Contents

1.1 This report contains a summary of the findings on mobile phone use from Oftel’s third quarter survey among small and medium enterprises (SMEs).

1.2 The survey was conducted among some 701 SMEs (see note 1 below) comprising 401 small (1-50 employees) and 300 medium (51-500 employes) businesses 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:

• Use of mobile phones among SMEs
• Mobile phone service providers and packages
• Switching mobile phone service provider/package
• Mobile phone use abroad
• Mobile number portability
• Satisfaction with mobile phone service.

Notes to section 1.2:
1. Some sources of data (including the DTI SME Statistics) define SMEs as employing between 1-249 staff though the definition of medium businesses is arbitrary, defined sometimes by number of employees, sometimes by turnover. The current survey included businesses with up to 500 employees in order that the survey was as inclusive as possible. It was felt that, from the point of view of telecoms purchasing, little difference existed between businesses with 249 employees and those with 500
2. The survey was conducted amongst a representative sample of small and medium enterprises (SMEs) in the UK, reflecting the UK profile in terms of business size, sector and region. As small businesses (1-50 employees) make up around 99% of businesses in the UK, medium businesses were oversampled in the survey to produce a sufficiently robust sample to allow analysis of the results among medium businesses. The combined results were re-weighted to be representative of UK SMEs as a whole (99% small businesses; 1% medium businesses), consequently the results for small businesses closely resemble those for SMEs as a whole. The error margin for this survey of 701 businesses is about 2-4%, though higher amongst small subgroups.

2. Summary

Use of mobile phones among SMEs

2.1 Some 55% of SMEs had mobile phones, ranging from 54% of small businesses to 84% of medium businesses at November 2000.

Mobile phone service providers and packages

2.2 30% of SMEs with mobiles interviewed were using Orange, 28% using BT Cellnet and Vodafone, and 16% using One2one. Apart from the four main providers, a fifth of the sample were using a range of around 15 smaller mobile phone service providers.

2.3 Around two-thirds of SMEs with mobiles were using monthly subscription packages, a fifth pre-pay packages and 16% all in one packages.

Switching mobile phone service provider/package

2.4 35% of SMEs with mobiles had switched network/service provider, the main reason for doing so being for better network coverage. In addition, 27% of SMEs with mobiles had changed package and 46% had changed tariff with their existing provider.

Mobile number portability

2.5 37% of SMEs that had switched mobile phone network/service provider had used the number porting facility and kept the same numbers for all of their phones. Medium businesses (at 51%) were more likely to have kept all their numbers than small businesses (at 36%).

Mobile phone use abroad

2.6 38% of SMEs with mobiles had phones that were used abroad for work purposes. Satisfaction with quality and coverage of service whilst abroad was high at 89%, whilst satisfaction with price and value for money of mobile use abroad was noticeably lower.

Satisfaction with mobile phone service.

2.7 Mobile phone networks/service providers were highly rated for the accuracy of their billing (98% of SMEs with mobiles were satisfied) and for overall mobile phone service (93% satisfied). Other aspects of service, such as congestion, dropped calls and the cost of calls to mobiles were less well-rated.

Main Findings

3. Use of mobile phones among SMEs

Ownership of mobiles among SMEs

3.1 Some 55% of SMEs owned mobile phones (ranging from 54% of small businesses to 84% of medium businesses) at November 2000.

3.2 The proportion of businesses owning mobiles has varied over the three quarters of the survey (June, September and November 2000), due to unavoidable sample differences in the type of businesses surveyed (and consequently differences in their telecoms needs and usage). Taking the averages of the three quarters, the survey has found that some 57% of SMEs owned mobile phones (ranging from 57% of small businesses; 79% of medium businesses).

Telecoms bills of mobile phone users

3.3 SMEs’ average approximate monthly mobile bill totalled £150, ranging from £125 for small businesses up to £1071 for medium businesses. Figure 1 shows the average approximate monthly mobile telecoms bill of small and medium businesses compared with their average fixed telecoms bill.

Figure 1: Average monthly mobile and fixed telecoms bills by business size (base: businesses with mobiles)

Mobile phone service providers used

4.1 The survey found 30% of SMEs using Orange, 28% using BT Cellnet and Vodafone, and 16% using One2one. In addition to the four main providers, a fifth of the sample were using a range of at least 15 smaller mobile phone service providers, the most frequently mentioned of which were RSL (5%) and Hutchison, Mobile Telecom and Singlepoint (all 3%). Approaching a quarter of businesses appeared to be using more than one mobile phone service provider.  Please note that these figures are not market shares and refer to percentages of businesses using each provider, not subscriber percentages.

4.2 Figure 2 shows use of the four main mobile phone service providers by small and medium businesses.

Figure 2: Mobile phone service providers used by small and medium businesses (base: businesses with mobile phones)

Mobile networks used

4.3 Taking the proportions of SMEs using the four main mobile phone service providers and their networks, and also use of those networks by the smaller independent service providers supplying SMEs, total network use by SMEs is shown in Figure 3 (see note below). For example, 28% of SMEs were using Vodafone as a service provider with another 7% using an independent service provider over the Vodafone network.

Note to section 4.3:
Figure 3 shows that 3% of SMEs with mobiles claimed to be using the Orange network through an independent service provider although Orange does not sell its network through independent providers. It is therefore likely that this finding is due to misunderstanding on the part of these businesses, for example the businesses may be arranging their mobile service through a third-party facilitator/management company although their contract is still directly with Orange.

Figure 3: Network use by SMEs (base: businesses with mobile phones)

Reasons for using single network

4.4 77% of SMEs with mobiles were using a single mobile phone network, ranging from 77% of small businesses to 72% of medium businesses.

4.5 Figure 4 shows reasons for using a single network among SMEs. The most common reasons given were that the network had offered the best deal/special deal and that the business had received good service/was happy with service (both mentioned by 21% of businesses using a single network).

Figure 4: Reasons for using a single mobile phone network among SMEs (base: businesses using a single mobile phone network)

4.6 Other reasons mentioned for using a single network included less admin (mentioned by 1%) and best reception/coverage (1%).

4.7 By business size, medium businesses (at 23%) were more likely than small businesses (13%) to be using a single network because it was cheaper for their employees to call each other on their mobiles if they were on the same network. Medium businesses were also more likely to have a group arrangement to use a single network (23% against 13% of small businesses) and to use a single network as it was easier for them to deal with one network/provider (11% against 5% of small businesses).

5. Mobile phone packages used

5.1 Over two-thirds (69%) of SMEs were using monthly subscription packages, a fifth (19%) pre-pay packages and 16% all in one packages.

5.2 Figure 5 shows that pre-pay and all in one packages were more frequently used by small businesses than by medium businesses.

Figure 5: Mobile phone packages used by small and medium businesses at November 2000 (base: businesses with mobile phones)

* The column for medium businesses does not add to 100% or more due to the 7% of medium businesses that said they did not know what packages they were using

Figure 6 shows the type of mobile package used by SMEs as a whole in the three quarters of the survey conducted in June, September and November 2000.

Figure 6: Mobile packages used by SMEs: June-November 2000 (base: businesses with mobile phones)

Proportion switching network/service provider

6.1 35% of SMEs with mobiles had switched their network/service provider at November 2000. This ranged from 34% of small businesses that had switched network/service provider to 52% of medium businesses.

6.2 Just over a quarter (27%) of SMEs had changed the package they had with their existing provider (ranging from 27% of small businesses to 34% of medium businesses). Also, 46% of SMEs had changed tariff with their existing provider (ranging from 45% of small businesses to 64% of medium businesse^s).6 (Change of package refers to transfer between monthly subscription, all in one and prepay packages with existing supplier. Change of tariff refers to transferring between different call/subscription rates etc within each of the packages each provider offers.)

6.3 Over the three quarters of the survey, the proportions switching mobile network/provider, package and tariff appear to have increased slightly, more so among medium businesses than small businesses (figure 8). This area is likely to be covered in future surveys which should confirm (or not) whether switching levels are increasing or if this slight increase is due to sample differences between quarters.

Figure 8: SMEs switching mobile provider/package/tariff: June to November 2000 (base: businesses with mobiles)

* Change of package/tariff were combined in the June 2000 quarter as opposed to measured separately in the September and November quarters

Reasons for switching mobile network/service provider

Figure 9: Reasons for switching network/service provider (base: businesses that had switched mobile network/service provider)

6.5 Two main differences between small and medium businesses emerged in reasons for switching. Medium businesses appeared to be more concerned with costs. 46% of medium businesses claimed to have switched network/service provider for cheaper mobile call costs against 14% of small businesses. Also, a higher proportion of medium businesses (24%) than small businesses (17%) had switched for cheaper subscription costs. In turn, small businesses were more likely to have switched for better customer service and support (19% of small businesses against 7% of medium businesses)

Reasons for not switching network/service provider

6.6 Satisfaction with current supplier was clearly the most common reason for not switching network/service provider. Figure 10 shows reasons mentioned by 2% or more of businesses that had not switched.

Figure 10: Reasons for not switching network/service provider (base: businesses that had not switched mobile network/service provider)

6.7 Few differences emerged between small and medium businesses in reasons for not switching. Small businesses were slightly more likely to say that they preferred to stay with a well-known supplier (mentioned by 6% of small businesses against 1% of medium businesses) and also not to have switched as they were not heavy users/hardly used mobiles (7% of small businesses; 1% of medium businesses). In turn, 10% of medium businesses said that they did not know why they had not switched against 3% of small businesses.

7. Mobile number portability

7.1 In the first quarter of the survey (June 2000), number portability was one of the main problems foreseen by SMEs that thought it would be difficult to switch mobile network/service provider. However, the second quarter (September 2000) found that few businesses that had actually switched network/service provider had experienced difficulties with number porting. This suggests that perceived rather than actual difficulties might act as a potential barrier to switching network/service provider. In the current quarter, the survey looked at SMEs’ use of and attitudes towards number porting when switching network/service provider.

Use of mobile number porting facility among switchers

Figure 11: Use of mobile number porting facility among SMEs (base: businesses that had switched mobile network/service provider)

7.4 Just over half (51%) of medium businesses had kept the same numbers for all of their phones compared with 36% of small businesses.

Reasons for not porting mobile numbers

7.5 Businesses that had not kept the same numbers for all of their phones were asked why they had not done so.

Figure 12: Reasons for not porting mobile numbers (base: businesses switching network/service provider that had not ported any numbers)

7.6 Approaching half (46%) of SMEs that had not ported numbers said that having to change number had not been an issue for them, this applied to a higher proportion of medium businesses (at 58%) than small businesses (45%).

7.7 However, approaching a third of this group had reluctantly changed numbers, 24% saying that their provider had told them that it was not possible for them to port their numbers (this would include those who switched before January 1999 when mobile number portability was introduced) and 7% saying that they would have been charged too much to do so.

7.8 15% of the group mentioned a range of other individual reasons.

7.9 Please note that these figures are based on a small sample size (104 businesses).

Likelihood to make use of mobile number porting facility among non-switchers

7.10 Businesses that had not switched mobile network/service provider were asked to agree/disagree with a number of statements to determine the extent to which mobile number porting influenced their likelihood of switching mobile network/service provider.  The survey found that around a third (29%) of businesses said that they would switch and would not be concerned about changing numbers.  However, just over half (53%) of the businesses said that they definitely would not switch if they could not keep their existing numbers.

Amount prepared to pay for mobile number portability

7.11 With networks/service providers charging between £0-30 per phone for number porting, the survey found that SMEs on average were prepared to pay £11 per phone to keep existing numbers, no difference emerging in the average between small and medium businesses. The base on which the £11 average was calculated included the 40% of SMEs that were not prepared to pay the minimum £2 asked in the survey. These businesses were presumed not to be prepared to pay anything for porting numbers.

7.12 Figure 13 shows how much small and medium businesses with mobiles would be prepared to pay per phone to keep their existing numbers in the event of switching network/service provider. Most notably, 40% of SMEs (40% of small businesses; 49% of medium businesses) were not prepared to pay the minimum asked in the survey of £2 per phone.

8.1 Some 38% of SMEs with mobiles had phones that were used abroad for work purposes, ranging from 37% of small businesses to 57% of medium businesses.

Satisfaction with mobile use abroad

8.2 Whilst satisfaction was high for quality and coverage of service whilst abroad, satisfaction with price of calls and value for money of service abroad were noticeably lower, particularly in comparison with satisfaction with price and value for money in the UK (see Figure 16). Please note that these figures are based on a small sample.

Figure 14: Satisfaction with mobile use whilst abroad (base: businesses using mobiles abroad)

*This figure is based on the subset of businesses that were aware they were being charged for receiving incoming calls abroad (comprising
66 businesses).

8.3 No significant differences emerged between small and medium businesses in satisfaction with mobile use abroad.

Awareness of charge for incoming calls abroad

8.4 Just over two-thirds (68%) of SMEs were aware that they were charged for receiving calls abroad.

8.5 23% of SMEs claimed that they were not charged, this figure being higher among small businesses (at 23%) compared with medium businesses (13%). Medium businesses, in turn, were less certain, with 18% saying that they did not know whether they were charged or not against 9% of small businesses.

Steps taken to limit bill for mobile use abroad

8.6 Although satisfaction with price and value for money of mobile calls whilst abroad was relatively low, the majority of SMEs using mobiles abroad (71%) had not taken any steps to limit the amount their business spent.

8.7 Figure 15 shows the steps taken to limit spend on mobile use abroad.

Figure 15: Steps taken to limit bill for mobile use abroad (base: businesses using mobiles abroad)

9.1 Virtually all (98%) SMEs with mobile phones were satisfied with accuracy of billing and 93% were satisfied with their overall mobile phone service. Value for money of overall package (91% satisfied) and value for money of calls from mobiles (89%) were also highly rated. In contrast, the amount it costs for others to call the business’ mobiles (67% satisfied), dropped calls (67%), the cost of calling other mobile networks (57%) and the cost of making calls to abroad (48%) were poorly rated.

Figure 16: Satisfaction with mobile phone service (base: businesses with mobile phones)

9.2 Comparing satisfaction levels at November 2000 with those of the previous quarter (September), a number of aspects of service appeared to have improved in the view of these businesses. These included overall mobile phone service (up five points to 93%), value for money of overall package (up eight points to 91%), value for money of calls from your mobiles (up nine points to 89%) and network coverage (up 13 points to 88%). Whether these increases are stable or are due to differences in the sample between quarters should be confirmed by future surveys.

9.3 By business size, medium businesses appeared to be less satisfied with value for money than small businesses. Whilst 92% of small businesses were satisfied with value for money of overall package, this proportion dropped to 83% of medium businesses. Similarly, 90% of small businesses were satisfied with value for money of calls from mobiles against 79% of medium businesses.

9.4 Further comparative quality of service information is available in the industry-produced Mobile Network Operator’s Call Success Rate Surveys (www.oftel.gov.uk/cmu/initiatives/mobilcpi.htm). These are endorsed by Oftel and provide information by region on individual operators’ quality of service and coverage.

10. Cost of calls to mobiles

10.1 One of the areas investigated in the second quarter of the SME survey (September 2000) was SMEs’ attitudes towards the cost of calls to mobiles. The survey found that, whilst three-fifths of businesses using mobiles were satisfied with the cost of calls to mobiles, this level of satisfaction was relatively low when compared with satisfaction with other aspects of mobile phone service.

10.2 The November survey continued to investigate cost of calls to mobiles through a number of questions. The findings have been compiled below:

• 67% of SMEs with mobiles were satisfied with the cost for others to call their company’s mobiles and 57% were satisfied with the cost of calling other mobile networks, again both relatively low when compared with satisfaction with other areas of mobile service.
• 13% of SMEs (including 23% of medium businesses) using a single mobile network were doing so as it was cheaper for employees to call each other on their mobiles if they were on the same network. Similarly, another 13% of SMEs using a single network said they were doing so due to group arrangements, which may also be related to the cost of calling mobiles, and cheaper calls to the same network.
• 11% of SMEs that had switched mobile network/service provider had done so as it was cheaper with the new provider to call the company’s mobiles from the office, and another 5% had switched as it was cheaper with their new provider for customers to call the company’s mobile phones. In addition, 2% had switched so that the company’s mobile phones would all be on the same network (again, perhaps due to the cost of calls to mobiles and cheaper calls to the same network).
• Lastly, 2% of SMEs that had not switched network/service provider said they had not done so as calls were cheaper if they stayed on the same network when replacing individual phones.

10.3 These findings will feed into the current review of calls to mobiles.

Use of competition

11.1 SMEs appeared to be taking advantage of the choice available in networks/service providers and also of the packages and tariffs offered by each provider. A third had switched mobile network/service provider.

11.2 By business size, medium businesses were both more likely to switch, and more likely to be switching for financial savings. It may be that lower switching among small businesses is due to difficulties comparing tariffs and packages, small businesses being less likely to have expert advice than larger businesses and also being less likely to be approached by networks/service providers directly (due to their lower spend). However, when asked why they had not switched approaching two-thirds of small businesses simply said that they were satisfied with their current supplier. Suggestions have been made for further research to be conducted into existing comparative information on mobile tariffs to ensure that it is meeting the requirements of businesses.

Mobile number portability

11.3 The June and September surveys identified number portability as a potential barrier to switching mobile network/service provider. The November survey found that around a third of SMEs that had switched had been able to keep all their existing numbers. Whilst around half of the businesses that had not kept all their numbers claimed that they did not mind changing their number, a quarter had been told by their provider that it was not possible (this would include businesses that switched before the introduction of number portability in January 1999). Another 7% had been deterred by cost which was backed up by the average £11 SMEs were prepared to pay per phone for number porting (compared with the actual charge of between £0-30).

11.4 Operators are aware of some areas where mobile number portability is not delivering the benefits of easy switching as perhaps it should.  Operators are aware of this, and, encouraged by Oftel, have been working together to develop improved processes for handling requests to transfer numbers.   Oftel expects the industry to deliver improvements that will make the transfer of numbers cheaper, more reliable, faster and more user-friendly during 2001.

Mobile use whilst abroad

11.5 Satisfaction with price and value for money of mobile use abroad was noticeably lower than for other aspects of mobile phone service, although relatively few had taken steps to limit their bill for use abroad.

11.6 The survey also found that just two-thirds of SMEs using mobiles abroad were aware that they were charged for incoming calls. However, whilst satisfaction with cost was low, the majority of businesses had not taken any steps to limit their bills for use abroad.

11.7 These findings will feed into the current review of mobile competition.

Cost of calls to mobiles

11.8 The survey found that around two-thirds of SMEs with mobiles were satisfied with the cost for others to call their company’s mobiles and three-fifths were satisfied with the cost of calling other mobile networks. These proportions are relatively low when compared with satisfaction with other aspects of mobile phone service. The survey also found evidence of businesses limiting their use to a single network and switching with the cost of cheaper on-net calls (calls to the same network) in mind.

11.9 These findings will feed into the current review of calls to mobiles.