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31
July 2001
Contents
Chapter
1 - Introduction
Chapter
2 - Summary & conclusions
Chapter
3 - Main findings
Chapter
4 - Use of special rate numbers and personal numbering services
Appendix
1 - Changes to Oftel's Quarterly Business Survey
Appendix
2 - Q5 business questions on fixed telephony
Chapter
1 - Introduction
1.1 This report
provides an overview of the key findings of business behaviour in the
fixed telecoms market, taken from the fifth wave of Oftel’s quarterly
business survey, conducted in May/June 2001.
1.2 The survey sample
changed in wave five, and hence results are not directly comparable
with previous waves. Details and implications of the changes can be
found in appendix 1. The survey is now conducted among 800 businesses
(previously 700), comprising 500 (previously 400) small businesses (1-50
employees) and 300 medium businesses (51-250 employees – previously
51-500 employees), 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 (Small and
Medium Enterprises) in the UK in terms of business size, industry sector
and region (see note 1 below).
1.3 The survey was
conducted on behalf of Oftel by Continental Research during May/June
2001. This report has been prepared by Oftel (see
note 2 below) based on the results provided by Continental Research.
1.4 The report covers:
- number of fixed
lines and telecoms spend
- awareness and use of suppliers, reasons for not using indirect access
operators
- satisfaction
with fixed telecoms service
- use of special
rate numbers
- use of
personal numbering services
1.5 A copy of the
questions is attached in Appendix 2. Topics
to be researched each quarter are requested by Oftel project teams,
and results feed into current investigations and reviews in individual
market areas.
Notes:
1. 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
and £50,000 annual turnover) make up around 97% of businesses
in the UK, medium businesses (51-250 employees) were over-sampled 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 (97% small businesses; 3%
medium businesses), consequently the results for small businesses closely
resemble those for SMEs as a whole. The error margin for this survey
of 800 businesses is about 2-4%, but is higher among 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.
2. 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.
Chapter
2 - Summary
& Conclusions
Use of fixed
telecoms services
2.1 Small businesses
on average have more fixed lines per employee, and spend more on fixed
telecoms services per employee, and as a proportion of business turnover,
than medium businesses. However, as they are making less use than medium
businesses, of advanced telecoms services such as Internet, ISDN and
leased lines, they spend less ‘per fixed line’ than medium businesses.
Medium businesses conversely, have fewer fixed lines per employee, and
spend less on fixed telecoms services per employee, and as a proportion
of their annual business turnover, but spend more ‘per fixed line’ as
a result of their greater use of more advanced telecoms services and
perhaps more expensive call mix (eg international calls).
2.2 On average,
small businesses spend about £354 per month on fixed telecoms services,
and medium businesses spend on average £3478 (see
note three below).
Use of fixed
line suppliers
2.3 Medium businesses
were twice as likely as small businesses to use more than one supplier
for their fixed telecoms services (61% and 29% respectively).
2.4 Medium businesses
were as likely as small businesses to use BT (both in the region of
90%), but were more likely to do so in conjunction with other suppliers.
58% of medium businesses used BT and other suppliers, compared with
28% of small businesses - who were considerably more likely to BT as
their sole supplier.
2.5 Previous Oftel
surveys found that medium businesses were twice as likely as small businesses
to have changed their fixed supplier.
Awareness and
use of indirect access operators
2.6 80% of small
businesses and 92% of medium businesses said they were aware of indirect
access (IA) operators. 25% of all SMEs said they currently use these
suppliers, and a further 7% said they are considering using them. 10%
of businesses said they have used indirect access operators in the past
(but no longer do so), and a further 15% said they considered using
them but decided not to.
2.7 The main reasons
given for no longer using IA operators included the hassle involved
in dialling the access code before each call, insufficient savings on
calls, and some perceptions that the quality of the service was poor.
Businesses who had not considered using IA operators said this was because
they were happy with the service offered by their current supplier.
Satisfaction
with fixed telecoms services
2.8 96% of small
businesses and 87% of medium businesses were satisfied with their fixed
telecoms services overall. Similar proportions were satisfied with the
reliability of their service. Satisfaction with value for money was
lower, with 81% small and 74% medium businesses satisfied with this
aspect of their fixed telecoms services.
Use of special
rate numbers
2.9 Almost a quarter
(24%) of medium businesses had a special rate number for their customers
to call them on, compared with 7% of small businesses – free-phone numbers
were most popular. About a fifth of medium businesses with special rate
numbers said they got together with other companies, when purchasing
their special rate numbers, to take advantage of discounted rates on
volume purchases.
Awareness and
use of personal numbering services
2.10 Less than half
of businesses were aware of personal numbering services, and 2% had
used a personal numbering service. Similarly, less than half of businesses
knew how much it would cost to call a personal numbering service. Of
the small number of businesses who had used this service, the vast majority
said it was useful.
Note:
3. These
averages are somewhat inflated by a small number of heavy spenders -
see main text for further details.
Chapter 3 -
Main Findings
Business
use of fixed telephony
3.1 Small businesses
in the UK had on average 5 separate lines for their fixed telecoms services
(including voice, faxes, and data lines), while medium businesses had
an average 37 lines. One-person businesses had an average of 3 lines.
Business use of fixed lines per employee is shown in figure 3a. 27%
of small businesses surveyed were using a single fixed line.
Figure 3a UK
SME business use of fixed lines, by employee size
Base:
UK SME businesses, June ’01 (Small: Base – 501, Medium: Base – 301 2%
‘don’t knows’ have been excluded)
3.2 There was a
positive correlation between use (and likely use) of Internet, and number
of fixed lines. Both small and medium businesses with Internet had more
than twice as many fixed lines as businesses without Internet who were
not likely to get it in the near future.
3.3 The average
monthly spend on fixed telecoms services (which includes call costs,
rental, maintenance and VAT for all voice, fax, Internet and data services)
amongst small businesses was £354, compared with £3478 for medium sized
businesses. These averages have been inflated by a small number of heavy
spenders. The median spend for small businesses was in the region of
£125 per month, and £2000 for medium businesses. Average spend levels
per employee, per fixed line, and as a proportion of businesses’ annual
turnover, are shown in figure 3b.
3.4 Small businesses
have more fixed lines per employee and spend more on fixed telecoms
services per employee, than medium businesses. They spend less per line
however than medium businesses, as they tend to fewer advanced services,
such as Internet, ISDN, and leased lines (see Business
Use of the Internet, May 2001). Additionally, medium businesses
were found in previous Oftel research to have a more expensive call
mix eg making more international calls, etc.
3.5 Small business
spend on fixed telecoms services however, accounts for a slightly higher
proportion of the business turnover, compared with medium businesses.
Amongst all SMEs, annual spend on fixed telecoms services accounts for
less than 1% of annual turnover. This may vary by business sector however,
which we will examine in future quarters once sufficient sample has
been collected in each category to enable analysis by type of industry.
Figure 3b Average
monthly on fixed telecoms services, by business size
Base: UK SME businesses, June ’01 (Total base: 802, ‘don’t knows’ have
been excluded)
*
Average spend figures have been rounded to the nearest £1 and
therefore calculations may not exactly total the average monthly
spend.
Use
of fixed telecoms suppliers
3.6 The majority
of small businesses use only one supplier for their fixed line services.
29% use more than one, compared with 61% of medium businesses. Figure
3c shows multi-supplier usage among different types of businesses.
3.7 Use of more
than one supplier for fixed telecoms services was higher than average
among businesses making wider use of a range of telecoms services, such
as those with Internet, heavy monthly spenders, and to a lesser extent
those with mobiles.
Figure
3c % UK SME businesses using more than one supplier for fixed telecoms
services
Base:
UK SME businesses, June ’01 (Total base: 802)
3.8 Overall, 92%
of SMEs use BT for some or all of their fixed telecoms services. Medium
businesses were considerably more likely to use BT in conjunction with
another supplier, compared to small businesses, about two-thirds of
whom used BT as their sole supplier (figure 3d).
Figure
3d UK SME business use of fixed telecoms suppliers
Base:
UK SME businesses, June ’01 (Small: Base – 501, Medium: Base – 301)
Awareness
and use of indirect access operators
3.9 Businesses were
asked whether they were aware of indirect access operators, who offer
telecoms services using the existing business lines, by entering a short
code before dialling, or attaching a special box to the phone which
does this for them. 80% of small businesses and 92% of medium businesses
said they were aware of indirect access operators. Over three-quarters
(77%) of businesses with 1-5 employees were also aware of this option.
3.10 However, general
awareness of these operators is slightly different to being aware that
they offer services in the business’s area (some businesses may only
be aware of the general concept of indirect suppliers, and may not be
fully aware that most offer national coverage). The February survey
found that just over half of small businesses and three-quarters of
medium businesses were aware of indirect access operators who offered
service in their area.
3.11 Overall, a
quarter of businesses said they currently use indirect access operators
– this was considerably higher among medium (51%) than small businesses
(24%). A further 7% were currently considering them. 10% of businesses
said they had used indirect access operators in the past and a further
15% of businesses had considered using them but decided against it.
About 2 in 5 businesses said they had not considered using these operators
(this includes businesses who were not aware of these operators). This
is shown in figure 3e.
Figure
3e Business situation with regard to indirect access operators
Base:
UK SME businesses, June ’01 (Base: 802)
3.12 Reasons given
by businesses for not using indirect access operators are shown in figure
3f. These differed depending on the business ‘experience’ or ‘situation’
with regard to indirect access usage, as described above.
3.13 Businesses
who had previously used indirect access suppliers said they found it
a hassle to dial the access code, that they made insufficient savings,
and some said that quality of the service had been poor.
3.14 Businesses
who had considered using indirect access operators but decided against
it, said they thought it would be a hassle to dial the access code,
that the savings would be insufficient to justify changing supplier,
and that they were happy with their current supplier.
3.15 Businesses
who were currently considering using indirect access operators said
they didn’t yet know enough about the company/service, and that they
had been too busy to arrange the service.
3.16 Businesses
who had not considered using indirect access operators (only those who
were aware of this option) said they were happy with their current supplier.
Figure
3f Reasons for not using indirect access operators
Base: UK SMEs, aware of but not currently using IA operators, June
‘01 (Base: 395)
Satisfaction
with fixed telecoms services
3.17 Overall satisfaction
with fixed telecoms services remains high amongst UK SMEs at 95% which
of a similar level to satisfaction with mobile services (also 95%).
Medium businesses were slightly less satisfied overall (87%) than smaller
businesses (96%). Similarly, 95% of businesses were satisfied with the
reliability of their fixed telecoms services, but fewer were satisfied
with the overall value for money (80%). This is shown in figure 3g.
Figure 3g %
UK SME businesses satisfied with various aspects of their fixed telecoms
services
Base:
UK SME businesses, June ’01 (Small: Base – 501, Medium: Base – 301,
‘don’t knows’ have been excluded)
Chapter 4
- Use of special rate numbers and personal numbering services
Use of special
rate numbers
4.1 Special rate
numbers include freephone, local, national and premium rate numbers.
Overall, 8% of SMEs said they had a special rate number which customers
could call them on. They were considerably more popular among medium
businesses (24%) than small businesses (7%). The proportions of businesses
with each of the special rate numbers is shown in figure 4a – freephone
was most common. Special rate numbers were generally most popular in
the transport, communications, utilities, business services and construction
industries.
Figure
4a % UK SME businesses using special rate numbers
Base: UK SME businesses, June ’01 (Small: Base – 501, Medium: Base –
301, ‘don’t knows’ have been excluded)
4.2
The most common supplier of special rate numbers among both small and
medium businesses was BT. Medium businesses were slightly more likely
than small to use a range of other suppliers, including Colt, Energis
MCI/Worldcom, and cable companies. Medium businesses were twice as likely
as small businesses to have previously used a different supplier for
their special rate numbers (25% and 13% respectively, although caution
should be applied due to the small base size of businesses with special
rate numbers).
4.3 Overall, 3%
of businesses with special rate numbers said they got together with
other companies, when purchasing their special rate numbers, to take
advantage of discounted rates (by negotiating deals as a group, and
buying more than one number/service they may achieve a volume discount).
Again this practice was considerably more popular in medium (21%) than
small businesses (1%).
Awareness
and use of personal numbering services
4.4 Personal numbering
services are numbers beginning 070 (different to mobile numbers which
begin 077, 078, 079) which enable a person’s calls to be routed to the
appropriate number, such as their fixed phone at home, work phone, and
mobile phone, at different times of the day, ensuring that they receive
all calls regardless of where they are.
4.5 Less than half
of businesses were aware of personal numbering services (38% small businesses,
47% medium businesses), and 2% had used a personal numbering service.
Of the small number of businesses who had used this service, the vast
majority said it was useful.
4.6
Overall, just over half of businesses didn’t know how much it would
cost to call a personal numbering service, and there was little difference
between small businesses (55% didn’t know) and medium businesses (48%
didn’t know). Businesses who had heard of personal numbering services
were no more aware of the cost of calling these numbers, than those
who had not previously heard of this service.
4.7 Personal numbering
charges are flexible so that callers pay for the technology they use
(for example fixed to fixed, fixed to mobile, mobile to fixed). The
cost of a call to an 070 number can be as little as 5 pence or as much
as 40 pence per minute. The remainder of businesses who did hazard a
guess at the cost of calling a personal numbering service, gave a wide
range of costs which included the following:
- 2% free
- 9% cost
of a local call
- 9% cost
of a national call
- 7% cost
of a premium-rate call
- 17% cost
of a mobile call
- 2% other
cost
Appendix
1 - Changes to Oftel’s Quarterly Business
Survey
Background
A.1 Oftel’s quarterly
business surveys began in May 2000. The purpose of these surveys is
to provide better information for Oftel decision making and to assist
stakeholders in their response to Oftel documents and policy decisions.
A.2 The surveys
focus on small and medium sized businesses and exclude large businesses
for a number of reasons:
- large businesses
account for less than 1% of all UK businesses
- they are very
over-researched particularly in the field of telecoms (primarily due
to their limited number) and for this reason are often reluctant to
participate in research
- they have considerably
greater buying power for telecoms services and can negotiate bespoke
deals with individual suppliers, enabling them to get better deals,
and making it difficult to make any meaningful comparisons in a research
context
- Oftel uses its
large business advisory panel to conduct research on specific topics
A.3 Oftel’s business
surveys are conducted among a representative sample of UK small and
medium businesses (with a minimum turnover of £50,000), reflecting the
UK profile in terms of number of employees, business sector, and geographic
region. As small businesses (with up to 50 employees and over £50,000
annual turnover) account for around 97% of UK businesses, the surveys
over-sample medium businesses in order to produce a sufficiently robust
sample to allow analysis of results among medium businesses.
A.4 Quotas are set
for small and medium businesses separately to ensure each sample is
representative of businesses of these different sizes, in terms of number
of employees, business sector, and geographic region. After interviewing,
the results are combined and weighted to be representative of UK small
and medium businesses as a whole. This enables us to present representative
results for small and medium businesses separately, each based on sufficiently
robust samples, and representative results for the combined small and
medium business sector.
Details of changes
to the sample
A.5 A review of
the first four surveys was conducted in March 2001, and a segmentation
study conducted enabling the data to be examined in greater detail than
was possible during each separate wave. As a result of this work, three
key changes have been made to the surveys between waves four (February
2001) and five (May 2001):
(a) Larger
quarterly sample
- the first four
waves of Oftel’s business survey interviewed 700 businesses each quarter
– 400 small, 300 medium. From wave five, each quarterly sample has
been increased to 800 businesses – 500 small, 300 medium,
- increasing
the overall sample will provide greater scope for a wider variety
and more detailed analysis among subgroups.
(b) Change
to definition of ‘medium’ businesses
- the first four
waves of Oftel’s business survey sampled ‘medium’ businesses with
between 51-500 employees in order to be as inclusive of as many businesses
as possible. From wave five, the survey samples ‘medium’ businesses
with between 51-250 employees,
- businesses
with more than 250 employees were generally found to be making fairly
good use of competition and choice, and were exhibiting behaviour
that was more in line with larger businesses than smaller businesses
in relation to their use of telecoms. It was therefore decided to
exclude them from future surveys and focus resources on smaller businesses
who generally require greater assistance to make best use of the choices
available. This definition of medium businesses as up to 250 employees
is now in line with that of the DTI.
(c) More detailed
sampling of small businesses
- the first four
waves of Oftel’s business survey applied quotas and weights for small
businesses’ number of employees in the categories 1-10 employees,
11-25 employees, and 26-50 employees. From wave five, these categories
have been expanded and quotas and weights are now applied to 1-5 employees,
6-10 employees, 11-25 employees, 26-50 employees,
- businesses
with 1-10 employees account for around 86% of all SMEs. However, use
of telecoms can differ quite significantly between businesses with
one employee compared to those with ten. Refining the sampling methodology
to interview consistent numbers of 1-5 and 6-10 employee businesses
wave-on-wave, should result in fewer fluctuations in results, and
enable greater opportunity for analysis and trend data based on number
of employees at this lower end of the spectrum.
Implications
of changes, for comparison between surveys
A.6 The changes
to the sampling methodology (employee categories) as described above,
mean that the results of wave five are not directly comparable with
those from waves one to four. This does not however mean that the results
from waves one to four are inaccurate or invalid. Waves one to four
are representative of businesses with up to 500 employees, whereas waves
five, and onwards, are representative of businesses with up to 250 employees,
and provide a greater focus on businesses with up to 5 employees than
waves one to four.
A.7 Whilst this
unfortunately results in a discontinuity of trend information between
waves four and five, the re-focus on smaller businesses following the
review of the first four waves of data, was felt to be of greater benefit
in assisting Oftel’s policy development and assessment, and other work
in respect of small businesses.
Appendix
2 - Q5 business questions on fixed telephony
Q5 In total how
many individual fixed telephone lines does your company have? Please
include all lines such as voice, faxes and data lines but do not include
extensions?
Q6 What is the
approximate MONTHLY telecoms bill of your company for all your voice,
fax, internet and data requirements. Please include all call costs,
rental, maintenance costs and VAT. Please exclude any bills from mobile
companies.
Q7 How many
telecom suppliers does your business use? Please exclude mobile suppliers.
Q8 You said you
use ..... (INSERT NUMBER MENTIONED AT Q7) suppliers. Which of the following
does your business use for its fixed line telephone services? Please
include all you use but do not include mobile phone companies. (MULTI
CODE)
BT
Any Cable
company e.g. NTL, Telewest, cable and wireless
Colt
Energis
MCI Worldcom
Any other
supplier(s) SPECIFY
Q9 Thinking about
all your fixed line telecoms services and suppliers, are you satisfied
with them on the following attributes? Firstly .....
The overall service
they provide
The reliability
of their service
Providing
value for money
Q10 Is your company
aware of indirect access operators? These are companies which offer
telecoms services using your existing lines. You usually enter a short
code before you dial the number you wish to call. Alternatively you
may have a box attached to your phone which does this for you.
Q11 Which of
these best describes your company's situation on the use of an Indirect
Access Operator service?
We are currently
using this service
We have used
in the past but don't do now
We are considering
using the service
We have considered
the service but will not be using it
We have not
considered the service
Q12 Why don't
you currently use an Indirect Access operator phone service?
Q30 Moving on
now to special rate numbers. Does your company have any of the following
types of telephone numbers that customers can call you on?
Freephone numbers
e.g. 0800 and 0808
Local call
rate numbers e.g. 0345 and 0845
National call
rate numbers e.g. 0870 and 0990
Premium rate
numbers e.g. 09
Q31 You mentioned
you use ..... READ OUT SERVICE(S) USED AT Q30. Which telephone company
or companies provides this service for you?
Q32 And have
you used any other telephone company's services to provide any of your
special telephone number calling services in the past which you no longer
use now?
Q33 Did you get
together with any other company when purchasing your ...... READ OUT
SERVICES USED AT Q30 calling services to take advantage of discounted
rates?
Q34 How much
do you think it costs to call an 070 number? Do you think the call rate
is the same as .... READ OUT
A free call rate
A local call
rate
A national
call rate
A premium
call rate
A mobile phone
call rate
Or some other
rate
Q35 Are you aware
of Personal Numbering Service? These are numbers beginning with 070
which enable all your calls to be diverted to the appropriate numbers
at various times of the day - such as fixed line at home, work or to
your mobile phone.
Q36 Do any of
your employees use a personal numbering service?
Q37 How useful
does your company find the 070 Personal Numbering Service?
Very useful
Fairly useful
Not very useful
Not at all
useful
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