the future. Over three-quarters of this sample (77%) cited a more competitive price as a potential motivator. In addition 21% mentioned more information about a supplier and 19% mentioned a recommendation. There is clearly a substantial difference between the large proportion that cites price as the main thing that would persuade them to change supplier and the more modest proportion that actually give this as a reason for their choice of supplier. There are probably two reasons for this apparent discrepancy. First, many respondents selected their supplier in the days before competition and for whom there was no price differential to discuss. In the sections below that discuss the behaviour and motivations of those who have changed supplier we will see that the proportion that mentions price increases, particularly when discussing companies other than BT. The second explanation is more straightforward. Even though respondents provided an answer to the specific question, we will see below that relatively few respondents plan to change their supplier. Thus, while price might, at some point in the future, become the prime motivator, any price benefits are currently outweighed by the comfort of using a tried and trusted supplier for international telephone calls. We believe that these general comments hold true, to a greater or lesser extent, to persons with one / two or more suppliers and respondents in both the residential and business markets.
3.3.4 Those who currently use more than one supplier As reported above, approximately two-fifths (39%) of the total sample fell into this category. The chart opposite shows the status of each supplier at the time when it was selected for use. Not surprisingly, a very high proportion of those who use BT / telephone at home specified that this was their original supplier but there are considerably lower proportions among the three other groups of users, described on the chart. One key observation is that those suppliers that are not the original supplier are, in the main additional to, rather than replacements of, the original supplier. It is for this reason that an earlier chart observed that almost all those persons with more than one supplier specified BT / telephone at home as one of their suppliers. Thus, whatever the changes in the market this core provider seems to be retained by respondents. One reason for this might be inertia and security but we will also observe high levels of satisfaction with all suppliers and with BT in particular. In almost all cases where respondents have replaced a previous supplier, this switch was made because of perceived benefits of the new supplier rather than any problems they had experienced with the previous supplier (and in almost every case this benefit related to price). However, this is, as we have noted, a very small proportion of the overall sample.
3.3.5 Reasons for selection of supplier The chart opposite which outlines the main reasons mentioned is based, not on people, but rather on all the suppliers used by those persons who use more than one supplier. Therefore, we are able to break the total chart down by different combinations of supplier and method in the chart below. The reasons are very similar to those outlined above when a similar question was asked of those who use one supplier only. The main difference is the relative importance of each of the reasons. In this chart, price / value for money is the most important single reason, cited by just over one quarter (26%). The lower chart does show the differences between respondents explaining why they use BT / telephone at home and why they use any other combination of company / method. The reasons for using BT / telephone at home show very similar answers to those from the single supplier sample (18% of this sample mentioned price / value for money as a reason compared with 17% in this chart). However, the answers are markedly different for those explaining why they use any other company / method - comfort / security / inertia are relatively less important and price is cited by nearly one-third (31%). Apart from the reasons outlined in the chart, two other reasons were mentioned by those using any other method / company. These are ‘was away from home when needed to make a call’ cited by 10% overall and particularly by those using a mobile phone or chargecard and ‘got a special offer’ mentioned by 6%. The most mentioned aspect that related to a service issue was ‘always get through’ (4% of each of the two sample types discussed in this section).
Levels of satisfaction among those who use more than one supplier are high although rather lower than among those who only use one supplier. At the other end of the scale, however, approximately one in ten company / method combinations that are generating some degree of dissatisfaction. The key reason for these mentions of dissatisfaction, cited in sixteen out of twenty instances is high price / lack of value for money. In terms of respondent type, younger respondents are less likely to be very satisfied (32% of 18 - 34 year olds), while more regular users are a little more likely to give that response (51% of those who make international calls at least once a month). The lower chart gives these data for a selection of different suppliers. The figures are very consistent for any company being used with a telephone at home but other methods differ in two important respects. While mobile phone users are just as likely to give very satisfied as a response, they are the most likely, largely for financial reasons, to report some level of dissatisfaction. By contrast, those using other methods are not very dissatisfied but more likely to give the more neutral ‘quite satisfied’ response. Respondents were asked whether they will use the supplier again in the future. The results of this question reflected closely the answers to the satisfaction question, with similar proportions to those satisfied saying they will use a supplier again in the future. For example, we have seen that 93% of those using BT / telephone at home were very or quite satisfied and 90% said they would use this method again in the future. 
3.4.1 Likelihood to change supplier in the next 12 months The most obvious and immediate conclusion from the chart opposite is that most respondents are unlikely to change in the next 12 months. In addition, we would recommend that the positive answers are qualified. For example, we might assume that one half of those who say they are very likely to change might do so and that one-quarter of those who say they are quite likely to change will do so. Applying these factors we can conclude that between 8% and 9% of all respondents might change in the next 12 months. This figure is substantially lower than the 23% of respondents who have started using a particular method in the last 12 months. There might be two reasons for this. Firstly, a proportion of that 23% will be first time IDD callers and, therefore, not representing a change. Secondly, since we have seen that this is a relatively low interest market we would suspect that many changes are not considered in advance but occur due to specific circumstances such as receiving a mailing or recommendation or seeing an advertisement. However, looking at the top-line figures, it is possible to identify some groups that are more likely to change than others. In demographic terms the key variable is age. While 45% of 18-34 year olds say they are very or quite likely to change, this figure falls to 23% among 35-44 year olds and consistently thereafter down to 14% among 55+ year olds. Somewhat less dramatically, those in social groups AB (31%) and men (30%) are also rather more likely to change than average. In addition, the small group of non-white respondents is the most likely to change (47%). Frequency of making calls is another important factor. The middle chart opposite illustrates that 32% of those who make a call at least once a month are very or quite likely to change. Finally, the bottom chart shows a clear relationship between past activity in this market and propensity to change in the future, with 37% of those who already use two or more suppliers stating that they may change again in the next 12 months. In addition, the same proportion, 37%, of those who use any non-BT company say they will change, compared with 26% of those that use BT. Respondents aware of a greater number of companies are more likely to use another supplier in the future. 36% of those aware of 5+ companies said they were very or quite likely to change in next 12 months. It is difficult to understand whether the fact that they are aware of more companies has led them to consider changing or vice versa, but the fact remains that there is an association between awareness and changing.
3.4.2 Further detail about prospective change Those respondents who said they might change were asked for some further details about that change. First, they were asked for the prospective company or methods that they might choose to use. Over one half of the sample said ‘don’t know’. Of those respondents who could specify a company, the most common was Cable and Wireless, mentioned by 12% and the next highest was BT (4%). Thereafter, a wide range of other companies and methods were each mentioned by one or two respondents. For each company or method that was mentioned (a respondent was able to mention more than one), the respondent was asked to say why they might change to that company or method. Again, price issues predominated, given by about three-quarters of those citing a reason for their choice of brand. The lower chart shows how respondents might use their new supplier, with three fifths saying they would use it for all their calls. Finally in this section, those respondents who are unlikely to change supplier in the next 12 months were asked why this is the case. Two answers stood out; 64% said that they are satisfied with the service they receive from their existing supplier or suppliers and 24% said that they are simply not interested. Just 9% specified the price or that they receive good value for money. This is clearly an important reason for changing supplier but less so for retaining an existing supplier. 3.4.3 An indication of price elasticity At this point in the interview, after many respondents had mentioned price as an issue, a question was asked to establish what percentage of saving would persuade a respondent to change to another supplier. Just over one fifth of respondents failed to give an answer. We would suggest that a high proportion of these respondents are those that would not consider a change at all. The fact that they tended to be older and currently using one supplier only would support this hypothesis. Of the positive answers, one in ten respondent would be persuaded by a percentage saving of up to 9%. A further 12% would be persuaded by a saving of 10% - 19% and an additional 27% by a saving of 20% - 29%. Thus, a saving of less that 30% might persuade nearly one half (49%) of residential callers to change supplier. While those who make more frequent calls are a little more susceptible to change (35% of those that make calls at least once a week might be persuaded by a saving of up to 19%), there were only small differences among users of different companies and between those that use only one supplier and those that use two or more suppliers.
3.5 Overall opinion of amount of choice in the market Respondents were asked to say whether they believe there is…..
(a don’t know option was not read out to respondents but this answer was recorded if the respondent could not answer the question) The top chart opposite indicates that nearly two thirds of respondents believe that it is about right (46%) or could offer no opinion (17%). Among those who offered an opinion in one or other direction, the balance was in favour of there being too much competition in the market (22%) rather than too little (15%). Examining the various demographic and behavioural sub-groups there were few major trends. For example, there were only minor differences by the various socio-economic groups or by persons using different methods or different suppliers or, perhaps more surprisingly, by those who use different numbers of suppliers. Those who make international calls at least once a month were slightly more likely to say there is too little choice (18%) but, on balance, they still believe there is too much choice (21%). The subsequent two sets of pie charts do illustrate some sub-groups that do demonstrate differences of opinion. It is clear that younger respondents appreciate choice. The charts show that, on balance, those aged up to 44 years think there is too little choice (20% compared with 18% who think there is too much). Among the youngest age group, 18-34 year olds, this opinion is rather stronger with figures of 25% (too little) and 15% (too much). Finally, there appears to be a straightforward relationship between the number of companies a respondent is aware of and their opinion. Among those who are aware of more than five companies, there is a clear opinion that there is too much competition, an opinion given by 30% compared with 10% who say there is too little. However, across all these findings it should be remembered that the most common answer, never given by less than two fifths of respondents is that there is about the right amount of choice.
As described in the sample design section, the sample was selected via a quota, which sought to obtain specified numbers of establishments of different sizes, and with specified IDD spends. The key consideration is that it is immediately easy to appreciate that the total line figures in this report will be dominated by small establishments that make up 88% of the total weighted sample. In particular, small / low spend establishments alone account for exactly two thirds of the total weighted sample. Therefore, in this report, while reporting top-line figures, we will report the results for the medium and large and higher spending establishments, where relevant. 4.1.1 Telecoms and IDD usage Overall, as the chart opposite indicates, just under two fifths (39%) of establishments make an international telephone call at least once a week. This proportion increases substantially among medium sized establishments (53%) and large establishments (87%). There was a similar relationship with spend with medium spend establishments (70%) and high spend establishments (89%). Thus, 97% of large / high spend establishments fall into this category. In addition, those establishments that use a company apart from BT were also more frequent international callers (50% make a call at least once a week). Overall, just 15% of establishments make an international call less often than once a month. Apart from the USA at the top of the list, the main countries called are dominated by Western European nations. Large companies tend to have a wider repertoire of countries they call. For example three fifths of large companies have called USA, France, and Germany in the last three months. In addition, those establishments that had mentioned more than one country were asked which country they called most often. Thus, it was possible to generate a list of countries that were only called (where an establishment had mentioned one country only) or mainly called. With one exception, the order of this list is very similar, with the same seven countries dominating, with the list headed by USA (mentioned by 27%) and France (15%). Overall, these seven countries accounted for 70% of the countries only called or mainly called. The one exception to this order is the Republic of Ireland which is mentioned at all by 13% but is the only / main country for 7% of establishments. A full list of all countries called is included in appendix A.
.2 Methods and companies used for making calls 4.2.1 Awareness of methods of making IDD calls Spontaneously, just over four fifths (81%) of establishments specified telephones at work when asked which methods of making internationals calls they had heard of. This method is clearly the most common method in the chart below with a mobile phone being the only other method mentioned by more than one in ten establishments. (These figures of 81% and 11% are identical to those obtained for the residential market). There were no particular differences by size or spend although large and high spend establishments were somewhat more likely to mention a mobile phone (each 19%). 15% of respondents gave no answer at all. After prompting, figures for telephone at work and mobile phone increased to over 90% and figures for several of the other methods increased substantially. In particular, the proportion aware of video conferencing calls increased to nearly three fifths (57%) of all establishments. 4.2.2 Awareness of companies providing IDD callsThe chart opposite shows which companies providing IDD services respondents have heard of, again on a spontaneous and prompted basis. Even when prompted, however, figures for many companies remained rather low, with six of the specified companies failing to achieve a figure of 25%. There were, however, some marked differences when looking at the larger establishments. Among this group, there were considerably higher levels of total awareness for WorldCom (63%), Energis (62%), and Colt (45%). Across all the specified brands, 28% of respondents have heard of just one or two brands, (BT and Cable & Wireless in most cases) and just over two fifths (41%) have heard of three or four companies. This leaves just under one third (31%) who claimed to be aware of five or more of the nine specified companies.
4.2.3 Methods used in the last 3 months About nine tenths (91%) of establishments of all sizes have used telephones at work in the last 3 months, while just over one third (34%) overall has used the next most common method, a mobile phone. However, this figure of one third does obscure considerable differences across different establishments, with usage figures ranging from 35% for small establishments to 58% for large establishments and up to 68% for those with high IDD spend. Usage of mobile phones was also higher among establishments that make international calls at least once a week (53%). Large establishments also stood out with high usage of chargecards (23%), video conferencing (26%), private circuit (14%), and virtual private network (13%). With the exception of video conferencing, which is used almost exclusively by large establishments, medium size establishments had figures between the total and the figure reported for large establishments. While use of an account did not differ by size of establishment, it was those establishments with a high spend most likely to use this method, mentioned by 25% of such establishments. The second chart opposite indicates that while most establishments use telephone at work, the other methods mentioned are almost exclusively used by those using two or more methods – these would appear to be additional to the core method. 4.2.4 Companies used in the last 3 months The previous section indicated that use of telephone at work is easily the most common method of making IDD calls and as the chart indicates, BT is, by far, the most used company for this method. Cable and Wireless is the only other company mentioned by more than 3% of establishments, with predominance for direct access. Appendix B provides a chart that describes the number of respondents that fell into each combination of method and company. It shows, for example that 641 respondents, that is 78% of the total sample have used BT / telephone at work in the last 12 months. The next most common combinations are Cable & Wireless / telephone at work, used by just 82 respondents, 10% of the total sample, followed by Vodaphone / mobile phone (9%).
4.2.5 Summary of usage patterns We can provide two different ways of summarising usage patterns over the last 12 months;
The first pie chart opposite indicates that similar proportions of establishments have used BT and no other company in the last year (44%) and used both BT and another company (42%). The small balance of establishments (14%) represents those that have used another company only. Not surprisingly the figures differ substantially across establishments of different sizes. The three pie charts opposite indicate that while small and medium sized establishments have a broadly similar profile, large establishments are distinct with a much higher proportion using both BT and another company or companies. Similarly, those who make more frequent calls are more likely to use a combination of different companies. Of those who make international calls at least once a week, 54% use BT and another company or companies, compared with 26% of those who make such calls less frequently. Among those who use more than one combination of company / method, it is most common for these combinations to be spread across two different companies rather than using a single company for several different methods. Nearly four fifths (79%) of this group stated that they use both BT and another company, leaving small proportions that only use BT (14%) or only use another company (ies) (5%)
In terms of combinations of company / method ("supplier"), the chart opposite illustrates that just over one half (53%) of all establishments have used two or more suppliers in the last 3 months. As the chart also indicates, large establishments and those with higher IDD spend are more likely to fall into this category. This chart does conveniently illustrate a general point that is common to many other findings. Looking at IDD spend, there is a gradual increase in the proportions using two or more suppliers across the three spend categories. However, when looking at the establishment size, small and medium establishments seem to have rather more in common with each other and it is the large establishments that stand out, in this case for using two or more suppliers.
4.3 Calling history and motivations 4.3.1 A summary of current awareness / usage of competition The previous section described that just over one half (53%) of establishments currently use two or more suppliers. In addition, those respondents who currently use one supplier were asked some additional questions to measure their awareness of competition in the market. A summary of the responses to these questions is shown in the pie chart opposite, and indicates the proportions that fell into each of the following three categories, in addition to the substantial proportion that currently use two or more suppliers:
In addition to those who are currently using two or more suppliers, we have added those establishments that have changed supplier within the last five years. This group comprises 11% of the total sample, giving a total of 64% in the largest pie. We reported above and the two other pie charts on the opposite page illustrate that it is large establishments that are considerably more likely to be using or to have used two or more suppliers. At the other end of the scale, ignorance is still relatively low among small / low spend establishments, with a figure of 6%, and, overall, about one in seven of these establishments (15%) might currently have difficulty in switching supplier. The reasons that respondents gave to explain why they are ignorant of competition were much like the residential sample. About one half (49%) said they could not be bothered to find out and smaller proportions said that they had never changed (13%) or did not expect to change (20%).
4.3.2 Length of time using existing suppliers For each combination of company / method, the sample was asked to say how long they had been using that supplier. The chart opposite shows that nearly one quarter (23%) of the sample has started using their supplier in the last 12 months, and that one in twenty have done so in the last 3 months. At the other end of the scale nearly three in ten have used a supplier for over 10 years. This is particularly true of large establishments, where over one half have used at least one of their suppliers for over 10 years. However, there is no such relationship in terms of IDD spend, with very similar figures for each of the three categories of IDD spend. There are considerable differences between those using BT and those using another company. While those who started using a supplier more than 10 years ago seemed to have little option but to use BT (92% did so), the BT share of establishments starting to use a new supplier has declined steadily over the last decade. There seems to have been a clear increase in competition between 5 and 10 years ago when the BT share of new accounts declined from 75% to 42%. In the last year, BT was the selected company for approximately three in ten of those staring a new account for international calls. (It is possible that the apparent increase in BT share over the last three months is due to little more than sampling error around a very small base).
4.3.3 Attitudes of those who currently use one supplier only As reported above, a little under one half (47%) of the total sample fell into this category. These respondents were asked two series of questions. The first related to their past activity in this market and the second discussed their current supplier. Just over one fifth (22%) of these companies have switched supplier in the last five years. (A tiny proportion, 2%, has switched more than once in this period). Within this sample, they tended to be more frequent IDD callers (30% of those who make at least weekly calls), large establishments (32%), and those who do not currently use BT (45% of this group). Thus, just 36% of establishments use only one supplier and have used that supplier for at least five years. The reasons for switching are familiar. Again, price is key, cited by about seven in ten respondents. Among those, 48% specified that their old supplier was too expensive and 28% that the new supplier was cheaper. A small number of other problems were also mentioned, including billing problems (9%), poor account management (6%), and problems getting through (6%).
Thinking in more detail about the current supplier, the main reasons that respondents gave for using just one supplier indicated a general lack of interest in this market. The reasons suggest apathy, comfort, and a lack of motivation to move. Looking at these main reasons, only one –price and value for money – departs from this general pattern. Across all those who use only one supplier, this was mentioned by 27%, but that proportion is higher among those establishments with a high IDD spend (47%) and among those who have switched within the last five years (35%). Finally, the proportion is also substantially higher (54%) among those establishments that use a company other than BT.
Apart from a lack of interest in the market, it should be added that there is a high level of satisfaction with the supplier that establishments use. This is demonstrated in the chart opposite. Nearly three fifths (59%) specified that they are very satisfied with the service provided and of the remainder only a tiny minority (4%) expressed some level of dissatisfaction. There are similar figures across the different establishment sizes but there were somewhat lower figures for this category among those with high IDD spend (48%) and those that make more frequent calls (49% of those who make IDD calls at least once a week). Another key variable is illustrated in the second chart opposite. Those using BT as their sole supplier were considerably more likely to express the view that they are very satisfied with the service they receive. There is only one thing that is likely to persuade respondents to change supplier in the future. Over four-fifths of this sample (83%) cited a more competitive price as a potential motivator. In addition, 10% mentioned more information about a supplier and 4% mentioned a recommendation or if the current standards of service were to deteriorate.
4.3.4 Those who currently use more than one supplier As reported above, just over one half (53%) of the total sample fell into this category. The chart opposite shows the status of each supplier at the time when it was selected for use. Not surprisingly, a very high proportion of those who use BT / telephone at work specified that this was their original supplier but there are considerably lower proportions among the three other groups of users, described on the chart. One key observation is that those suppliers that are not the original supplier are, in the main, additional to, rather than replacements of, the original supplier. It is for this reason that an earlier chart observed that almost all those persons with more than one supplier specified BT / telephone at work as one of those suppliers – whatever the changes in the market this core provider is retained by respondents. One reason for this might be inertia and security but we will also observe high levels of satisfaction with all suppliers and with BT in particular. In almost all cases where respondents have replaced a previous supplier, this switch was made because of perceived benefits of the new supplier rather than any problems they had experienced with the previous supplier (and in almost every case this benefit related to price).
4.3.5 Reasons for selection of supplier The chart opposite which outlines the main reasons mentioned is based, not on people, but rather on all the suppliers used by those persons who use more than one supplier. Therefore, we are able to break the total chart down by different combinations of supplier and method, as in the chart below. The reasons are broadly similar to those outlined above when a similar question was asked of those who use one supplier only. The main difference is the relative importance of each of the reasons. In this chart, price / value for money is the most important single reason, cited by nearly one-third (32%). We will look below at users of different suppliers but, overall, there is a tendency for large establishments and those with a high IDD spend to put greater emphasis on price / value for money. Indeed, those with high IDD spend were more likely to give a variety of reasons and also more likely to talk about never having problems in the past. The lower chart does show the differences between respondents explaining why they use BT / telephone at work, why they use BT using a different method, and why they use any other company. The key difference is that of price / value for money which is far more likely to be mentioned by those using any other method / company (41%), whereas those describing why they use BT / telephone at work emphasise the comfort factors, and less so price (10%). Among those using BT / telephone at work, large establishments were most likely to mention price (17%). Those who use BT with another method give broadly similar reasons to those using BT / telephone at work but are beginning to display some of the patterns of users of other companies. In particular, price / value for money is, just, the largest figure (18%). Two other reasons stand out, almost entirely in terms of using other companies. 8% of this group mentioned that they were away from work when they needed to make the call – not surprisingly this was particularly associated with use of mobile phones. Secondly, and again associated with mobile phones, 6% said the quality of connection is good.
Levels of satisfaction among those who use more than one supplier are high and similar to those who only use one supplier (59% = very satisfied). There are, however, approximately one in twelve accounts that are generating some degree of dissatisfaction. In terms of respondent type, there were few differences although more regular users are a little more likely to be dissatisfied. The lower chart gives these data for a selection of different suppliers. The figures across all groups are consistent although, while over one half of mobile phone users give very satisfied as a response, they are the most likely to report a level of dissatisfaction. Unlike the residential market, where the reasons were almost entirely financial, poor quality of connection was the most common reason given. Across all methods, financial reasons accounted for about one half of the instances of dissatisfaction, with poor quality of connection and problems getting through the most mentioned other reasons. Respondents were asked whether they will use the supplier again in the future. The results of this question reflected closely the answers to the satisfaction question, with similar proportions of those satisfied saying they will use a supplier again in the future. For example, we have seen that 96% of those using BT / telephone at home were very or quite satisfied and 94% said they would use this method again in he future.
4.4.1 Likelihood to change supplier in the next 3 months The most obvious and immediate conclusion from the chart opposite is that respondents are unlikely to change in the next 3 months. In addition, as with the residential sample, we would recommend that the positive answers are qualified. Again, we might assume that one half of those who say they are very likely to change might do so and that one-quarter of those who say they are quite likely to change will do so. Applying these factors we can conclude that about 6% of all establishments might change in the next 3 months. In the case of this business sample, this estimate is extremely close to the 5% of establishments who have started using a particular supplier in the last 3 months. Looking at the top-line figures, it is possible to identify some groups that are more likely to change than others and these are illustrated in the second and third charts on the page opposite. In terms of size, it is again the large establishments that stand out – 22% either very or quite likely to use a different supplier. Conversely, it is the lower spend establishments that are distinctive, only 12% of those with a quarterly IDD spend up to £50 say they might use a different supplier compared with 25% of those with a bigger spend. Frequency of making calls is another important factor; just 11% of those who make calls monthly or less often think they will change in the next three months. However, there is little relationship between past and future behaviour – those currently using two or more suppliers seem no more likely than those with one to use a different supplier and neither is there a great difference between establishments who currently use BT and those who use other companies. There is no relationship between awareness of companies and likelihood to change.
4.4.2 Further detail about prospective change Those respondents who said they might change were asked for some further details about that change. First, they were asked for the prospective companies or methods that they might choose to use. Nearly two thirds of this sample said ‘don’t know’. Of those respondents who could specify a company, the most common was, in fact, BT, mentioned by 6% and the next highest was Cable & Wireless (5%). Thereafter, a wide range of other companies and methods were each mentioned by one or two respondents. For each brand that was mentioned (a respondent was able to mention more than one), the respondent was asked to say why they might change to that company. Again, price issues predominated, given by about three-quarters of those citing a reason for their choice of brand. The lower chart shows how respondents might use their new supplier, with nearly three fifths (57%) saying they would use it for all their calls. Finally in this section, those respondents who are unlikely to change supplier in the next 12 months were asked why this is the case. One answer stood out; 67% said that they are satisfied with the service they receive from their existing supplier or suppliers while 17% said that they are simply not interested. Just 12% specified the price or that they receive good value for money. This is clearly an important reason for changing supplier but less so for retaining an existing supplier. 4.4.3 An indication of price elasticity At this point in the interview, after many respondents had mentioned price as an issue, a question was asked to establish what percentage of saving would persuade a respondent to change to another supplier. Nearly one fifth (18%) of respondents failed to give an answer. We would suggest that a high proportion of these respondents are those that would not consider a change at all. Of the positive answers, just 7% of respondents would be persuaded by a percentage saving of up to 9%. A further 20% would be persuaded by a saving of-10% - 19%and a further 30% by a saving of 20% - 29%. Thus, a saving of less that 30% might persuade nearly three fifths (57%) of establishments to change supplier. Large establishments and those with high IDD spend are more susceptible to change. 39% of large establishments might be persuaded by a saving of up to 19%, compared with 25% of small establishments. Similarly, 40% of high spend establishments might be persuaded by a saving of up to 19%, compared with 25% of low spend establishments. Unlike the residential market, there were significant differences within the different behavioural groups. Thus, 36% of those who use a non-BT supplier might be susceptible to a saving of up to 19% compared with 27% of those using BT and just 15% of those who have used the same single supplier for at least five years might change at that level of saving.
4.5 Overall opinion of amount of choice in the market Respondents were asked to say whether there is…..
(a don’t know option was not read out to respondents but this answer was recorded if the respondent could not answer the question) The top chart opposite indicates that nearly three fifths (58%) of respondents believe that it is about right (48%) or could offer no opinion (10%). Among those who offered an opinion in one or other direction, the balance was clearly in favour of there being too much competition in the market (28%) rather than too little (14%). The middle chart opposite shows that large establishments are more likely to believe there is too much choice (41%). The corresponding figure for medium establishments was 29%, again demonstrating that these establishments seem to have more in common with the small rather than the large. In terms of IDD spend there was a consistent increase from 24% (low spend), through 33% (medium spend) to 44% (high spend). Even at the low spend level, however, there was a clear balance towards thinking there is too much choice (just 15% thought there is too little). More frequent callers were, again, more likely to believe there is too much choice – 34% of those who make calls at least weekly. Finally, there appears to be a straightforward relationship between the number of companies a respondent is aware of and their opinion. Among those who are aware of more than five companies, there is a clear opinion that there is too much competition, an opinion given by 39% compared with 11% who say there is too little. However, across all these findings it should be remembered that the most common answer, never given by less than two fifths of respondent is that there is about the right amount of choice.
All countries called by residential international callers
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