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Last updated 29/6/00

Main findings
- Use of networks and packages
- Consumer switching in the mobile market
- Consumer experience of mobile coverage and quality
- Consumer concerns about mobile use

Conclusions

Appendix 1 – Mobile network and package customer profiles

Appendix 2 – Research methodology and questionnaire

Summary of consumer research conducted for Oftel by Ipsos-RSL, April 2000

1. Introduction

1.1 During April 2000, a sample of 1113 GB residential adults, were asked by research agency IPSOS-RSL, on behalf of Oftel, about their use of mobile phones.

1.2 Almost half (49%) of GB adults now claim to use a mobile, and they currently have a choice of four network operators - Vodafone, Orange, BTCellnet, and One2One. This choice is expected to expand as some of these operators open up their networks potentially enabling a range of newcomers to offer mobile services to residential consumers.

1.3 Use of mobile operators is more evenly distributed in comparison to the fixed line market, where the majority of residential consumers still use BT. However, as mobile usage continues to rise and choice continues to expand, it is important to examine consumers’ use of competition and identify potential barriers to making best use of the choices available.

1.4 This survey provides a brief overview of switching behaviour in the mobile market, the key factors behind purchasing behaviour, satisfaction with quality of service and coverage, and some of the concerns consumers have with regard to mobile usage. Details of survey methodology and full questionnaire can be found in appendix 1.

1.5 The results of this survey will contribute to Oftel’s review of the mobile market and will be used to identify and track key mobile issues via Oftel’s quarterly residential consumer survey commencing May 2000.

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2. Summary of results

Mobile usage

2.1 Over half of GB adults (54%) claim their household has a mobile phone, and almost half (49%) claim to personally use a mobile.

2.2 Prepay mobiles were most popular, used by 3 in 5 mobile consumers, and were particularly favoured by the low income groups, DE social grades, and the under 24s. Monthly subscription contracts were used by just over 1 in 4 mobile users, and were most popular amongst the AB high income groups.

Mobile switching

2.3 29% of mobile users claim to have switched network and/or package. This compares to 25% switching in the fixed line market. Given the shorter time in which consumers have had their mobiles in relation to their fixed line phone, and therefore the shorter period in which they have switched, there is clearly considerably less inertia and more active use of competition in the mobile market. Consumers who had switched both their mobile and fixed supplier, said switching mobile supplier was easier than switching fixed.

2.4 Age, income/working status, and household size appear to be the key demographic features behind propensity to switch.

2.5 Consumers making most use of mobile competition, in terms of their propensity to switch were:

• Younger (25-34)
• Higher income
• Internet users

2.6 While those making least use included:

• Over 55s
• Low income / not working
• Larger households

2.7 Satisfaction with current supplier and package was the main reason for not switching, and encouragingly, about 1 in 6 mobile users said that nothing would put them off switching supplier should they choose to. However, between 25-40% consumers claimed that factors such as having to change number, prices of other suppliers, and having to buy a new phone would discourage them from switching.

2.8 Consumers reported price as the most important factor when selecting a mobile, primarily the price of calls, but also rental charges. Quality of service was ranked slightly behind price, but was more important amongst the larger income groups.

Mobile coverage and quality of service

2.9 Less than half of users said their mobile works at all times in all places. However, the majority (over 9 in 10) said that coverage was good in all/most places. Problems were mainly experienced in rural areas, indoors, and underground (tunnels, basements etc). There was little difference between the four mobile networks.

2.10 In terms of specific problems such as inability to make/receive calls due to poor reception, dropped calls, and poor sound quality during calls, 2 in 3 mobile users said they never or rarely experienced these problems, and fewer than 1 in 10 experienced them frequently.

Concerns about mobile usage

2.11 2 in 5 consumers said they had no concerns about mobile usage. Of those who did, cost was the greatest concern, including call costs in general, and more specifically the cost of calls to other mobiles and rental charges. Health concerns were mentioned by about 1 in 3 mobile users.

2.12 Service quality and coverage were not a big concern, mentioned spontaneously by only 1 in 20 mobile users, however, when prompted, about half claimed to be concerned with quality and coverage.

2.13 Almost 3 in 5 mobile users were happy for more masts to be built to further improve coverage and quality of service. This did not appear however to be related to their actual experiences of mobile coverage, as generally they did not report any greater problems than other groups. Aesthetic and health concerns were the main reasons as to why the remaining 2 in 5 mobile users would be unhappy to see more masts.

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Main Findings

3. Consumer use of mobile networks and packages

3.1 Figure 3a shows the proportion of consumers in the survey sample using each of the mobile operators. This is compared to recent mobile market share information based on actual numbers of subscribers, produced by Fintec Mobile Communications. The comparison confirms that the survey sample is representative of the current mobile market in terms of the proportion of consumers using each operator.

Figure 3a – Consumers’ use of mobile suppliers

3.2 Overall, pre-paid packages are currently most popular, used by about 3 in 5 consumers with mobiles, followed by monthly subscription contracts used by just over 1 in 4, and all in one packages, used by 1 in 10.

3.3 There were few significant differences between operators, although pre-pay packages were most popular amongst One2One customers and least popular amongst BTCellnet.

Figure 3b – Consumers’ use of mobile packages

Demographic characteristics of mobile users

3.4 In summary, mobile ownership is becoming more evenly spread amongst the population. Whilst still slightly more prevalent amongst younger consumers and the higher social grades (ABC1s), usage has increased amongst children and older consumers, and lower income groups. Other recent Oftel research indicates that mobiles have become a more cost-effective alternative for some homes who cannot afford a fixed line phone.

Figure 3c Demographic characteristics of mobile users vs GB population

Demographic differences between networks

3.5 In summary, the main notable differences between users of the mobile networks were as follows:

• Elderly consumers, over the age of 65, were considerably more likely to choose BTCellnet than any other operator.
• AB consumers and the high income groups were also more likely to use BTCellnet than the lower social grade and income groups.
• Consumers in London were more likely than average to use One2One, as were those on lower incomes.

3.6 Usage of the other operators Vodafone and Orange tended to be more evenly distributed amongst the range of consumer groups.

Figure 3d Demographic characteristics of users of different mobile networks

Appendix 1 shows the customer profile of each of the four network operators

Demographic differences in packages used

3.7 In terms of the types of packages used, there were more distinct patterns amongst different demographic groups of the population.

3.8 Pre-pay packages were most popular amongst:

• Low income groups and the DE social grades – over 80% of these groups were using pre-pay packages.
• younger consumers, aged 15-24

3.9 They were least popular in London, where 2 in 5 claim to use pre-pay packages, (despite the fact that One2One was the most popular network in this area, and was the network with the highest proportion of pre-pay users), compared to almost double this number in the Midlands where they were most popular.

3.10 Monthly subscription contracts were most popular amongst the high income groups and AB social grades, the middle age groups, and consumers in London.

Figure 3e Demographic characteristics of users of different mobile packages

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4. Consumer use of mobile competition

4.1 In addition to examining the market shares of the four main network operators, another way of assessing use of competition in the mobile market might be to consider whether or not consumers have switched network or package (prepay, all in one contract, or monthly subscription contract) – ascertaining the extent to which consumers are shopping around as more deals come onto the market.

4.2 Almost 3 in 10 mobile users (29%) claimed to have switched either mobile network and/or the type of package they use.

• 14% have switched network only
• 7% have switched package only
• 8% have switched both network and type of package

Figure 4a Consumer switching behaviour in the mobile market

Base: Mobile users, 1016

Who’s making most use?

4.3 Consumers making most use of the range of suppliers and packages available to them, by switching between them, included:

• 24-35 year olds – 38% have switched
• Higher income groups – 37% have switched
• Consumers with Internet – 38% have switched

Who’s making least use?

4.4 Least use of mobile competition, in terms of their switching behaviour to date includes:

• The over 65 year olds – 9% have switched
• Not working – 20% switched
• Larger households (5+) – 21% switched
• Low income (under £9500) – 22% switched

Little difference between networks

4.5 There was little difference between the mobile networks in terms of the proportion of their customers who have switched package (between prepay, all in one contract and monthly subscription contract) or network:

• BTCellnet – 31% switched
• One2One – 29% switched
• Orange - 29% switched
• Vodafone – 30% switched

Or between types of package

4.6 There was also little difference between the types of mobile package used in terms of the proportion of customers who have switched package or network

• Pre-pay – 26% switched
• Monthly subscription contract – 32% switched
• All in one contact package – 28% switched

Figure 4b % consumers who have switched mobile supplier or package

Base: Mobile users, 1016

How does mobile switching compare to fixed?

4.7 At almost 3 in 10 (29%), switching in the mobile market would appear to be slightly more prevalent than in the fixed line market, where a recent Oftel survey found that 25% of consumers have switched their fixed line supplier. Given the shorter time in which consumers have had their mobiles in relation to their fixed line phone, and therefore the shorter period in which they have switched, there is clearly considerably less inertia and more active use of competition in the mobile market. In the same survey, consumers who had switched both their fixed and mobile supplier, reported that switching mobile had been easier than switching fixed supplier.

4.8 Factors possibly contributing to this more active consumer behaviour in the mobile market, compared to fixed might include:

• More active advertising and selling of mobiles – high street shops, supermarkets, mail order catalogues etc
• Ease of purchasing, similar to purchasing other durables eg prepay, complete phone service in a box concept bought over the counter
• A more obvious and visible choice of operators for all customers, compared to the fixed market where only 50% have a choice of cable, and awareness of indirect options is still relatively low
• End of contracts or having to actively renew contract - may act incentive to shop around for other deals?
• Upgrading of handsets linked to type of service / package – may act as incentive to shop around / try other packages/networks?
• Despite falling prices, call costs still more expensive than fixed – may act as incentive to shop around for cheaper deal?

Reasons why consumers haven’t switched mobile supplier

4.9 Satisfaction with current supplier and or package was the main reason for never having switched, mentioned by 3 in 4 mobile non-switchers. This is similar to non-switching in the fixed line market.

4.10 About 1 in 10 non-switchers specifically mentioned that they consider their current supplier to be the cheapest. This was slightly higher amongst the lower income groups and DE social grades who are perhaps more price conscious than their peers.

Figure 4c Reasons for not having switched mobile supplier or package (unprompted)

Base: Mobile users who have not switched, 714

Potential barriers to switching

4.11 Mobile users were asked about a number of factors and whether or not they would put them off changing their supplier. Encouragingly, fewer than 2 in 5 mobile users were put off by any of the individual factors. And almost 1 in 5 said that none of the factors mentioned would discourage them from changing.

4.12 The main perceived barrier to switching was having to change phone number – 2 in 5 mobile users said this would discourage them changing supplier. This was more of a barrier for the higher income groups, higher social grades, and those working.

4.13 The price of other suppliers would put off 1 in 3 consumers from switching, and having to buy a new phone was perceived as a potential barrier by 1 in 4. 1 in 7 consumers were put off by difficulties in comparing the services and prices offered by different suppliers.

4.14 Consumers in London and younger consumers under the age of 24, were generally more discouraged by the factors than consumers elsewhere in the country.

Figure 4d Barriers to switching mobile supplier (prompted)

Base: Mobile users, 1016

What drives consumer choice when selecting a mobile?

4.15 Mobile users were asked to rank a series of six factors in order of importance to them when selecting their mobile. Figure 4d shows the overall score each factor achieved, based on the scale where 1 was most important through to 6 which was least important.

4.16 Price of calls was considered most important, followed by rental cost and quality of service.

4.17 Price of calls was the driver for pre-pay customers, while price of rental was most important for those using the all in one packages. For those on monthly subscription contracts, price of rental and quality of service were considered almost as important as the price of calls, resulting in closer ranking for these three factors. There was little difference between the rankings given by customers of the four networks.

4.18 Price of calls was considerably more important for younger mobile consumers (under 34), the DE social grades/low income groups, and larger households, who are obviously more price sensitive than other consumer groups. Those with larger incomes ranked quality of service more highly.

Figure 4e Consumer ranking of factors considered when selecting a mobile

Base: Mobile users, 1016

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5. Consumer experience of mobile coverage and quality

5.1 Consumers were asked "Thinking about the coverage and quality of your mobile phone when you want to make and receive calls, would you say it …"

• Works at all times / in all areas
• Works most of the time / in most areas
• Works sometimes / in some areas
• Rarely works / only in a few areas

5.2 Less than half of users said their mobile works at all times in all places. However, the majority (over 9 in 10) said that coverage was good in all/most places. Overall, only 1% of users said their mobile rarely worked, or only worked in a few areas.

5.3 There was little difference between the four networks as seen in figure 5a below.

Figure 5a Consumer opinion on mobile coverage, by network used

Base: Mobile users, 1016

5.4 Differences in perceptions of coverage are shown by the geographic location of the respondent in figure 5b. Upon first glance it would appear that mobile users in London and the south have slightly more difficulty than elsewhere with their mobile coverage. However, caution should be exercised when considering these results, as the questions on coverage related to all areas where consumers used their phone, not just the area in which they live.

Figure 5b Consumer opinion on mobile coverage, by geographic region

Base: Mobile users, 1016

Where do consumers experience most difficulty in mobile coverage and quality?

5.5 Consumers who reported any difficulty in coverage and quality of their mobile service were asked where they tend to experience most problems. Rural areas were unsurprisingly mentioned most frequently as a trouble spot by 37% of those who experience any problems with coverage. This is equivalent to just over 1 in 5 (22%) of all mobile users experiencing problems in rural areas.

5.6 Other areas where mobile users experienced problems with coverage included indoor locations such as shops and offices (20%), and at home (16%). Underground areas such as tunnels and basements, where mobiles are not supposed or expected to work, were mentioned by 17%. These each equate to about 1 in 10 of the total mobile population experiencing problems in these areas.

Figure 5c Areas where consumers experience poor mobile coverage/quality (unprompted)

Base: Mobile users who experience any coverage problems, 601

Rural areas 37%
Indoors (shops, offices) 20%
Underground (tunnels, basements) 17%
At home 16%
Town centres 13%
Other urban areas 8%
Coastal areas 7%
On trains 7%
In cars 6%
On motorways 5%
Conservation areas 3%

Specific mobile quality of service problems

5.7 Consumers were asked how frequently they experienced the following mobile problems:

• Inability to make / receive calls due to poor reception / signal
• Cut off during calls due to poor reception / signal
• Poor line / sound quality during calls

5.8 2 in 3 consumers said they never or rarely experienced any of these problems when using their mobile phone and fewer than 1 in 10 experienced these problems frequently.

Figure 5d Frequency of mobile quality problems experienced (prompted)

Base: Mobile users, 1016

* Mean score illustrates relative frequencies of problems experienced. Based on scoring of 4=frequently, through to 0=never. Hence, the closer the mean score is to 4 the more frequent the problem.

Differences between networks

5.9 Overall, there was little difference between the four networks in terms of the frequency with which their consumer experience poor quality or coverage problems. If anything, Orange fared slightly better than average, which is broadly in line with the quality of service indicators published by the mobile operators.

5.10 There was little difference between the broad geographic regions on these measures, and no clear patterns emerged. However, some differences might be expected between rural and urban areas.

Figure 5e Frequency of poor mobile quality - by mobile network (Mean score*)

Base: Mobile users, 1016

* Mean score illustrates average frequencies of problems experienced. Based on scoring of 4=frequently, 3=sometimes, 2=rarely, 0=never. Hence, the closer the mean score is to 4 the more frequent the problem, and the closer to 0 the less frequent the problem.

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6. What are consumers’ main concerns about mobile usage?

6.1 Consumers were asked what concerns they have about using their mobile, or mobile usage in general. This was asked in two different ways. Firstly, unprompted – where consumers were asked what concerns they had, and everything they spontaneously mentioned was recorded. At this stage they were not prompted about specific issues which they might not have immediately considered. Secondly, prompted – consumers were asked about specific mobile issues, including costs, quality of service, health risks, and increasing number of masts. They were asked whether they were very, fairly, not very or not at all concerned about each of these specific factors.

6.2 Briefly, the purpose of this dual approach is to firstly identify issues and concerns which are most important to consumers, in so much as they are sufficiently at the forefront of their minds to merit unprompted mentions. And secondly, to assess the extent of concern about other issues which may also be important, but which consumers may not have initially considered, but may none the less be concerned about. As a result, expressed levels of concern are unsurprisingly higher for the latter than former technique.

6.3 Whilst both approaches are equally valid and useful, the results clearly differ. For a variety of reasons, unprompted responses may underestimate true levels of concern whilst prompted responses may overestimate. True levels of actual concern about these issues, are likely to lie somewhere in between the two.

Unprompted concerns

6.4 Encouragingly, almost 2 in 5 consumers claimed they had no concerns about mobile usage. Of the remainder who did, cost was the biggest concern, both the price of calls in general (25%), and more specifically, calls to other mobiles (16%), and rental charges (7%).

6.5 Health risks were a concern for about 1 in 3 mobile users, both the risks from phones (25%), and the risks from masts (7%). Quality and coverage of service was not a big concern, mentioned by only 1 in 20 mobile users (5%).

6.6 Younger consumers under 24 tended to have the most concerns, primarily about the potential health risks from using their phone, and about the cost of calls to other mobiles (presumably calling friends etc). Regionally, Londoners had by far the greatest concerns, both about costs, quality of service, and health risks. The DE social grades and elderly consumers were least likely to have any concerns.

6.7 There was little difference by the mobile network or package used, and any differences are more likely to be due to the characteristics of customers using these networks, rather than specifically related to the network itself.

Figure 6a Consumer concerns about mobile usage (unprompted)

Base: Mobile users, 1016

Prompted concerns

6.8 Consumers were then asked how concerned they were about a number of mobile issues including:

• Quality of service/coverage/reliability
• Cost of calls
• Health risks from using mobiles
• Health risks from masts
• Increasing number of masts

6.9 Cost of calls were of greatest concern to mobile users, with almost 3 in 4 claiming to be concerned about this. The other issues were of concern to fewer mobile users, on average about half expressed concern with quality, health issues, and an increasing number of masts.

Figure 6b % mobile users, concerned about mobile issues (prompted)

Base: Mobile users, 1016

Mobile masts

6.10 Mobile users were asked whether they would be happy for more masts to be built to improve mobile coverage and quality of service.

6.11 Just over half (57%) said they would be happy for more masts to be built in order to improve coverage, while about 1 in 3 would not be happy.

• Very happy15%
• Fairly happy42%
• Not very happy20%
• Not at all happy14%
• Don’t know10%

6.12 Approval of more masts declined with increasing age of respondents, with younger consumers most content for more masts to be built (67%) falling to only 25% amongst those over 65. This might be partially related to level of usage rather than age alone, as older consumers tend to be lighter users of their mobiles, and were most likely to claim that the reason they don’t switch is because they ‘don’t use their phone enough to bother’.

6.13 Approval of more masts also decreased with increasing social grade, from 67% amongst the DEs to 42% amongst the ABs. There was a similar, though less marked pattern by income, with the lower income groups happier to see more masts than the larger income groups.

6.14 The main reasons consumers were not happy for more masts to be built related to aesthetics, spoiling the environment, and health and safety related concerns. Just over 1 in 10 felt that coverage and quality was already sufficient thus negating the need for additional masts.

Figure 6c Reasons not happy for more masts to be built (unprompted)

Base: Mobile users not happy for more masts to be built, 324

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7. Conclusions

7.1 The actual level of consumer switching behaviour in the mobile market is certainly comparable, and if anything, slightly more prevalent than the fixed market. However, the recent explosion of mobile ownership, and hence the shorter usage time in which consumers have switched, suggests that consumers are more active in the mobile market, and more advanced their usage of mobile competition than fixed. Factors driving switching and non-switching behaviour are however similar to the fixed market.

7.2 However, certain groups of consumers are making more use of the choices available than others. Age, income, and household size would appear to be the main indicators of switching behaviour.

7.3 Price is the main driver behind consumer choice – both price of calls and rental. Quality of service is also an important factor in the decision process, and hence the importance of being able to compare different networks on both price and quality, in assisting consumers make better informed choices.

7.4 Price and the ability to compare different networks and packages were of particular interest to the more price sensitive groups who tended to be younger, low income/DE social grades, and those living in larger households.

7.5 Encouragingly, the main reason for not switching was satisfaction with current supplier. However, potential barriers for 25-40% of mobile users included having to change number, price of other suppliers, and having to buy a new phone.

7.6 Mobile coverage and quality of service did not appear to be a major problem to consumers, with the majority reporting good coverage in the main, and relatively low incidences of specific problems such as dropped calls, poor sound quality, or inability to make calls due to coverage problems. However, it is important to note that whilst the survey does over-represent rural areas in its sampling (see note in methodology) these areas are not analysed separately. The results are based on a geographic average of all areas and might therefore underestimate problems in specific rural areas.

7.8 With regard to the issue of additional masts to improve coverage, 1 in 3 consumers were not happy with this prospect, the main reasons for which related to aesthetics and potential health risks.

7.9 Oftel’s quarterly omnibus research for 2000/01 will continue to track these, amongst other mobile issues, including consumer switching behaviour, drivers of choice, and perceptions of coverage and quality. Quarter 1 results are expected to be published during July 2000.

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Appendix 1 – Customer profile of mobile networks

Customer profile of mobile packages

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Appendix 2 – Questionnaire and methodology

Research agency - IPSOS-RSL

Method - In home, face to face omnibus, representative of the adult population (over age 15) in Great Britain (England, Scotland, Wales). Oversample in rural areas (on average 14% sample is rural, which compares to 7% GB classified as rural)

Sample - 1113 adults with mobile in household, 1016 adults personally using mobiles

Period - 14^th-20^th April 2000

Questionnaire

Base: Mobile phone owners

Which mobile network do you mainly use?

Cellnet
One 2 One
Orange
Vodafone
Other

Which of the following statements best describes the sort of mobile phone deal you have...

Contract via a monthly subscription - after paying a one-off fee for the phone and connection, you pay a monthly rental charge which may include some inclusive call minutes

Contract via an all in one package - the user pays a one-off fee which includes the phone, one year of line rental and a certain amount of calls

Prepay - after paying a one-off fee for the phone, you buy call vouchers, or other credits, as and when required

Have you ever used a different package or supplier/ network?

Different package
Different supplier/network
Different package and supplier/network
No

Why have you never switched supplier or package?

Which of the following, if any, would put you off changing mobile supplier?

Having to change number
Having to change/buy new phone
Contract with current supplier
Prices of other suppliers
Quality of other suppliers
Range of service of other suppliers
Friends/family already on same network
Difficulties in comparing what suppliers are offering

Please rank each of the factors on this card in order of importance, starting with the most important and finishing with the factor of least importance.

Price of rental
Range of phone features e.g. exchangeable covers, selection of ring tones etc.
Price of calls
Range of services e.g. SMS, voicemail
Customer service
Quality of service / coverage

Thinking about the quality and coverage of your mobile phone when you want to make and receive calls, would you say it….

Works at all times / in all areas
Works most of the time / in most areas
Works sometimes / only in some areas
Rarely works / only in a few areas

Where do you experience problems?

How often, if at all, do you experience any of the following problems when using your mobile phone?

Frequently
Sometimes
Rarely
Never

Unable to make/receive calls due to poor reception/signal
Get cut off during calls due to poor reception/signal
Poor line / sound quality during calls

What concerns , if any, do you have about using your mobile or mobile usage in general?

How happy would you be for more masts to be built to improve mobile coverage and quality of service?

Very happy
Fairly happy
Not very happy
Not at all happy

Why are you not happy for more masts to be built?

How concerned are you about the following mobile issues?

Very concerned
Fairly concerned
Not very concerned
Not at all concerned

LIST

Quality of service / coverage / reliability
Cost of calls
Health risks from using phones
Health risks from masts
Increasing number of masts

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