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Q3 November 2000 Consumers use of additional telephony services 1.1 This report provides an overview of the key findings in the fixed telecoms services market, taken from the third quarter 2000/01 of Oftel’s quarterly residential consumer survey conducted in November 2000. Results from previous quarters are used for comparison purposes where appropriate and referred to throughout this report. 1.2 The report provides trend information on which subsequent quarterly results can be compared and examines differences between consumers with different social characteristics. 1.3 The survey was conducted for OFTEL by MORI amongst 2133 UK adults during November 2000, of whom 93% claimed to have a fixed line at home. Additional research was conducted by Ipsos-RSL during November, examining consumers’ use of directory enquiries and services that enable customers to identify the number calling them. Results from this survey are also contained in this report. The report has been prepared by Oftel, based on the results provided by MORI and Ipsos-RSL. 1.4 This report provides tracking information on:
1.5 Issues specific to the November survey include:
UK fixed line penetration 2.1 UK fixed line penetration has fallen since 1999, primarily due it would appear, to the increasing popularity and affordability of mobiles. There has been little change since May 2000 in the proportion of UK homes with a fixed line phone service, currently at 93% (consistently lower than the most recent (1999) data from the Office for National Statistics, which reported penetration of fixed lines virtually static at around 95% between 1997 and 1999). 2.2 Of the 7% of homes without a fixed phone, 5% used a mobile, and 2% had neither fixed nor mobile. 2.3 Furthermore, the August survey reported a significant proportion of consumers now selecting their mobile rather than their fixed phone in situations. Oftel’s most recent Market Information reports also show a drop in fixed line (and corresponding rise in mobile) local and national call minutes. 2.4 11% of UK homes claimed to have more than one fixed line, particularly Internet homes, of whom 1 in 5 had a second line for their Internet usage. Awareness and use of fixed line suppliers 2.5 There has been little change since August in use of fixed line suppliers, with 9% of UK homes claiming to use more than one fixed supplier, and a further 1 in 5 using a sole alternative to BT. 2.6 Some consumers are more aware of, and making better use of the choices available to them. Overall, awareness of indirect operators as a viable alternative in individual areas remained relatively low at about a third of consumers, and was lowest amongst older and lower income groups. Use of caller identification services 2.7 Awareness and use of caller identification services (such as 1471, caller display, anonymous call reject) was variable, and was highest for the free services and lower for the subscription services. 1471 (enabling customers to identify the number of the last caller) was most popular, used by more than 4 in 5 consumers, while just over 1 in 10 used caller display. 2.8 Consumers using the caller identification services rated them satisfactory and few experienced any problems such as unavailable or incomplete numbers, or the identity of withheld numbers later being identified. 2.9 The majority of those who want to use caller display (enabling customers to see the number calling them before answering) and anonymous call reject (automatically rejecting calls where the number has been withheld) appear to be doing so already. Fewer than 1 in 5 thought they would be likely to get these services in the next 12 months. Lack of need was the main reason for not using these services although the cost of the service and for a new phone was a barrier for some consumers. Use and opinion of directory enquiries 2.10 Three-quarters of residential consumers said they called 192 for directory enquiries at least sometimes, and from a variety of locations (including home, work and public payphones). This included a quarter of consumers who use the service frequently (at least once a month). 2.11 The 192 DQ service was considered fairly good on provision of the information requested and helpfulness of staff, but 2 in 5 consumers considered it poor value for money (there being little difference in these ratings by frequency of use). 2.12 Although retaining the existing 192 number was considered more important than having a wider choice of services there was a willingness to use new services should 192 be replaced. The majority of consumers said they wouldn’t mind if the 192 number was replaced and on average 2 in 10 thought they would use new 5 or 6 digit DQ services, rising to 3 in 10 of those frequently calling 192.
Fixed telecoms usage in UK homes 3.1 During November, 93% of UK homes interviewed claimed to have a fixed line phone. Of the remaining 7% without a fixed phone, 5% used a mobile, and 2% had neither fixed nor mobile. This can be seen in figure 3a below. Figure 3a: Profile of UK home telephony Base: UK homes
3.2 There has been little change since August in the proportion of UK homes with a fixed line service at about 93%. These figures have been consistently lower than the most recent data from the Office for National Statistics which reported penetration of fixed lines virtually static at around 95% between 1997 and 1999. According to Oftel data, penetration certainly appears to have fallen in recent months and has remained stable at about 93%, due primarily to the increasing popularity and affordability of mobiles. 3.3 The August survey reported consumers are increasingly using mobiles rather than fixed phones in a variety of situations, and the most recent Oftel Market Information (July 2000) reports an increase in mobile local and national call minutes, and corresponding drop in fixed line local and national call minutes. Multi fixed-line homes 3.4 Whilst 7% of homes have no fixed line, 11% claim to have more than one. There has been little change in these figures since May (figure 3b). 3.5 Multi fixed-line usage remains most popular amongst higher income and AB social grade homes, and homes with Internet, a quarter of whom had second lines. They were also more common in larger rather than smaller households, amongst younger rather than older consumers, and were twice as popular amongst cable (25%) than BT customers (11%). 3.6 The May survey identified that the most popular use of second lines was for Internet or business purposes. About 1 in 5 homes with Internet access, claimed to have second lines specifically for their Internet use. Figure 3b: Fixed line penetration in UK households Base: UK adults
3.7 Homes with more than one line also tend to be making greater use of competition in the fixed market, shown in their propensity to use more than one fixed operator (figure 3c). Figure 3c: Relationship between number of fixed lines, and number of operators used Base: Fixed line homes
Consumers’ use of fixed telecoms operators 3.8 9% of fixed line homes claim to be using more than one operator for their calls and other home telecoms services, and 19% were using a sole alternative to BT (figure 3d). 3.9 We will continue to monitor consumers’ use of suppliers as competition and choice continues to increase with carrier pre-selection and local loop unbundling which offer customers a wider range of suppliers using the existing lines in their phone. Figure 3d: Residential supplier usage Base: UK adults with fixed phone at home
Dual supply customers 3.10 Homes using more than one company for their telecoms services tended to be the typical higher spend customers - the higher income, AB social grades, and Internet users - about 15% of whom said they used more than one supplier. 3.11 The May survey reported that one of the key features of multi-supply homes was their tendency to make international calls. It also reported however, that local and national calls were the main uses of secondary suppliers. Although this is probably a reflection of consumers calling patterns (ie they are likely to make more local and national calls than any other type), it indicates that secondary suppliers are not just being used for international calls. This was consistent with other Oftel research. Are consumers aware of the choices available? 3.12 Only 31% of all consumers said they were aware of the option of indirect operators. There has been little or no change in this level over recent months, indicating that the introduction of interim carrier pre-selection has not yet had a significant impact on consumers’ awareness and use of their increased choices. Additionally, the August survey found that 2 in 5 residential consumers were unsure or thought they would have to change their existing number if they switched supplier. 3.13 Awareness of indirect operators was lowest amongst consumers over the age of 55, the lower income and DE social groups – less than a quarter of these groups were aware of these alternatives. Raising awareness amongst these groups remains important, particularly the lower income groups, to assist them shop around for the best deals. 3.14 Awareness of indirect operators was highest amongst the AB social grade and higher income groups, middle age groups, and homes with Internet. These groups were most likely to be already making use of more than one supplier for their home phone services. 3.15 As choice increases some consumers may find it even more difficult to choose a supplier. The May survey (when this question was last asked) found that only 18% of consumers felt they had sufficient information to decide the best telecoms supplier and deal for them. Raising awareness of initiatives such as operator price comparisons and quality of service comparisons remains very important if Oftel is to achieve its objective of well informed consumers. How much are residential consumers spending on their fixed line service? 3.16 There has been little change since May in the average fixed line quarterly spend at about £80. This is slightly inflated by a small number of high spenders and quarterly spends are shown in figure 3e. Figure 3e: Quarterly fixed line spend, including rental, calls & VAT
Base: Fixed line phone customers Spend was related to the obvious consumer characteristics including income, social grade, household size, and use of additional telecoms such as Internet and second lines. Average quarter spend amongst different customers is shown in figure 3f. Figure 3f: Average quarterly fixed line spend, including rental, calls & VAT Base: UK fixed line phone customers
Consumers use of additional telephony services - caller line identification and directory enquiries Caller identification services 4.1 Residential customers have a range of ‘additional’ telephony services available to them to assist their home phone usage, including caller line identification services:
4.2 Consumers were asked whether they had heard of or used any of these call identification services, how satisfactory they found them, and whether they would consider using them in future. 4.3 Awareness and use of caller identification services is shown in figure 4a. Awareness and use was highest for the call identification 1471 service, which is unsurprising given that it is both free of charge, requires no special or additional equipment, and was subject to extensive advertising by BT in recent years. Over 4 in 5 customers said they have used this service. Awareness and use was lower for caller display and anonymous call reject, with 14% and 3% respectively claiming to have used these services. 4.4 3 in 4 consumers said they were aware that they could withhold their number on a call by call basis by dialling 141, and just less than half said they have used this facility. Awareness of permanently withholding their number by blocking the line was lower at about a third of consumers, and used by about 1 in 10. Figure 4a Awareness and use of caller identification services
Base: GB adults (Ipsos-RSL survey) 4.5 Awareness of these services was lowest amongst older consumers, particularly those over the age of 65, those not working/low income groups/DE social grades. Apart from 1471, which was equally popular across all groups, use of these services was lowest amongst older consumers (aged 65+). The free to use 1471 and 141 services were more widespread in their usage, while the subscription services were more popular amongst the higher income/AB social groups, and to a lesser extent younger consumers. Satisfaction with caller identification services 4.6 The vast majority of customers (98%) who used the caller identification services were satisfied with them, including 60% who were very satisfied. Few customers had ever experienced any problems with these services as shown below in figure 4b. Potential problems could include:
4.7 The most common problem (experienced by only 10% of customers) was unknown or unavailable numbers. Figure 4b: Customer satisfaction with caller identification services
Base: GB adults who use caller identification services(Ipsos-RSL survey) 4.8 The majority of customers not already using caller display or anonymous call reject said they were unlikely to subscribe to these services in the next 12 months. Caller display was of most interest to younger customers and larger households. 4.9 Given the high level of satisfaction amongst those using caller identification services, the quality and functionality of the service does not appear to be a barrier to greater usage. Lack of need was the most common reason for not using caller display although the cost of a new phone and subscription to the service were barriers for some consumers. Reasons for not using caller display can be seen in figure 4c. Figure 4c: Reasons for not using caller display Base: GB adults not using caller display (Ipsos-RSL survey) Directory enquiries services 4.10 Oftel is currently reviewing provision of directory enquiries (DQ) services with a view to increasing retail competition in this market. Consumers were asked about their use of directory enquiries, in particular use of the 192 service, and what impact any change to this number might have on their use of DQ services. 4.11 Aside from phone books, the most popular DQ service was from fixed phones at home, as seen in figure 4d. Less frequent sources were work phones and public payphones, each used by about 1 in 5 consumers. Payphones were significantly more popular amongst consumers without a fixed phone at home (just over a third accessed directory enquiries from public payphones). Mobile sources were obviously more popular amongst those who owned a mobile (about 1 in 5 of whom were accessing mobile DQ services). Internet services such as Scoot were used by fewer than 1 in 10 consumers on average, but was largely dependent on access to the Internet, and was more popular amongst those with home and work access, younger consumers and higher income groups. Figure 4d: Frequency of use of DQ services
Base: GB adults (Ipsos-RSL survey) 4.12 Three-quarters of GB adults said they call the 192 DQ service at least sometimes. Only a quarter said they never use this service (figure 4e). Use of 192 declined with increasing age and decreasing social grade and income. The most frequent users were young (aged 15-34) and higher income groups (over £25k annual income) of whom 1 in 3 claimed to use 192 frequently (at least once a month). Figure 4e: Frequency of use of 192 directory enquiries
Base: GB adults (Ipsos-RSL survey) 4.13 The majority of customers using the DQ 192 service considered it good or fair both on the helpfulness of staff and its ability to provide the numbers requested (figure 4f). Ratings were considerably lower on the overall value for money the service offered, with 2 in 5 customers saying this was poor. There was little difference in the ratings given by frequent and less frequent users of 192 DQ services. Figure 4f: Opinion on 192 service Base: GB adults who use 192 DQ service (Ipsos-RSL survey) Interest in new DQ services 4.14 A number of different options are currently being considered to expand the number of companies offering directory enquiries services to consumers, possibly at different prices of offering different types of service. Consumers were asked about their preferences in relation to a number of the changes being considered. 4.15 Overall, about a third of consumers said they would be dissatisfied if the existing 192 number was removed and replaced with a range of 5 or 6 digit alternatives in order to provide a wider range of DQ services. The majority however (65%) said they wouldn’t mind or would be satisfied if this change occurred. 4.16 Dissatisfaction was higher however amongst frequent 192 callers (calling at least once a month) as shown in figure 4g. Figure 4g: Opinion on replacing 192 with range of 5 or 6 digit numbers
4.17 Consumers were asked whether they felt it was more important to keep the existing 192 number or have a wider choice of services using new 5 or 6 digit numbers. Despite the majority saying they wouldn’t mind if the 192 number was replaced (figure 4g) the majority then said that when given the choice they felt it was more important to keep the existing 192 number than have a wider choice of DQ services (figure 4h). 4.18 Frequent customers of 192 services expressed a stronger than average preference for retaining the existing 192 number, despite the significant level of dissatisfaction with value for money. Younger consumer and higher income groups were slightly more likely to prefer a wider range of new services and hence could be the potential early customers for such services. 4.19 Customers who rated DQ 192 service poor on overall value for money and ability to provide the numbers requested were considerably more likely to express preference for a wider range of new services, and hence are also potential customers for these new services. Figure 4h: Preference for retaining 192 or having a wider range of 5 or 6 digit services
Base: GB consumers (Ipsos-RSL survey) 4.20 Consumers were then asked whether they would use new companies offering different types of DQ services at different prices or whether they would continue to use the 192 service. Just over half of consumers said they would probably continue to use the 192 service, compared with about a fifth who said they would be likely to use new DQ services, shown in figure 4i). 3 in 10 frequent 192 callers said they would probably use the new services. Figure 4i: Likely to use new DQ services or 192 service
Base: GB consumers (Ipsos-RSL survey)
Has fixed telephony penetration reached its peak amongst UK households, and will it start to decline due to the increasing use of mobiles instead? 5.1 Since May, Oftel’s surveys have reported penetration of fixed line phones in UK homes in the region of 92-93%, consistently lower than previously static estimates of about 95% between 1997 and 1999. Whilst, it is too early to predict whether penetration will remain at this lower level or will continue to decline, it has certainly dropped during 2000 and, in most of the homes without fixed lines, has been replaced with mobiles. 5.2 Furthermore, an increasing proportion of consumers with both fixed lines and mobiles reported in the August survey that in an increasing number of circumstances they are using their mobile rather than fixed phone. Oftel’s most recent Market Information publication (for the period May-July 2000) also reports a decrease in local and national fixed line minutes and corresponding increase in these mobile minutes Has there been any improvement in consumers’ awareness and use of competition? 5.3 There has been little change since May in awareness of indirect supplier, which remains low at about 1 in 3 consumer aware of these options, and fewer than 1 in 10 using more than one supplier. Interim carrier pre-selection appears as yet therefore to have had little impact on consumers in terms of their awareness and use of alternative supplier, but we will continue to monitor uptake as choices continue to increase with both full carrier pre-selection and local loop unbundling. 5.4 It is hoped that Oftel’s consumer guides, due to be published in February 2001, will assist more consumers understand the range of choices available to them. What did consumers think about proposed changes to the 192 DQ number? 5.5 Directory enquiries 192 service is used by about 3 in 4 consumers and generally considered satisfactory although 2 in 5 felt it was poor value for money. Frequent users in particular however, felt it was important to keep the existing 192 number although just over half said they wouldn’t mind if the number was replaced with 5 or 6 digit alternatives offering a wider choice of services. A sizeable minority (particularly higher income groups and those dissatisfied with the 192 service) thought they would use new 5 or 6 digit DQ services. This could reasonably be expected to rise further as consumers got used to new numbers and a wider range of potentially more individually tailored services.
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