Chapter 1 Introduction

Chapter 2 Summary findings, conclusions and recommendations

Chapter 3 Main findings

Chapter 4 Are consumers making use of the range of connections and ISP packages available?

Chapter 5 Satisfaction with Internet service

Appendix 1 Q5 May 2001 Residential Questionnaire: Internet questions

Chapter 1

Introduction

1.1 This report provides an overview of the key findings on consumer behaviour in the Internet market. These results are taken from the fifth wave of Oftel’s quarterly residential consumer survey conducted in May 2001. Results from previous quarters are used for comparison purposes and referred to throughout this report.

1.2 The report provides a base for 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) during May 2001, of whom 40% claimed to have Internet at home. This report has been prepared by Oftel (see note 2), based on the results provided by MORI.

1.4 The report covers:

• how many, and which consumers have Internet access at home – social demographics
• method of accessing the Internet
• type of package, and ISPs used
• average time spent on-line each week
• satisfaction with ISP service

1.5 Other issues addressed in recent quarters include:

• consumer satisfaction with individual aspects of their Internet service and the choices available.
• sources of advice used before connecting to the Internet
• interest in ADSL Internet access options and examination of which aspects of the service consumers consider most attractive
• potential future interest amongst non-users, barriers to usage

1.6 A copy of the questions is attached in appendix 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 sample of 770 home Internet users is about 2-4%, but is higher amongst smaller subgroups.

2 The report should not be seen as recommendimg 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 and recommendations

2.1 Home Internet access continues to grow. 40% of UK homes currently claim to be connected, compared to 34% in February 2001. A total of 10million homes are now connected; an increase of 3.75million homes during the past 12 months.

2.2 Most subgroups have seen a rise in home Internet access, particularly in the North of England, however penetration remains highest amongst younger and middle aged groups, higher income and large households. 19% of older consumers (55+) now claim to be connected at home.

2.3 The vast majority of customers are still using the traditional PC and ordinary phoneline / dial up method to access the Internet. However, younger consumers in particular are continuing to make use of the new technologies available such as mobile phones, digital television and games consoles.

2.4 35% of Internet homes currently claim to use fully or partially unmetered packages. While use of fully unmetered packages has continued to grow (18% to 24%) the number of subscribers to partially unmetered products has dropped slightly (17% to 11%).

2.5 Average weekly household time spent on-line has risen to just over 7½ hours, and while this was inflated by a small number of heavy users, customers with unmetered packages (c. 10 hours) spent about twice as long on-line as those on pay per use packages (c. 5 hours).

2.6 Satisfaction levels remain high with 90% of customers satisfied with the overall service provided by their home ISP. This is broadly in line with both the fixed and mobile markets.

Chapter 3

Main findings

UK Internet usage at home

3.1 During May 2001 40% of UK homes (10 million) claimed to be connected to the Internet. This is a growth of 3.75million homes in the last 12 months. The speed of take up has also increased. Up 4% and 6% respectively in the last 2 quarters, from an average 2% since January 1999. This rise could be related to the increase in access methods such as digital television and mobile phones. Figure 3a shows trends in home Internet connection since January ’99.

3.2 Of those adults who do not have home Internet access 6% said they use the Internet at work / place of study, or elsewhere.

Figure 3a % UK homes with PC and Internet access

Base: *UK homes, May ‘01 (Base: 2089)

* Note - Figures up to March 2000 are based on GB population and are taken from MORI’s Technology Tracker. Figures from May 2000 onwards include Northern Ireland and therefore represent the UK adult population.

** data not available from May 2001

Which consumers are connecting to the Internet at home?

3.3 Internet uptake is continuing to grow across all consumer groups. Figure 3b shows growth between February ’01 and May ’01, in the proportion of UK consumers who have Internet at home. Usage remains highest amongst AB social grades and higher income groups, who were three times as likely to have Internet as those on lower incomes.

3.4 Between February and May 2001 most regions experienced an increase in the proportion of homes with Internet access. The largest increase occurred in the north of England, which experienced a rise of almost 10%. Figure 3c shows combined quarterly rolling data from the November and February, and February and May surveys for individual geographic regions, to provide more robust sample sizes (minimum of 200 for each area) on which to base conclusions.

Base: UK adults Base: UK homes *

3.5 Home Internet users continue to be more likely than average to have other technologies including mobile phones and digital TV, as shown in figure 3d. Consumers with Internet access in their homes are also more likely than average to use the Internet at work or place of study.

Figure 3d Telecoms usage in UK Internet homes, May ‘01

How is the profile of Internet homes changing?

3.6 Following the slight rise in the proportion of DE social grades and consumers over the age of 55 connecting to the Internet at home in February ’01, figures remain reasonably unchanged this quarter. Distribution is most prominent amongst the younger and middle age groups, higher social grades and the working population. This is illustrated in figure 3e.

Figure 3e Changing profile of homes with Internet access
Base: UK homes with Internet access, May ‘01 (Base: 770)

Chapter 4

Are consumers making use of the range of connections and ISP packages available?

Connection method

4.1 The PC and ordinary phone line/dial up access continues to be the most popular method of connecting to the Internet. Consumers are also continuing to make use of digital TV and mobile phones as an alternative access method. May results show a small increase in the proportion of consumers claiming to use the ISDN and ADSL technology.

Figure 4a Changing profile of methods used by consumers to access the Internet at home

Base: UK homes with Internet access, May ’01 (Base: 770, 6% ‘don’t knows have been excluded)

*Industry estimates suggest just less than 1% using ADSL

**3% of consumers claimed to be using cable modem (Industry estimates in May 2001 suggest less than 1% actually use cable modem)

4.2 2% of Internet users claim to use games consoles as a means of access. These consumers were primarily under the age of 34 as were the 4% using digital TV.

4.3 Following the interest in ADSL, which was reported in November, this quarter sees a small rise in the number of subscribers. Although based on a small sample ADSL users seem to be under the age of 34 and amongst the AB social grades with higher household income, which perhaps indicates that the cost of this service continues to play a major part in uptake.

How many ISPs are consumers using?

4.4 An increasing number of consumers are choosing to use only one ISP, this may reflect the growth in use of unmetered and subscription based packages where consumers may be committed to a minimum contract. Or perhaps these consumers are satisfied with the overall service provided by their ISP and therefore have no need to use alternatives alongside.

4.5 On the whole consumers appear to be making relatively wide use of the range of ISPs and Internet packages available.

4.6 Multi-ISP usage remains most popular amongst younger consumers (under the age of 34), amongst higher income groups, and amongst medium to heavy Internet usage homes (online more than 6 hours per week).

Figure 4b Number of ISPs used at home

Base: UK homes with Internet access, May ’01 (Base: 770, 8% ‘don’t knows’ have been excluded)

Note 3: The figures for January '01 are based on GB households taken from a survey conducted for Oftel by Ipsos-RSL

Which type of package are consumers using?

4.7 Subscription and/or cost of online calls packages remain most popular, with subscriber numbers broadly similar to those quoted last quarter. These packages tend to be found more amongst smaller households (less than 4 people), and AB social grades.

Figure 4c Main type of Internet package used at home

Base: UK homes with Internet access (Base: 770, 18% ‘don’t knows/none of these’ have been excluded)

4.8 35% of UK homes with Internet access are opting for unmetered products. The main subscribers to these packages tend to be younger consumers (under the age of 34).

4.9 Use of fully unmetered packages continues to grow (24%) while the number of subscribers to partially unmetered packages falls this quarter (as shown in figure 4c). The drop in partially unmetered subscribers could possibly be related to the amount of time consumers are spending online, perhaps switching from partially to fully unmetered packages as usage increases, or it may be linked to an increase in availability and awareness of fully unmetered packages.

Which ISPs are currently being used?

4.10 Consumers are making use of a range of ISPs as shown in figures 4e and 4f. The following chart and table show the individual ISP share of the residential Internet market based on which ISPs consumers were using. [NB This is not the same as the proportion of consumers using each ISP, as some customers are using more than one] Only ISPs with a share of 2% or more are shown. ISPs with less than 2% share are included in the ‘other’ category.

Figure 4d ISP share of UK residential homes with Internet access (based on all ISPs consumers use)

Base: All ISPs used in UK homes with Internet access, May ’01 (Base: 905, 10% ‘don’t knows’ have been excluded)

Figure 4eISP share of UK residential homes with Internet access (based on all ISPs consumers use)

Base: All ISPs used in UK homes with Internet access, May ’01 (Base: 905, 10% ‘don’t knows’ have been excluded)

( - Shares of less than 2%, included in the ‘Other’ category)

How long are consumers spending online?

4.11 There has been little change since February, with the average weekly household time spent on line rising slightly to just over 7½ hours. This is inflated by a small number of heavy users and in fact the majority of homes are online for less. The most popular amount of time spent online was between 3-5 hours per week. Further details of on-line activities can be found in the May ’00 report.

4.12 Household income does not seem to be a contributing factor in relation to the amount of time spent online. The heavier users, households spending over 16 hours per week online, tend to be younger consumers (15-34), lower social grades and larger households.

4.13 2% of consumers claim to be using ADSL connection and this small proportion are currently spending an average of just over 16 hours per week online. Due to the very small base size of this group the figure is quoted for information only however, we will continue to track the amount of time spent online as the number of users increases.

Does the type of package have any impact on levels and patterns of usage?

4.15 May results showed that consumers using unmetered packages claimed to be using the Internet for almost twice as long each week as those on pay-per-use packages. Both large and medium sized homes said they were online each week for longer than smaller homes.

Figure 4f Average weekly household hours spent on-line, by type of package and connection method

Base: UK homes with Internet access, May ’01 (Base: 770, 4% ‘don’t knows’ have been excluded)

* Caution should be exercised as base size less than 100

** Time spent online by the connection medium is shown for interest only - extreme caution should be exercised due to some very small base sizes. It is too early to derive any conclusions from these figures but we shall continue to track time spent online as use of these alternatives grows.

Chapter 5

Satisfaction with Internet service

5.1 Satisfaction levels remain high with 90% of Internet users claiming to be satisfied with their overall service at home. This level of satisfaction is broadly in line with consumer satisfaction in other markets including fixed and mobile. There was little difference in satisfaction levels between connection and access methods or by the amount of time spent online. Consumers using digital television to access the Internet were slightly less satisfied than average with their service which could perhaps be related to the more limited nature of access available through this medium.

Figure 5a Customer satisfaction with overall Internet service at home

Base: UK homes with Internet access, May ‘01 (Base: 770, 8% ‘don’t knows’ have been excluded)

5.2 There are further details on satisfaction levels relating to individual aspects of Internet service within the November report. (link to Nov report)

Appendix 1

Q5 May 2001 Residential Questionnaire: Internet questions

ASK Q14 – Q19 ONLY OF THOSE WHO ARE CONNECTED TO THE INTERNET AT HOME