Use of fixed line services among small and medium enterprises (SMEs)
Summary of Oftel SME survey

Q3 November 2000

Contents

1. Introduction

2. Summary

3. Main findings

4. Conclusion

1.1 This report contains a summary of the findings on use of fixed line services from the third quarter of Oftel’s survey among small and medium enterprises (SMEs). Reports from the first and second quarters of the survey (June and September 2000) are available on the Oftel website.

1.2 The survey was conducted among some 701 SMEs comprising 401 small (1-50 employees) and 300 medium (51-500 employees) businesses (see note 1 below) located across the UK with a minimum turnover of £50,000. Quotas and weighting were applied to small and medium businesses separately so that the sample was representative of SMEs in the UK as a whole in terms of business size, industry sector and region (see note 2 below). The fieldwork was conducted on behalf of Oftel by Continental Research during November 2000.

1.3 This report has been prepared by Oftel based on the results provided by Continental Research. The report should not be seen as recommended best buys and should not therefore be relied upon when making purchase decisions. Oftel accepts no liability in respect of any of the results provided to it by Continental Research or any decisions taken by any person in reliance on the report.

1.4 The report covers:

• Number of fixed lines
• Telecoms spend
• Awareness of choice
• Use of suppliers
• Awareness and use of Calling Line Identification services
• Satisfaction with fixed telecoms service

2. Summary

Awareness of competition

2.1 Some 60% of SMEs were aware of a cable company in their area and 65% of an indirect supplier. Awareness of both these alternatives to BT was higher among medium businesses compared with small businesses.

Use of competition

2.2 28% of SMEs were using more than one fixed line supplier, ranging from 27% of small businesses to 58% of medium businesses.

2.3 Overall, two-thirds of SMEs were using BT as their only supplier, ranging from 67% of small businesses to 37% of medium businesses. Medium businesses (56%) were more likely to be using BT and other suppliers against 25% of small businesses. Roughly equal proportions were using only suppliers other than BT (8% of small businesses; 6% of medium businesses).

Awareness and use of Calling Line Identification (CLI) services

2.4 The vast majority of SMEs were aware of the services to find out the number of the most recently received call using 1471 (95% of SMEs aware) and to withhold numbers using 141 (93% aware). The 1471 service was also the most frequently used, followed by the 141 service and Caller Display (allowing the person receiving the call to see the number of the caller before answering).

Satisfaction with service/problems experienced

2.5 Satisfaction with overall telecoms service had risen slightly since the September survey from 94% to 96%. Reliability of service (97% satisfied) and accuracy of billing (96%) were the most satisfactory aspects of service for SMEs. Cost of calls (82%), value for money (81%) and the ability to get hold of the appropriate person when necessary (77%) were less satisfactory.

3.1 Some 27% of the SMEs surveyed were using a single fixed line (all small businesses) as was found in the September survey.

3.2 Approaching three-quarters (74%) of the one-person businesses surveyed were using more than one fixed line, suggesting that businesses may increasingly be installing lines for different purposes (using one for telephone and another/others for fax or Internet). This proportion has risen from 52% in September 2000 and 28% in June, however, due to small sample sizes, it is difficult to establish whether this is a trend. Number of fixed lines will continue to be tracked to establish whether the increase in lines among one-person businesses (forming around three-fifths of all businesses ^- SME Statistics for the United Kingdom 1999 - National Statistics) is significant or is perhaps due to sample differences between the surveys.

3.3 The average monthly fixed telecoms spend of SMEs (including Internet, excluding mobile) at November 2000 ranged from £228 for small businesses (1-50 employees) to £2787 for medium businesses (51-500 employees).

Figure 1: Average monthly telecoms bill by number of employees (base: all SMEs)

3.4 Overall, some 60% of SMEs said that they were aware of a cable company in their area and 65% were aware of indirect suppliers. In comparison with the September survey, whilst awareness of cable companies was similar (61% at September 2000), awareness of indirect suppliers was substantially higher (from 50% at September 2000). This apparent increase was most notable among small businesses (+15 points to 65%) although it may be due to sample differences between the surveys. Awareness of choice will continue to be tracked in future research.

3.5 By business size, figure 2 shows that, as in the September survey, awareness of alternatives to BT was higher among medium businesses than among small businesses.

Figure 2: Awareness of cable companies/indirect suppliers (base: all businesses)

3.6 Some 28% of the SMEs in the November survey were using more than one fixed line supplier, ranging from 27% of small businesses up to 58% of medium businesses.

3.7 Over the three quarters of the survey from June to November 2000, the figure for businesses using more than one fixed supplier has ranged from 27% to 35% for small businesses and 52% to 64% for medium businesses. Taking the results from the three quarters together, an average of 30% of small businesses are using more than one supplier and 58% of medium businesses.

3.8 Looking at the number of suppliers used, 22% of SMEs (21% of small businesses; 43% of medium businesses) were using two suppliers at November 2000 and 5% (5% of small businesses; 15% of medium businesses) three or more.

3.9 Two-thirds of SMEs were using BT as their only supplier, with 26% using BT and at least one other supplier and 7% using suppliers other than BT only. These proportions have remained broadly similar over the three quarters of the survey (June, September and November 2000).

3.10 Businesses have the opportunity to use certain additional telecoms services at no additional cost or for a limited extra charge. Various services are now available which allow the called or calling party to receive or withhold information about the call being made. The survey sought information on SMEs’ awareness of certain CLI services, the use they made of them and their general level of satisfaction with the services offered. This information will help to inform policy making in future. Of equal importance is the fact that European legislation creates a number of rights with regard to CLI services and obliges companies offering such services to publicise these rights to their customers. It is therefore important, from a compliance aspect, to assess customers’ awareness of their rights pertaining to CLI. Use, awareness and satisfaction with CLI services among residential consumers is covered in the equivalent fixed line report from the residential quarterly survey.

3.11 Awareness of the various CLI services available to businesses varied widely, ranging from 95% and 93% respectively for the 1471 and 141 services down to 44% for withholding numbers through permanent line blocking and 30% for Anonymous Call Rejection.

Figure 5: Awareness of Calling Line Identification services among SMEs (base: all businesses)

3.12 By business size, awareness of Caller Display, withholding numbers through permanent line blocking and Anonymous Call Rejection was noticeably lower among small businesses.

Use of Calling Line Identification (CLI) services

3.13 Businesses aware of each of the CLI services were asked if they used that service. Overall, four-fifths of SMEs were using at least one of the CLI services, ranging from 80% of small businesses to 73% of medium businesses.

3.14 CLI services used varied between small and medium businesses. Figures 7a/b summarise use and awareness of CLI services among small and medium businesses in the survey.

3.15 The most frequently used service among small businesses was the 1471 service. The 141 and Caller Display services were less used by small businesses despite high awareness of these services. Just 6% of small businesses were using a permanent line block to withhold numbers and 2% Anonymous Call Rejection, with the majority of small businesses not aware of either of these services.

3.16 Caller Display and the 1471 service were the services most frequently used by medium businesses followed by the 141 service. As with small businesses, permanent line blocking and Anonymous Call Rejection were less used among medium businesses with a lower proportion aware of either of these services.

3.17 Businesses not using Caller Display were asked their reasons for not using the service. The most common reason for not using Caller Display was that businesses did not need to see who was calling before answering, particularly small businesses (55%) which were less likely to use Caller Display. Medium businesses also mentioned that they did not need to see who was calling before answering (35%), though they were more likely not to be using Caller Display because it was not available on their system or they would have to buy new phones (40%).

3.18 In addition, 5% of SMEs not using Caller Display said that the service was too expensive.

3.19 95% of businesses using CLI were satisfied with the service, little difference emerging between small (95%) and medium businesses (94%).

Satisfaction with service

3.20 96% of SMEs were satisfied with the overall telecoms service they received. Small businesses (at 96%) were found to be more satisfied with overall service than medium businesses (89%).

3.21 Reliability of service (97%) and accuracy of billing (96%) received the highest ratings, as in the September survey. Satisfaction with other aspects of service was very similar to the previous quarter, the only significant change being a slightly lower satisfaction with installation/ordering of new services (down 3 points to 90%). Cost of calls (82%) and value for money (81%) remained the lowest rated aspects of service along with the ability to get hold of the appropriate person when needed (77%).

Figure 9: Satisfaction with fixed telecoms service among SMEs (base: all businesses)

3.22 By business size (Figure 10), in addition to lower satisfaction with overall service, medium businesses appeared to be less satisfied with individual aspects of telecoms service. Significant differences in satisfaction were found between small and medium businesses with overall service, reliability of service, fault repair, installation/ordering of new services and cost of calls. In particular, medium businesses were less satisfied than small businesses with cost of calls and getting hold of the appropriate person when necessary.

Figure 10: Satisfaction with aspects of service by business size (base: all businesses)

SMEs' use of competition

4.1 At least three-fifths of SMEs were aware of an alternative to BT in their area, either a cable company or an indirect access operator. Whilst awareness of alternatives is higher among medium businesses than small businesses, awareness of indirect operators appears to have increased since the September survey, particularly among small businesses, although this apparent increase may be due to sample differences between the surveys. SMEs’ awareness and use of indirect access operators will continued to be tracked in future surveys, as permanent carrier pre-selection (PCPS) is introduced, allowing customer’ calls to be automatically routed to the carrier of their choice.

4.2  As in the June and September surveys, small businesses were found to be making less use of competition than medium businesses both in the number of suppliers they were using and in the proportion that had switched supplier. In particular, two thirds of small businesses were using BT as their only supplier. Following the June survey which identified difficulties comparing suppliers on price and quality, it is planned to conduct further research on the Comparable Performance Indicators/CPIs (http://www.cpi.org.uk/), which provide quality of service information on suppliers, and on the small business advice site TelecomsAdvice (http://www.telecomsadvice.org.uk/) to ensure that these existing sources of information are meeting businesses requirements and to target these sources more effectively to businesses most likely to benefit from the information with the aim of assisting small businesses in particular in getting the best deal and facilitate their use of competition.

Increasing number of fixed lines in one-person businesses

4.3 From the small samples of one-person businesses surveyed over the three quarters (June to November 2000), an increasing proportion appear to be using more than one fixed line, perhaps for different purposes (ordinary phone line, fax, Internet). This area will be tracked in future surveys to establish if the apparent increase is part of a trend which might lead to increasing business use of telecoms (one-person businesses forming three-fifths of all businesses), or if the apparent increase is simply due to sample differences between quarters.

4.4 The survey revealed that SMEs had a high level of awareness (of over 90%) of two basic Calling Line Identification services, Call Return (1471) and Call Blocking (141). This contrasted with surprisingly low level of awareness (of fewer than 1 in 3 businesses) of the Anonymous Call Rejection (ACR) service, which enables a subscriber to reject calls where the number of the caller has been deliberately withheld. Although it is not surprising that there is little call for ACR in a business environment – the survey revealed 5% usage – the level of awareness was disappointingly low and suggests that service providers are not adequately promoting this service to their customers, as required by the Telecommunications Data Protection Directive.

4.5 A fifth of SMEs were using Caller Display, enabling them to see the caller’s number before answering the phone. Caller Display, linked with CTI (computer-telephony integration) can be a powerful tool, offering immediate access and display from a customer database when a particular customer calls. One possible area for future research is how Caller Display is being used by businesses.

4.6 Awareness and use of DSL (digital subscriber line) services is now covered in the Internet report from this survey.