31 July 2001

Contents

Chapter 1 - Introduction

Chapter 2 - Summary

Chapter 3 - Main Findings

Chapter 4 - Satisfaction with mobile telecoms service

Chapter 5 - Use of mobiles abroad

Appendix 1 - Changes to Oftel's Quarterly Business Survey

Appendix 2 - Q5 business questions on mobile telephony

Chapter 1 - Introduction

1.1 This report provides an overview of the key findings of business behaviour in the mobile telecoms market, taken from the fifth wave of Oftel’s quarterly business survey, conducted in May/June 2001.

1.2 The survey sample was 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 one 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 two below) based on the results provided by Continental Research.

1.4 The report covers:

• number of mobiles used, and mobile telecoms spend
• service providers and packages used
• use of / interest in WAP phones
• use of text messaging
• satisfaction with mobile service
• use of mobiles abroad and satisfaction with information on charges

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 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.
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

Business use of mobiles

2.1 In May 2001, 58% of small businesses and 81% of medium businesses owned at least one mobile phone. Within small businesses there was significant variation, ranging from 51% of one-person businesses, to 73% of 21-50 person businesses. Similarly, the average number of mobiles per business varied by business size, ranging from 1 in one person businesses, to 13 in businesses with 101-250 employees. About 3% of businesses said they used WAP phones.

2.2 Previous Oftel research reported that lack of need was the main reason for not using mobiles either because staff were primarily office based, or didn’t need to be contactable when they left the office. However, reduced costs was the main factor that would encourage those businesses with mobiles to make greater use of them.

Mobile spend

2.3 Businesses spend on average £51 per month on each mobile phone they own, although this figure is inflated by a small number of heavy users.

2.4 Overall, 16% of businesses said that their staff were encouraged to text rather than call colleagues in an attempt to reduce costs.

Use of mobile packages

2.5 Just over three-quarters (77%) of SMEs with mobiles were using post-pay packages, and a third were using pre-pay packages. Again there were variations by business size with pre-pay packages twice as popular among businesses with 1-5 employees than those with 101-250.

Satisfaction with mobile service

2.6 95% of businesses were satisfied with their mobile service overall (95% small businesses, and 90% of medium businesses), which is in line with overall satisfaction with fixed telecoms services (also 95%). Generally, small businesses tended to be more satisfied with most aspects of their mobile service than medium businesses.

2.7 Ability to access the network (ie lack of congestion) and customer service and support were considered the most satisfactory aspects of service. The least satisfactory aspect of mobile service was the cost of off-net calls - 59% of SMEs were satisfied with this.

2.8 Network coverage appeared to have greatest impact on levels of satisfaction with overall mobile service. Businesses who were dissatisfied with their mobile coverage tended to be considerably less satisfied with their overall service, compared with businesses who were dissatisfied with other aspects of service, such as call costs. This is in line with previous findings which identified coverage and quality of service issues as the most important factors in network selection among businesses.

Use of mobiles abroad

2.9 Almost half (48%) of small businesses use their mobiles abroad, compared with 84% of medium businesses. On average, just less than half of businesses surveyed in February said that the price of calls when abroad had been explained to them when they bought their mobiles, and just less than half were satisfied with these costs, which was low in comparison with satisfaction on other measures. In May, 58% of businesses said they were satisfied with the information available on roaming charges, 13% were dissatisfied, 29% didn’t know - mostly those who had never used their mobiles abroad.

Chapter 3 - Main Findings

Business use of mobile telephony

Ownership of mobiles

3.1 In May 2001, 59% of UK SME businesses owned at least one mobile phone - 58% of small businesses, and 81% of medium businesses. Small businesses had on average 2 mobiles, compared to an average 15 among medium-sized businesses. Ownership of mobiles and average number of mobiles per business compared with number of employees is shown in figure 3a.

Figure 3a % businesses who own mobiles, and average number owned, by business size
Base: UK SME businesses, May ’01 (Small: Base – 501, Medium: Base – 301)

3.2 The February survey reported that lack of need was the main reason for not using mobiles,(either because employees were primarily office-based, or it was not considered important that people could contact them when they left the office), or staff were using their own personal mobiles.

Use of service providers and mobile packages

3.3 The survey found 38% of SMEs using Cellnet, 32% using Vodafone, 31% using Orange, and 10% using One2One. In addition to these main suppliers, 8% were using a range of service providers. Smaller businesses were slightly more likely to use Cellnet and One2One while medium-sized businesses were more likely to use Vodafone and Orange.

3.4 Just over three-quarters of SMEs with mobiles were using post-pay monthly subscription packages, and a third were using pre-pay packages (‘all in one’, and ‘pay as you go’). This adds to more than 100% as some businesses were using more than one type of package. Pre-pay packages were more popular among smaller than medium-sized businesses, as seen in figure 3b.

Figure 3b Use of mobile packages by UK SME businesses
Base: UK SME businesses with mobiles, May ’01 (Small: Base – 311, Medium: Base – 245)

Use of mobile data services

3.5 6% of businesses with mobiles said they already use WAP phones, (this equates to about 3% of all SMEs) and a further 10% thought they would probably start using them some time in the future. Four in five businesses with mobiles said they were unlikely to start using WAP phones in future. There was slightly greater usage among medium businesses, 18% of whom said they already used WAP phones, and a further 9% expressed interest in future use. This compares with 5% small businesses using, and a further 11% likely to use.

Business spend on mobile telecoms

3.6 The average monthly spend on mobile telecoms services by small businesses was £164 and £1727 by medium-sized businesses. This compares with spends of £354 and £3478 respectively on fixed telecoms services. Most businesses were spending less than these averages, which were inflated by small number of heavy spenders. The median spend among small businesses was £50-100, and the equivalent medium business spend was £751-1000.

3.7 Figure 3c compares small and medium businesses’ average spend per phone. Medium businesses are not only using more phones than small, but they are also spending more per phone than smaller businesses. Medium businesses may be more likely to have a ‘pool’ of mobile phones for employees, which might contribute to the larger monthly spend per phone.

Figure 3c Average monthly business spend on mobile telecoms services
Base: UK SME businesses with mobiles, May ’01 (Total base – 556, ‘don’t knows’ have been excluded)

3.8 The February survey reported that 7 in 10 businesses identified factors that would encourage them to use their mobiles more. Cheaper costs was the main factor including call, subscription and handset charges.

Chapter 4 - Satisfaction with mobile telecoms service

4.1 Figure 4a shows businesses’ satisfaction with a range of aspects of mobile service. Overall satisfaction with mobile telephony services remains relatively high amongst UK SME businesses at 95%, which is in line with satisfaction with fixed line services (also 95%). Medium businesses tended to be slightly less satisfied overall (90%) than small businesses (95%).

4.2 Overall, ability to access the network (ie lack of congestion) and customer service and support were considered the most satisfactory individual aspects of service. 89% of small businesses were satisfied with the overall value for money of their service, compared with 75% of medium-sized businesses.

4.3 The least satisfactory aspects of mobile service were the cost of calls to other mobiles (off-net calls), and the cost of calling mobiles (wherever the call is being made from). Satisfaction with these aspects of service has been consistently lower than the other measures over recent quarters.

Figure 4a % UK SME businesses satisfied with various aspects of their mobile telecoms service
Base: UK SME businesses with mobiles, May ’01 (Small: Base – 311, Medium: Base – 245, ‘don’t knows’ have been excluded)

4.4 The individual measures are not meant to ‘total’ overall satisfaction as there are likely to be many other factors which are not included in this survey which businesses consider important in contributing to their overall satisfaction with their mobile service. However, the impact each of these individual measures can have on overall satisfaction with mobile service is shown in figure 4b. This is a somewhat simplistic look at satisfaction as many of these measures will work in conjunction with one another when determining the level of overall satisfaction. However, it provides a preliminary indication of which factors can have a greater or lesser impact on overall satisfaction.

4.5 The chart should be interpreted as follows: of the businesses who were satisfied with network coverage, 98% of them were satisfied with their mobile service overall, and only 2% were dissatisfied. However, of the businesses who were dissatisfied with network coverage, 76% were satisfied overall, while 24% were dissatisfied.

4.6 Similarly, satisfaction with overall value for money and customer service seem to have quite a significant impact on overall satisfaction, in relation to other factors. So although satisfaction with coverage and quality of service issues were previously reported to be some of the most satisfactory aspects of mobile service (figure 4a), dissatisfaction with these appears to have quite a significant negative effect on overall satisfaction.

4.7 Conversely, whilst cost of off-net calls was previously reported as one of the least satisfactory aspects of mobile service, dissatisfaction with this does not appear to have a significantly negative impact on overall satisfaction. These findings support findings from previous surveys which reported that quality and coverage were the main reasons businesses switched supplier, and the important feature in choice of network.

Figure 4b Impact of individual measures on overall satisfaction with mobile service
Base: UK SME businesses with mobiles, May ’01 (Base: 556, ‘don’t knows’ have been excluded)

Steps taken by businesses to reduce mobile call costs

4.8 In the February survey, about 3 in 5 businesses said it was important for their customers to be able to call them on their mobile numbers and given the relatively low satisfaction with the cost of doing so, businesses were asked what steps they had taken, or would consider taking to reduce the costs of calling mobiles, for both themselves and their customers.

4.9 In February, about 1 in 5 businesses had taken any steps to reduce their in-house costs of calling their mobiles and about 63% had taken steps to reduce the costs to their customers when contacting the business on its mobiles. Some of the steps taken included use of private wires, leased lines, mobile to mobile adaptations (see note three below), and local-rate or free-phone numbers.

4.10 In the May survey, businesses were asked whether they encouraged their staff to use text messaging (which is generally cheaper than voice calls) to contact colleagues where possible, rather than calling. 16% of businesses with mobiles said that staff were encouraged to text rather than call colleagues (c. 7% strongly encouraged this, 8% slightly encouraged this). There was little or no difference in this level between small and medium-sized businesses or by the network used.

Note:

3. Private wires connect companies' private exchanges (PBXs) to a mobile network allowing companies to make and receive calls to and from mobiles on that network without paying a fixed line operator to carry that call to/from the mobile network. As with private wires, leased lines connect companies' private exchanges (PBXs) to a mobile network allowing companies to make and receive calls to and from mobiles on that network without paying a fixed line operator to carry that call to/from the mobile network. Mobile to mobile adaptations - giving companies radio links to a mobile network allowing companies to call from fixed phones to mobile phones for the price of a mobile to mobile call which might be cheaper if the mobile phones are on the same network.

Chapter 5 - Use of mobiles abroad

5.1 Overall, half of UK SMEs with mobiles, said their company’s mobiles are used abroad for business purposes. Overseas use was considerably higher among medium businesses than small as seen in figure 5a.

Figure 5a Frequency of mobile use abroad
Base: UK SME businesses with mobiles, May ’01 (Small: Base – 311, Medium: Base – 245, 1% ‘don’t knows’ have been excluded)

5.2 When asked about satisfaction with the range and quality of information available on call charges for using mobiles abroad, 82% of businesses were satisfied with this information. However, this figure was re-calculated to exclude 29% ‘don’t knows’. In other words, amongst those aware of this information / charges, the majority were satisfied, however, almost a third of businesses were not aware of this information / or whether it provided sufficient detail on international call charges.

5.3 Businesses who used their mobiles abroad were generally more satisfied with the information available than those who had never used their mobiles abroad. The ‘don’t knows’ were primarily businesses who had never used their mobile abroad.

5.4 Industry initiatives such as www.telecomsadvice.org.uk which provide telecoms related information and advice for small businesses, provide some information for businesses on using mobiles abroad. Raising awareness of such initiatives and information sources remains important if businesses are to get the best deal from their telecoms services.

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):

• 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.

• 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.

• 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 mobile telephony

Q15 Does your company own any mobile phones which are currently connected to a network?

Q16 How many mobile phones which are currently connected does your company own?

Q17 And thinking just about your company’s mobile phones, what is the approximate monthly mobile telecoms bill for your business. Please include all subscription and call costs and VAT.

Q18 Which suppliers provide your mobile phone services? By that I mean who sends you a bill? (MULTICODE)

Q19 Which of the following best describes the mobile phone packages your company uses? (MULTICODE)

Pre-paid (i.e. after paying a one-off fee for the phone, top up is bought as and when required)
Monthly subscription contract (i.e. line rental and call charges are paid each month)
All in one package (i.e. line rental paid in advance and calls either billed monthly or paid by call vouchers)

Q20 Are you satisfied with the mobile phone service and service supplier you use on the following attributes?

Overall mobile phone service
Value for money of overall package
Overall cost of calls from your mobiles
Amount it costs for others to call your mobiles
Network coverage
Dropped calls ie cut off in middle of call
Congestion ie ability to access the network
The cost of calling other mobile networks
The quality of customer service and support

Q21 Thinking now about WAP (Wireless Application Protocol) mobile phones. These were launched in 1999 and enable users to access data and other information services as well as make regular mobile calls. How likely is your company to start using WAP phones or does it already do so?

Already use
Almost certain to start using
Very likely to start using
Fairly likely to start using
Not very likely to start using
Not at all likely to start using

Q22 How often if at all, are your company's mobile phones used abroad for work purposes?

Frequently
Sometimes
Rarely
Never

Q23 How satisfied is your company with the range and quality of information available on call charges for using your mobile abroad?

Very satisfied
Fairly satisfied
Not very satisfied
Not at all satisfied

Q24 Does your company encourage its staff to use text messaging where possible rather than call colleagues? IF YES PROBE are they encouraged strongly or slightly?