Contents

Chapter 1 Introduction

Chapter 2 Summary

Chapter 3 Main findings

Chapter 4 Rental of telephone equipment

Chapter 5 Personal numbering services

Annex 1 Q5 May 2001 Residential Questionnaire

Chapter 1 - Introduction

1.1 This report provides an overview of the key findings of consumer behaviour in the fixed telecoms services market, taken from the fifth wave of Oftel’s quarterly residential consumer survey conducted in May 2001. Results from previous waves 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 2089 UK adults (see note 1 below) during May 2001, of whom 93% claimed to have a fixed line at home. The report has been prepared by Oftel (see note 2 below), based on the results provided by MORI.

1.4 This report covers:

- UK penetration of fixed home phones
- homes without a fixed line phone
- satisfaction with main method of making and receiving calls
- awareness and use of fixed phone suppliers
- consumer spend on fixed line telecoms
- rental of telephone equipment
- awareness and use of personal numbering services

1.5 A copy of the questions is attached in Annex 1. 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. This survey was conducted amongst a representative sample of UK adults, reflecting the UK profile of sex, age, social grade, region and employment status. Data has also been weighted to ensure the sample is representative of the UK adult population. All data shown is weighted data. Unweighted base sizes are shown on charts and tables to show the number of people who were asked the question. Because the survey was conducted amongst a sample of adults, rather than the whole population, the data may be subject to a small margin of error. The error margin for this total sample of 2089 consumers is about 1-2%, but is higher amongst smaller subgroups.

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 MORI or any decisions taken by any person in reliance on the report.

Chapter 2 - Summary Findings, Conclusions & Recommendations

Use of fixed line phones at home

2.1 There has been little change since May 2000 in the proportion of UK homes with a fixed line phone service at 93%. 6% of homes use mobiles only, and 1% of homes have neither fixed nor mobile phones.

2.2 79% of UK adults consider a fixed phone at home their main means of making and receiving calls, and 95% of these consumers were satisfied with this as their main method of making and receiving calls.

2.3 The majority (70%) of consumers without a fixed phone use mobiles as their main method of making and receiving calls, although 15% use payphones, and 7% use fixed phones either at work or in someone else’s home. Dissatisfaction with main method of telephony was slightly higher among homes without fixed phone (13% dissatisfied), than those with a fixed phone (5% dissatisfied). The higher level of dissatisfaction was caused primarily by those using payphones, only half of whom were satisfied with this method as their main telephony service.

2.4 Overall about 5% of adults said they were dissatisfied with their main telephony service. This equates to about 2.3 million, of whom, 1.9 million had a fixed phone at home, 275,000 had only a mobile at home, and 90,000 had neither fixed nor a mobile phone.

Use of fixed line suppliers

2.5 Since February, there has been a small rise in the proportion of UK homes claiming to use more than one fixed supplier, from 8% to 10%, and a corresponding drop in the proportion of BT only homes (from 72% to 69%).

Figure 2a Use of fixed telecoms suppliers – UK homes with fixed phone service, May 01
Base: UK homes with fixed line phone (Base: 1935, 1% don’t knows have been excluded)

2.6 Just over half (55%) of adults said they were aware companies offering ‘indirect’ telephone services using the line already in their home. The key groups of consumers who would benefit from greater information, such as Oftel’s consumer guides or the industry www.phonebills.org.uk website, to assist raise their awareness of the alternatives, include older consumers (over the age of 55), DE social grades, and lower income groups.

2.7 Insufficient savings or not making international calls were the main reasons given for not using indirect suppliers, highlighting consumers’ perceptions that these companies are primarily for international calls, and whilst this was traditionally the case, many now compete on a range of call types. Familiarity with brand names, and trusting a company were issues for some consumers, particularly older customers. Billing arrangements was identified as another barrier to take up of indirect suppliers for about 1 in 10 consumers, and included complicated billing (such as having to set up an account and pay a deposit in advance) or having to pay two bills.

Telephone equipment rental

2.8 During May, 13% of UK homes with fixed lines said they rented a telephone from their supplier, and a further 2% rented a combined telephone / answering machine. Telephone rental was most popular among older customers, lower income groups, and light telecoms spenders.

2.9 Half of renters did not know how much they paid to rent their telephone. Those who did know said on average £16 per year. The main reasons for renting their phone included buying hadn’t occurred to them, the phone was already in their house, or that it was easier/less hassle than buying. A quarter of customers said they didn’t know why they rented rather than bought their phone. The majority of customers who rent their phone seem not to have made a conscious decision to rent rather than buy. 17% of renters felt that it was cheaper to rent rather than buy their phone.

2.10 There was only a small difference between the estimated cost of buying a phone, and the amount paid annually in rental charges. Renters thought it would cost on average £18 to buy a basic phone. Although this is a slight overestimate as these can be purchased for about £10, it is broadly in line with the average amount paid in rental each year (£16).

2.11 In summary, it would seem that customers who rent their phone, even those who say they do so because it is cheaper than buying, appear to be aware that they are spending almost as much in rental each year as would cost to buy a basic phone. Their stated perceptions that it is cheaper to rent than buy might reflect that fact that rental is probably paid quarterly in smaller amounts, whereas buying a phone would require them to pay the lump sum all at once, which although appears relatively small, may seem difficult particularly for lower income groups.

Personal numbering services

2.12 Fewer than 1 in 5 consumers (18%) were aware of personal numbering services (numbers beginning 070 which route a person’s calls to different numbers eg home, mobile, work) and only 2% had used a personal numbering service, although it was generally considered useful by those who had. The majority of consumers had no idea how much it would cost them to call a personal numbering service which is unsurprising since only 2% thought they had ever called an 070 number.

Chapter 3 - Main Findings

Fixed telecoms usage in UK homes

3.1 During May, 93% of UK homes interviewed claimed to have a fixed line phone. Of the remaining 7% without a fixed phone, the majority (almost 9 in 10) were using mobiles instead, which equates to 6% mobile-only homes in the UK, and 1% with neither fixed nor mobile. This can be seen in figure 3a below. There has been little change in the proportion of homes with fixed lines over the last year, although an increasing number of homes now also use mobiles.

Figure 3a Penetration of fixed and mobile telephony in UK homes
Base: UK homes, May ’01 (Base: 2089, 1% ‘don’t knows’ have been excluded)

Note – rounding of data results in occasional months showing totals of 101%

Homes without a fixed line phone

3.2 The proportion of consumers without a fixed line phone at home, across different segments of the population is shown in figure 3b. Absence of fixed line phones was most common among younger consumers, particularly those in the 15-34 age group who are likely to be setting up home for the first time or living in rented accommodation. Level of income and employment status is also a key factor in absence of fixed line phones, although the vast majority of these groups have mobile phones.

3.3 Combined data from February and May is shown for individual geographic regions to ensure more robust base sizes of at least 200 in each region.

Figure 3b % UK consumers without a fixed line phone
Base: UK adults, May ’01 (Base: 2089)

Main method of making and receiving calls

3.4 Consumers were asked what they considered to be their main method of making and receiving calls, and how satisfied they were with this main method. The results are shown in figure 3c.

3.5 Almost 8 in 10 residential consumers considered a fixed phone at home to be their main method of making and receiving calls. 15% of all residential consumers, consider their mobile to be their main method of making and receiving calls. 7 in 10 of these consumers who considered mobiles their main telephony service also had a fixed phone at home.

Figure 3c % UK consumers using and satisfied with their main method of telephony
Base: UK residential consumers, May ’01 (Base: 2089)

3.6 Figure 3d compares methods used and satisfaction levels among consumers with and without fixed phones at home.

3.7 The majority of those without a fixed phone at home use mobiles as their main method of telephony, although 15% use payphones, 5% use a fixed line phone (in someone else’s home, for example friends, family, neighbours), and 2% a phone at work.

3.8 Satisfaction levels tended to be lower overall, among consumers who did not have a fixed phone at home compared with those who did have fixed phones (81% vs 95%). This was caused mainly by the people using payphones, of whom only half were satisfied with this as their main method of telephony. Those using mobiles as their main and only phone were as satisfied with this method as those who had a choice of fixed phone at home, but who had chosen to use their mobile as their main phone.

3.9 Overall 5% of adults said they were dissatisfied with their main telephony service. This equates to about 2.3 million, of whom, 1.9 million had a fixed phone at home, 275,000 had only a mobile at home, and 90,000 had neither fixed nor a mobile phone.

Figure 3d Main method of telephony and satisfaction with this – comparison of homes with and without fixed phones
Base: UK adults, aged 15+, May ’01 (Base: 2089)

Consumers’ use of fixed telecoms operators

3.10 10% of fixed line homes claim to be using more than one supplier for their calls and other home telecoms services – which is slightly higher than last quarter which reported 8% using more than one supplier. In line with this increase, there was a slight drop in the proportion of homes using only BT, from 72% to 69% (statistically significant drop at 95% level of confidence). 21% were using a sole alternative to BT (figure 3e).

3.11 Almost 1 in 10 homes (9%) were using a range of ‘other’ suppliers in addition to or instead of BT or cable. The February survey, reported these to include, Kingston Communications; Eurobell, ntl/Cable and Wireless indirect services; and other indirect suppliers such as LocalTel/World Online, British Gas, Powergen, One.Tel, and Atlantic.

Figure 3e Residential supplier usage
Base: UK adults with fixed phone at home, May ’01 (Base: 1935, 1% ‘don’t knows’ have been excluded)

Awareness and use of indirect operators

3.12 Consumers with a fixed phone at home were asked whether they were aware of companies which offer telecoms services using the line already in their home, by entering a short code before you dial the number or by using a box attached to the phone which does this automatically (indirect access operators). Just over half (55%) of fixed line customers said they were aware of these alternatives. This is higher than in previous quarters, which found that on average about a third of customers were aware of these companies. Caution should be applied before interpreting this as an improvement in awareness as the question in previous quarters asked whether they were aware of these suppliers in their area which may be lower than awareness of the general availability of indirect operators.

3.13 Awareness of these alternatives was lowest among older customers (aged 55+); DE social grades and lower income groups, in particular those not working; and those with small quarterly telecoms bills. These are the key groups who would benefit from better information to improve their awareness of the alternatives available to them, such as Oftel’s consumer guides (advising consumers of the options available to them), and price comparison information such as www.phonebills.org.uk (which provides consumers with a comparison of the prices available from different companies in their area).

3.14 13% of fixed phone customers said they use indirect operators, which is slightly higher than the proportion who said they are currently dual-supplied. Almost half of these customers said they currently use just one supplier which suggests that use of indirect suppliers by some consumers is occasional rather than continual, for example when they need to make an international call they may use an indirect operator. This is broadly in line with findings from last quarter which found that just less than half of customers using indirect suppliers used they companies for all of their calls.

3.15 Use of indirect operators was most popular in medium to higher income households; AB social groups; those with larger quarterly fixed line bills; and among those living in London and the South.

Reasons for not using indirect operators

3.16 Consumers who were aware of indirect operators but don’t use them were asked why. Insufficient savings or not making international calls were the main reasons given for not using indirect suppliers, highlighting consumers’ perceptions that these companies are primarily for international calls, and whilst this was traditionally the case, many now compete on a range of call types. Familiarity with brand names, and trusting a company were issues for some consumers, particularly older customers. Billing arrangements was identified as another barrier to take up of indirect suppliers for about 1 in 10 consumers, and included complicated billing (such as having to set up an account and pay a deposit in advance) or having to pay two bills. These and other reasons for not using indirect operators are shown in figure 3f.

Figure 3f Reasons for not using indirect operators
Base: UK adults with fixed phone at home, aware of, but not using indirect operators, May ’01 (Base: 805)

How much are residential consumers spending on their fixed line service?

3.17 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 3g.

Figure 3g Quarterly fixed line spend, including rental, calls & VAT
Base: UK adults with fixed phone at home, May ’01 (Base: 1935, 10% ‘don’t knows’ have been excluded)

3.18 Spend was related to the obvious consumer characteristics including income, household size, and use of additional telecoms such as Internet. Average quarterly spend amongst different customers is shown in figure 3h.

Figure 3h Average quarterly fixed line spend, including rental, calls & VAT
Base: UK adults with fixed phone at home, May ’01 (Base: 1935, ‘don’t knows’ have been excluded)

3.19 Spend was also related to the proportion of mobile calls made by the household from the fixed line phone. Overall, only 16% of homes said they never made calls to mobiles. Just over half of homes said that less than a quarter of the calls made from their home phone were to mobile numbers. 1 in 10 homes said that over half of their calls were to mobiles. Those making the highest proportion of calls to mobiles from their fixed phone tended to be younger rather than older. Caution should however be applied to these estimates as previous Oftel surveys have reported that 54% of consumers said they weren’t always sure whether or not it was a mobile number they were calling.

Chapter 4 - Rental of telephone equipment

4.1 Just over 1 in 10 (13%) homes with fixed line phones, rent a telephone from their telephone company, 2% rent an answering machine, and 2% rent a combined telephone and answering machine. Phone rental was most popular among older customers, lower income groups, and those with small quarterly telephone bills (figure 4a).

Figure 4a % consumers renting their telephone
Base: UK consumers with fixed phone at home, May ’01 (Base: 1935)

4.2 Just over half of customers renting their telephone said they didn’t know how much they paid in rental each year. This is shown in figure 4b. Of the remainder who did know, they paid on average £16 per year.

Figure 4b Annual amount paid to rent telephone(s)
Base: UK adults with fixed phone at home, who rent their telephone, May ’01 (Base:293)

4.3 Reasons for renting, rather than buying a phone, are shown in figure 4c. The main reason was that buying a phone hadn’t occurred to the customer – this was particularly the case among older customers and lower income groups. 17% said the phone was already in the house when they moved in – again this was particularly the case for older customers, but higher rather than lower income groups.

4.4 A further 17% of renters mentioned cost as an issue saying they thought it was cheaper to rent their phone than to buy one, and 1 in 10 said that provision of maintenance if the phone broke down was the reason they rented. About a quarter of customers could give no particular reason as to why they rented rather than bought their phone.

Figure 4c Reasons for renting rather than buying home telephone
Base: UK adults with fixed phone at home, who rent their telephone, May ’01 (Base:293)

4.5 Renters were asked how much they thought it would cost to buy a basic telephone. These can be bought for less than £10. However, over a third (37%) of renters said they didn’t know how much it would cost, and others on average thought it would cost about £18 (figure 4d).

Figure 4d Amount consumers who rent their phone think it would cost to buy a phone
Base: UK consumers who rent their telephone, May ’01 (Base: 293, ‘don’t knows have been excluded)

4.7 Most notably perhaps, was the small differences between the estimated cost of buying a phone, and the amount paid annually in rental charges. For example, customers who rented their phone because they thought it the cost of buying was an issue spent on average £15 per year on rental, and thought it would cost on average £19 to buy a phone. Customers who said that it was cheaper to rent than buy, spent on average £17 per year on rental, and thought it would cost on average £19 to buy a phone. Customers who said that buying didn’t occur to them, spent on average £17 per year on rental, and thought it would cost on average £20 to buy a phone.

4.8 In summary, it would seem that customers who rent their phone, even those who say they do so because it is cheaper than buying, appear to be aware that they are spending almost as much in rental each year as would cost to buy a basic phone. Their stated perceptions that it is cheaper to rent than buy might reflect that fact that rental is probably paid quarterly in smaller amounts, whereas buying a phone would require them to pay the lump sum all at once, which although is relatively small, may be difficult particularly for lower income groups.

4.9 The vast majority of residential customers (87%) had bought their telephone, rather than rent it from their telephone company. The main reason for this was that it was cheaper than renting, although a few mentioned that a greater variety of products/styles, etc were available to buy than rent. Reasons are shown in figure 4e.

Figure 4e Reasons for buying rather than renting telephone
Base: UK adults with fixed phone at home, who bought their telephone, May ’01 (Base:1642)

Chapter 5 - Personal numbering services

5.1 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.

5.2 Fewer than 1 in 5 (18%) consumers were aware of personal number services, only 2% of consumers had ever used a personal numbering service, and only 2% thought they had ever called an 070 number. Awareness and use of personal numbering services was highest among middle age groups, higher income groups, AB social grades, and those who can be contacted at a variety of numbers ie those who work and who use mobile phones.

5.3 Of the very small number of consumers surveyed who had used a personal number service (only 34) the vast majority (97%) said they had found the service useful.

5.4 Awareness of the cost of calling personal numbering services was unsurprisingly low given that the vast majority of customers were not aware of the service, nor aware of ever having called an 070 number. 62% said they had no idea how much it would cost to call on 070 number, 2% thought it was free, 5% about the cost of a local rate call, 12% about the cost of a national rate call, and 19% thought it was expensive. 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 actual cost of a call to an 070 number can cost as little as 5 pence per minute or as much as 40 pence per minute.

Annex 1 - Q5 May 2001 Residential Questionnaire – Fixed Telecoms questions

ASK ONLY THOSE ON THE TELEPHONE

Q1. How many companies provide your household with telephone services? Please do not count mobile phone companies. SINGLE CODE

ASK ONLY THOSE ON THE TELEPHONE

Q2. Which of these types of companies on this card do you/your household use for your home fixed line telephone services? If you use more than one fixed line supplier, please let me know what type of company each supplier is. Please do not count mobile phone companies. MULTICODE

BT
Cable
Someone else (not BT or Cable)
Don’t know/No answer

ASK ONLY THOSE ON THE TELEPHONE

Q3a. Are you aware of Indirect Access Operators? These are companies which offer telecoms services using the line already in your home. 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. SINGLE CODE

ASK IF YES AT Q3A

Q3b. And do you use any of these companies? SINGLE CODE

ASK IF NO AT q3b

Q4. Why do you not use an Indirect Access operator?

ASK ONLY THOSE ON THE TELEPHONE

Up to £30
£31-£50
£51-£70
£71-£100
£101-£150
£151-£200
£201-£300
More than £300
Don’t know/no answer

ASK ALL

Q6. Which of these do you consider to be your MAIN method of making and receiving telephone calls? SINGLE CODE

Public payphone
Mobile phone
Fixed line phone at home
Fixed line phone at work
Other

ASK ALL

Q7. And how satisfied are you overall with <insert method from Q6> as your main method of making and receiving calls? SINGLE CODE

Very satisfied
Fairly satisfied
Not very satisfied
Not at all satisfied
Don’t know/no answer

ASK ONLY THOSE ON TELEPHONE

Q8. Approximately what proportion of the calls FROM the fixed phone in your home are to mobile phones? SINGLE CODE

More than three-quarters
Around three-quarters
Over half but less than three-quarters
Around half
Less than half, but over a quarter
Around a quarter
Less than a quarter
None

ASK ONLY THOSE ON THE TELEPHONE

Q9. Which if any of the telephone equipment on this card does your household rent from your fixed phone telephone company? MULTICODE.

Any Telephone (not the line or a mobile phone)
Fax machine
Answering machine
Combined telephone/answering machine
Other (specify)
None of these/don’t rent telephone equipment
Don’t know/no answer

ASK THOSE WHOSE HOUSEHOLDS DO NOT RENT A TELEPHONE

Q10. Why did your household decide to buy rather than rent a telephone?

ASK ONLY THOSE WHOSE HOUSEHOLD RENTS A TELEPHONE

Q11. Why did your household decide to rent rather than buy your telephone?


ASK ONLY THOSE WHOSE HOUSEHOLD RENTS A TELEPHONE

Q12. How much does your household pay per year to rent your telephone? SINGLE CODE

Nothing (e.g. somebody else pays)
Less than £6
£6-£10
£11-£15
£16-£20
£21-£25
More than £25

ASK ONLY THOSE WHOSE HOUSEHOLD RENTS A TELEPHONE

Q13. How much do you think it would cost to buy a basic telephone? SINGLE CODE

Less than £11
£11-£15
£16-£20
£21-£25
£26-£30
More than £30

Ask ALL

Q32. Using this card, how much do you think it costs to call an 070 number? SINGLE CODE

Free
Local rate/Cheap
National call rate
Expensive
Don’t know/no answer

ASK ALL

Q33. Are you aware of Personal Numbering Services? 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 your fixed line at home, work or your mobile phone)

ASK ALL

Q34. Have you ever used a Personal Numbering Service for yourself to divert incoming calls in this way, OR called an 070 number?

ASK ONLY THOSE WHO HAVE USED A PERSONAL NUMBERING SERVICE

Very useful
Fairly useful
Not very useful
Not at all useful
Don’t know/no answer