Q4
February 2001
Notes:
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 700 businesses is about 2-4%, though
higher amongst small subgroups. All data shown is weighted data. Unweighted
base sizes are shown on charts and tables to show the number of businesses
who were asked the question.
3. The
report should not be seen as recommended best buys and should not
therefore be relied upon when making purchase decisions. Oftel has
conducted its own checks on the data in this report and whilst we
consider it to be correct, Oftel accepts no liability in respect of
any of the results provided to it by Continental or any decisions
taken by any person in reliance on the report.
2. Summary
Findings
2.1 Internet penetration
continued to rise amongst both small and medium sized UK businesses
– 59% and 92% respectively were connected in February 2001. Take up
levels varied quite considerably however, by both geographic region
and business type.
2.2 Businesses
on the whole appeared to be making use of a fairly wide range of ISPs,
packages, and connection methods. The majority of small business used
ordinary phone line / dial up access to connect to the Internet, whilst
medium sized businesses were more likely to use ISDN or leased lines.
2.3 Only a small
number of businesses claimed to be using DSL or cable modems. Whilst
half of (all) businesses were not aware of DSL technology, a third
of those currently connected to the Internet and not using DSL, thought
they would be likely to use DSL in future.
2.4 About a quarter
(24%) of businesses connected to the Internet said they used more
than one ISP and a fifth had switched ISP, making greater use of the
choices and deals available. The November survey reported that 90%
of businesses were satisfied with the choice of ISPs available in
the market. This survey reported that 86% of businesses with Internet
were satisfied with the information available to assist them in their
choices of ISP, and similar proportions were satisfied with the information
available on how to connect and the choice of Internet packages. There
was little difference in satisfaction levels between small and medium
sized businesses.
2.5 Use of unmetered
packages remained fairly constant at 26%, but was considerably more
popular amongst medium sized businesses (40%). Use of subscription
free / calls only packages recovered to the level reported in August
2000 (44%) following a apparent drop last quarter, although this was
likely to be a result of minor sampling variations.
2.6 Satisfaction
with Internet generally remains high – 90% of businesses were satisfied
with their ISPs quality of service, and satisfaction with subscription
charges was also high at 92% (amongst businesses using subscription
based packages).
2.7 Satisfaction
remained lowest for the customer care offered by ISPs (73%) which
experienced a slight drop from November 2000 (78%). Levels of satisfaction
with other factors including speed of access, and where applicable,
call charges, remained consistent with last quarter.
Main Findings
3.
Internet penetration among small and medium businesses
3.1
By February 2001, 60% of UK small and medium businesses said they
were connected to the Internet, a significant growth from 49% in November
2000, driven by both small and medium sizes businesses. The results
are summarised in figure 3a.
Figure 3a %
UK SMEs with Internet access
Base: UK businesses,
Feb ’01 (Small: Base – 400, Medium: Base - 300)
3.2 A further
9% of businesses (9% small, 4% medium) said they were in the process
of getting connected. This is shown in figure 3b. Just over a fifth
(23%) of UK businesses however, said they were unlikely to connect
to the Internet within the next 12 months (predominantly small businesses).
The August survey (www.oftel.gov.uk/publications/research/bint1000.htm)
found that the main reason for this was a perception that the Internet
was not relevant to the business and could not assist it in any way.
Lack of knowledge about the Internet, how to connect and its potential
uses and benefits were identified as potential barriers for a small
proportion of businesses.
Figure
3b Internet penetration amongst UK businesses
Base: UK businesses,
Feb ’01 (Small: Base – 400, Medium: Base - 300)
3.3 Figure
3c shows combined data for individual geographic regions and by business
type. Sample sizes at this level of detail can be quite small for
some groups, hence data from the November and February surveys has
been combined, to provide more robust sample sizes on which to base
conclusions.
Figure
3c Regional and industry differences in % UK businesses with /
in process of getting Internet
Base: UK small
and medium businesses, Nov ’00 and Feb ’01 (Base: 1400)
*
Caution should be applied as combined base size less than 100
4.
Business use of Internet access methods and ISPs
4.1 Businesses
on the whole appeared to be making fairly wide use of the range of
ISPs and packages available, given the relatively short length of
time that some of the alternatives have been available.
Connection
method
4.2 The majority
of small businesses connected were using ordinary phone line / dial
up to access the Internet. ISDN and leased lines were more popular
amongst medium businesses. Access methods are shown in figure 4a.
Figure
4a Methods used by businesses to access the Internet
Base:
UK businesses with Internet, Feb ’01 (Small: Base – 276, Medium: Base
- 279)
* Note, figures
add to more than 100% as some businesses are using more than one access
medium.
4.3
DSL usage by small businesses appears to have grown during the last
quarter (from less than 1% to 5%). This could partly be a result of
the more general rise in Internet take up amongst small businesses
over the last quarter - of the small businesses claiming to use DSL,
almost 2 in 5 said that they were not previously connected to the
Internet and DSL was the first access method they used. More likely
however, it would appear to be a slight over estimate probably a result
of confusion as to what DSL actually is. Industry subscriber figures
suggest that 3% would be a more realistic estimate of the proportion
of businesses with Internet using DSL.
4.4
The DSL users who had previously been connected to the Internet (3
in 5), said that DSL had recently replaced their ordinary phone line
/ dial up, or ISDN connection. The reasons they gave for replacing
their original access method with DSL included perceptions that it
was a better quality service, offered higher speeds, was ‘always on’,
and provided unmetered access. We will continue to monitor claimed
usage of DSL as the market continues to develop.
4.5
Potential future use of DSL remains encouraging with a third of businesses
with Internet (who don’t currently use DSL) saying they would be likely
to use it in future. The most common reasons for not considering DSL
in future included insufficient use of the Internet, not knowing enough
about DSL, and satisfaction with existing high speed or unmetered
connection methods.
4.6
Lack of awareness of DSL is clearly a barrier to greater usage - half
of all businesses interviewed had not heard of it, and interestingly
perhaps, there was no difference in awareness levels between businesses
connected and those not likely to connect to the Internet. Businesses
who were in the process of connecting were considerably more likely
to be aware of DSL, perhaps having recently investigated the alternative
access methods available to them.
Number
of ISPs used
4.7 About a quarter
(24%) of businesses said they used more than one ISP. There was no
difference between small and medium sized businesses. Furthermore,
a fifth of small businesses and a quarter of medium businesses said
they had previously used a different ISP, indicating a significant
minority at least who are making use of the choices available. This
is in line with switching in the fixed line market, but is lower than
the level of switching in the mobile market (36%).
4.8 The proportion
of businesses who have switched ISP was slightly lower than reported
in previous quarters which were in the region of 30%. This might be
a result of the growth in Internet take up amongst small businesses
in particular this quarter, as those just recently connected will
have had less opportunity in which to switch their ISP.
4.9 Previous quarters
reported that the majority of businesses who had changed ISP found
the switching process easy, and cost, better content/links, and faster
speeds were the main reasons for changing.
Type of
package used
4.10 Use of unmetered
type packages has remained broadly consistent over recent months,
at about a quarter of businesses. Medium businesses were more likely
to use unmetered packages than small businesses although this also
includes some leased lines. Small businesses were more similar to
residential customers in terms of the packages they used, with almost
half using subscription free / calls only packages.
Figure 4b Main
type of Internet package used by businesses
Base: UK businesses with Internet, Feb ’01 (Small: Base – 276, 13%
‘don’t knows’ have been excluded), (Medium: Base – 279, 18% ‘don’t
knows’ have been excluded)
4.11 Businesses
are making use of a range of ISPs as seen in figure 4c, which shows
individual ISP share of the SME business market based on what ISPs
businesses said they were using. [NB This is not the same as the proportion
of businesses using each ISP as some businesses are using more than
one ISP]. Only ISPs with a share of 2% or more are shown. Those with
less than 2% share are included in the ‘other’ category.
Figure 4c ISP
share of SME business Internet access (based on all ISPs businesses
use)
Base: All ISPs used in small and medium UK businesses with Internet
access, Feb '01 (Base:555, 14% 'don't knows' have been excluded)
5. Satisfaction
with Internet service
5.1 On the whole,
there has been little change in satisfaction with Internet since November
2000, with businesses expressing fairly high levels of satisfaction
with their Internet service.
5.2 As shown in
figure 5a, satisfaction remains highest with quality of service offered
by ISPs, at 90%, and was higher still amongst medium businesses (95%).
Satisfaction was also high with subscription charges (amongst businesses
for whom this was applicable).
5.3 Small businesses
were considerably less satisfied with speed of access than medium businesses.
This most likely reflects their higher use of PSTN / dial up access,
compared with medium businesses who were more likely to use ISDN or
leased lines.
5.4 Satisfaction
with customer care offered by ISPs remains lowest at 73%, and has experienced
a slight drop since November 2000 (78%). Smaller businesses who were
least satisfied with this aspect of service (72%) were also less likely
than medium businesses to have switched ISP (see para 4.7) and hence
could potentially be making greater use of the choices available.
Figure 5a %
UK businesses satisfied with aspects of Internet service
Base: UK businesses with Internet, Feb ‘01 (Small: Base - 276, Medium:
Base – 279, ‘Don’t knows’ have been excluded)
* Data available
for total business sample only
Satisfaction
with choice in the Internet market
5.5 The November
survey reported that the majority of businesses were satisfied with
the amount of choice in the Internet market. Satisfaction was highest
with the number of ISPs available and the quality of service offered
(90% of businesses were satisfied with these aspects of the market).
Satisfaction was lowest (although still three-quarters of businesses
were satisfied) with the choice in terms of customer care offered by
ISPs which is in line with the lower levels of satisfaction with this
aspect of service reported above.
5.6 Small businesses
tended to be less satisfied than medium businesses with the choice of
access speeds on offer. This may be a result of lower levels of awareness
of alternatives available, or perceptions that there is insufficient
choice at prices they are prepared to pay. Figure 5b shows business
satisfaction with the information available in the market to assist
them in their choice of ISP and connect to the Internet.
Satisfaction
with information sources on the Internet market
5.7 Whilst satisfaction
with existing information remains high, the November survey reported
that the most popular source of information used by businesses, when
connecting to the Internet, was advice from family and friends. Whilst
small businesses were satisfied with this advice, it is not necessarily
impartial and they acknowledged that a shortage of appropriate information
for them had led them to rely on informal ‘word of mouth’ sources, for
information about the Internet. This highlights the importance of raising
awareness and usage of independent information sites such as www.telecomsadvice.org.uk
and www.ukonlineforbusiness.gov.uk
which are aimed at improving businesses’ awareness and understanding
of Internet and telecoms to assist then get the full benefit of new
and existing technologies most appropriate to their business.
Figure 5b %
UK businesses satisfied with information on the Internet market
Base: UK businesses with Internet, Feb '01 (Small: Base - 276, Medium:
Base - 279, 'Don't knows' have been excluded)
6. Conclusions
6.1 Business take
up of Internet continues to rise, although the number of medium businesses
connected appears to have almost reached a ceiling, with 92% connected
and a further 5% in the process of connecting or likely to connect soon.
The proportion of small businesses connected is significantly lower
at 59% but is still growing with the potential for a further 15% in
the process of connecting or likely to connect soon. The remaining quarter
of small businesses who said they were unlikely to connect to the Internet
may benefit from better provision of information on the uses and potential
benefits of Internet access, as the main reason for not connecting was
a perception that the Internet was not relevant and nor would be of
any benefit to the business.
6.2 Although high
levels of satisfaction were expressed with the amount of information
on the choices available in the Internet market, the November survey
reported that family and friends were the most popular source of Internet
advice for small and medium sized businesses. This will not necessarily
provide businesses with the most appropriate advice for their individual
needs and in depth interviews conducted amongst small businesses on
behalf of Oftel by Research Works (www.oftel.gov.uk/publications/research/2001/sbir0101.htm),
most acknowledged that they had been driven to these information sources
by a shortage of appropriate information for them.
6.3 This emphasises
the importance of raising awareness and use of initiatives such as TelecomsAdvice
(www.telecomsadvice.org.uk)
– an industry-sponsored, Oftel endorsed, independent advice site for
small businesses; and UK online for business (www.ukonlineforbusiness.gov.uk)
– an industry/government partnership – both of which are aimed at improving
businesses’ awareness and understanding of the Internet and other communications
technologies.
6.4 Recent research
conducted amongst small businesses who had used the TelecomsAdvice site
reported favourable feedback about the site, and their suggestions to
further improve the content and design are currently being implemented.
6.5 Once connected,
businesses were generally found to be making fairly good use of the
choices available and the majority (90%) were satisfied with the quality
of their Internet service. Customer care offered by ISPs was less satisfactory
and about a fifth of businesses with Internet have changed their ISP.
We will continue to track levels of switching as this might reasonably
increase if satisfaction with customer care were to fall further.
6.6 Satisfaction
with speed was low in comparison to other aspects of Internet service,
amongst small rather than medium sized businesses. This most likely
reflects greater use of ISDN and leased lines amongst medium businesses
and lower use of PSTN / dial up access. The November survey also found
small businesses to be less satisfied with the choice of speeds on offer.
This may be a result of low levels of awareness of alternatives available,
or perceptions that there is insufficient choice at prices they are
prepared to pay. Half of businesses had not heard of DSL, although this
is not unexpected given the relatively early stage of roll-out. A significant
proportion of businesses with Internet expressed interest in using DSL
in future and we will continue to monitor awareness and take up as roll-out
continues.
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