Consumers’ use of mobile telephony: Summary of Oftel residential survey Q5 May 2001

Chapter 1 Introduction

Chapter 2 Summary findings, conclusions and recommendations

Chapter 3 Main findings

Chapter 4 Consumers’ use of mobile packages and suppliers

Chapter 5 Customer satisfaction with mobile service

Annex 1 Q5 May 2001 Residential Questionnaire: mobile questions

Chapter 1

Introduction

1.1 This report provides an overview of the key findings of consumer behaviour in the mobile 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 and referred to throughout this report.

1.2 The report provides trend information to 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 70% claimed to personally own or use a mobile phone. A further 8% who do not personally use a mobile claim to live in a home with at least one mobile. 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 mobile phones, networks, packages and services used
• which consumers are using mobiles
• satisfaction with mobile service
• switching behaviour
• use of mobiles abroad

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 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

Mobile usage

2.1 Mobile ownership continues to rise. By May 2001, 70% of UK adults claimed to have a mobile, up from 67% in February, and they each spend on average £19 per month. Furthermore, 78% of UK homes now have at least one mobile phone and 6% of UK homes only use mobile phones.

2.2 Pre-paid packages continue to be most popular, with 73% of mobile customers using pay as you go packages and 6% using all in one packages.

2.3 15% of all UK adults consider their mobile to be their main method of making and receiving calls. There has been no change in this proportion since February 2001. 7 in 10 of these consumers also have a fixed phone at home. Younger customers and larger households were most likely to consider mobiles their main means of communication. 92% of those who considered their mobile to be their main phone, said they were satisfied with this method. This was slightly lower than satisfaction among those who considered a fixed home phone their main phone, 95% of whom were satisfied with their fixed phone.

Switching behaviour

2.4 About a third of mobile customers (32%) had changed either their mobile network or package – 15% had changed both, 8% had changed network only, 9% had changed package only. This equates to 23% of customers who have switched network, and 24% who have switched package. There has been little change in the proportion of customers switching network over the last six months, although there was a slight rise in the proportion changing package.

2.5 38% of mobile customers had changed their handset. Wanting to upgrade was the main reason for this, although a small proportion mentioned the cost of SIM unlocking or said they were told or thought they had to change their handset when they switched package or network.

Satisfaction with mobile service

2.6 Satisfaction remained fairly stable between February and May; with 94% of mobile customers satisfied with their mobile service overall. Cost of calls to mobiles remains of particular concern however; with only 51% of mobile customers satisfied with the cost of these calls.

Use of mobiles abroad

2.7 There has been little change since September 2000 in the proportion of mobile customers who have used their mobile abroad, at 19%. Customers who frequently use their phone were more aware that they were charged for receiving incoming calls when abroad, although even among these most frequent users, 1 in 5 did not know whether they would be charged. 58% of customers who have used their mobile abroad at least once, said they were satisfied with the information available on the cost of the using their phone abroad. This is somewhat lower than satisfaction with information available to assist choice of mobile network and package, which 78% of mobile customers were satisfied with in Oftel’s August/September survey.

Chapter 3

Main findings

Mobile phone usage

3.1 Mobile usage continues to grow. 70% of adults surveyed in May 2001 said they owned/used a mobile phone, up from 67% in February (figure 3a). When asked about other mobile subscribers in their household (adults and children), mobile penetration was estimated to be a conservative 39 million, a rise of just over 1 million since February. This estimate is slightly lower than industry subscriber estimates for the same period - Fintec Mobile Communications April 2001 estimate 43 million subscribers - although it should be borne in mind that this estimate includes business subscribers and will include some subscriptions which are no longer being actively used.

Figure 3a Mobile growth - % UK* adults who have a mobile phone

Base: *UK adults, May ’01 (Base: 2089)

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

3.2 Almost 4 in 5 (78%) UK homes claimed to have at least one mobile phone (figure 3b). This includes both adult and child users, but it is not possible to accurately establish from this survey the split between the two.

Figure 3b % UK homes with at least one mobile phone

Base: UK homes, May ’01 (Base: 2089, 1% ‘don’t knows’ have been excluded)

3.3 7% of UK homes were without fixed phones. Almost 9 in 10 of these homes used a mobile instead, which equates to about 6% mobile-only homes in the UK. This is broadly consistent with findings from previous quarters as seen in figure 3c below.

Figure 3c Penetration of mobile telephony in UK homes

Base: UK homes, May ’01 (Base: 2089, 1% ‘don’t knows’ have been excluded)

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

Which consumers use mobile phones?

3.4 Figure 3d shows mobile ownership levels amongst various demographic groups of the population. Mobile ownership is still largely dependent on income and age.

3.5 Ownership continues to rise among all groups, but remains highest amongst the high income groups (more than £30,000 annual household income) and younger consumers (aged 15-34), about 9 in 10 of whom have a mobile. Use of mobiles falls with increasing age, and are currently used by 17% of those over the age of 75. Usage is also significantly lower than average among lower income groups and consumers not working, although almost 3 in 5 of these consumers now have mobiles.

3.6 Figure 3d shows combined quarterly rolling data from the November and February, and February and May surveys for geographic regions, to provide more robust sample sizes (minimum of 200 for each area) on which to base conclusions.

Base: UK adults, May 01 (Base: 2089) Base: UK homes*

3.7 Although still prevalent among the younger and middle age groups, and higher social classes, distribution of mobile usage has experienced a slight shift towards the DE social grades and older consumers, since January 1999. Between November 2000 and February 2001, the proportion of mobile users over the age of 55 rose, and this improvement has since been sustained. This is illustrated in figure 3e.

Figure 3e Changing profile of mobile usage

Base: Mobile users, May ‘01 (Base: 1411)

Mobile as main method of calling

3.8 Similarly to last quarter, 15% of all residential consumers considered a mobile to be their main method of making and receiving calls. 7 in 10 of these consumers who considered mobiles their main telephony services also had a fixed phone at home. Satisfaction with main method of calling is shown in figure 3f.

3.9 Consumers for whom mobile was their main telephony service tended to be younger – 30% of those aged 15-34 said their mobile was their main phone, and to a lesser extent those living in larger households (20%). 92% were satisfied with mobiles as their main telecoms service, which was slightly lower than satisfaction with fixed services both at home and work.

Figure 3f % UK consumers using and satisfied with their main method of telephony

Base: UK residential consumers, May ’01 (Base: 2089)

Mobile only homes

3.10 7% of UK homes had no fixed phone in May. Most of these homes had mobiles, predominantly pre-pay packages. Preference for the flexibility and convenience that mobiles offer, particularly pre-pay in relation to managing costs, were previously found to be the main drivers behind this trend.

3.11 Spending an average £32 each month on their mobile bill, they spend more than mobile users generally (average mobile monthly spend £19). This is inflated by 37% of mobile-only customers who spend more than £30 per month, and whilst the median spend was about £15 per month, only 10% of mobile-only customers spend less than £10 per month.

3.12 With the average mobile-only spend equating to about £90 per quarter, these mobile-only users are spending more than the average fixed line customer (who spends about £80 per quarter). This suggests that these consumers are either not familiar with fixed line charges and perhaps overestimate them, or that the greater control and convenience of mobiles is more significant than cost alone.

3.13 Mobile only users tend to be younger (almost two-thirds are under the age of 34), DE social grade and low incomes (3 in 5 fall into these categories).

Chapter 4

Consumers’ use of mobile packages and suppliers

Packages used

4.1 Popularity of pre-paid packages continues, preferred by 79% (‘pay as you go’ 73% and ‘all in one’ 6%) of mobile users in May 2001 (figure 4a).

Figure 4a Profile of mobile package usage

Base: UK Mobile users, May 01 (Base: 1411, 5% ‘don’t know/other’ have been excluded)

4.2 ‘Pay as you go’ packages are still most popular amongst DE social grades / low income groups, 4 in 5 of whom used these. They are also favoured by more women than men, and by customers over the age of 55, rather than middle age groups. There were fewer distinct features of consumers using ‘all in one’ packages (ie where phone and line rental is paid in advance and calls are either billed monthly or paid by call vouchers), although these were slightly more popular with the higher income groups and AB social grades.

4.3 Post-pay ‘monthly subscription’ packages remained more popular among AB social grades and the higher income groups, over a third of whom used post pay packages. They were also favoured by more men than women.

4.4 The February survey reported that over three-quarters of mobile customers (78%) were satisfied with the choice of mobile packages and tariffs available.

4.5 5% of adult mobile customers said they used WAP phones and were accessing the Internet via this medium. The February survey reported that 8 in 10 mobile customers were satisfied with the choice of services available through their mobile.

Suppliers used

4.6 A comparison of Oftel’s survey with published sources of mobile market share information (in terms of numbers of subscribers using each of the four networks, shown in figure 4b), indicates that the survey is broadly reflective of the current mobile market in terms of the proportion of customers using each network. It should be noted that industry figures include business subscribers.

Figure 4b % mobile users using each network

Base: UK mobile users, May ‘01 (Base: 1411, 3% ‘don’t know/other’ have been excluded) Industry data source: Fintec Mobile Communications, April 2001

Switching experiences

4.7 32% of mobile customers said they had ‘ever’ switched either network and / or package. Almost a quarter of residential mobile customers said they had changed their mobile network, and a similar proportion had changed the type of package they used (ie prepay, postpay). Switching package in particular has risen since September 2000 (figure 4c). The August/September survey reported that a fifth of those who had changed network kept their original number and a similar proportion had kept their original handset. This equates to about 4% of mobile customers who had ported their number and 4% who had unlocked their handset.

Figure 4c % mobile customers who have changed network or package (ever)

Base: UK mobile users, May ’01 (Base: 1411)

* September data is based on GB mobile customers

4.8 Changing network was most popular among younger rather than older customers. 28% of those under the age of 34 had switched network compared with 13% of those over the age of 55. This may partly reflect the different lengths of time customers have had their mobiles, with older customers tending to be more recent adopters and therefore having had less time in which to consider changing. Higher income groups were more likely than those on lower incomes to have changed their network, but switching was also more popular than average among those with no fixed phone at home (27%).

4.9 Whilst previous Oftel surveys (www.oftel.gov.uk/publications/research/swit0800.htm) reported that the majority of customers who had switched found it easy, results from February found that only 17% of mobile customers were aware of the procedures and potential costs involved in switching supplier before they bought their phone. Just over a third (35%) were aware that their handsets could be locked to their current supplier (and would need to be unlocked to enable them to use a different network) and 26% were aware that they might be charged to have their phone unlocked.

4.10 Almost two-thirds (63%) of those who had switched network, said they told their friends and family which network they were changing to. This behaviour was higher among younger than older customers, which would seem to be in line with previous findings which reported that younger customers were most likely to be taking advantage of on-net calls.

4.11 However, there would still appear to be some confusion amongst consumers regarding the implications of switching and number portability. Just less than half (46%) of mobile customers said it would cost them more to phone someone who changed to a different network to them, but who kept their original number (in most instances these customers would be correct). 28% thought it would still cost the same as before, 22% didn’t know, and 4% thought it would cost less than before, highlighting the confusion that can arise over the cost of calls, when people switch network but keep their original number.

4.12 This confusion was highest among older customers. This is broadly consistent with research from February which reported that 30% of mobile customers thought that the cost of on-net and off-net calls were about the same. Just less than half of mobile customers (47%) had been aware of the price of calls to mobiles on different networks before they bought their phone.

Handset switching

4.13 38% of mobile customers said they had changed their handset. This activity was particularly popular among younger age groups and higher income groups, heavier spenders and those using monthly subscription packages as shown in figure 4d.

Figure 4d % mobile customers who have changed their handset

Base: UK mobile users, May '01 (Base: 1411)

4.14 Reasons for changing handset are shown in figure 4e. The main reasons focused on wanting the latest models with more or better features, smaller handsets etc. About 1 in 10 mobile customers however, said they had to change their handset when they switched package or network and a similar proportion said it was cheaper to buy a new phone than pay to keep their existing handset when they switched.

Figure 4e Reasons for changing mobile handset

Base: UK mobile users who have changed their handset, May '01 (Base: 492)

Mobile spend

4.15 Average monthly mobile spend was about £19 (figure 4f), which is consistent with last quarter which reported slightly lower spend than in previous months. As reported in previous quarters, the average £19 spend is inflated by 15% of customers spending more than £30 per month. The median spend was about £15, and indeed 48% of customers said they spend less than £10 each month.

4.16 Consistent with previous quarters, heavy spenders are higher income groups, large households, and heavy fixed line spenders, but equally, homes without a fixed phone. Average monthly mobile spend decreased with increasing age, and was lowest amongst customers over the age of 55.

4.17 Aside from differences by customer type, spend continues to vary quite considerably by the type of mobile package used, with those using monthly subscription packages spending well over twice as much as those using pre-pay.

Figure 4f Average monthly mobile spends

Base: UK Mobile users, May ‘01 (Total base: 1411, ‘don’t knows’ have been excluded)

Mobile to mobile calls

4.18 On average, customers said that between a quarter and half of calls made from their mobile were to other mobile phones (figure 4g). This is broadly in line with data collected by Oftel from mobile operators. There was a positive correlation between the proportion of mobile calls made to other mobiles, and total monthly mobile spend. Customers with monthly bills of more than £30, said that on average between half and three quarters of their mobile calls were to other mobiles. Customers with smaller bills, said that on average just over quarter of their mobile calls were to other mobiles.

4.19 The highest proportions of mobile to mobile calls tended to be made by younger customers (aged 15-34), higher income groups, larger homes, and customers without fixed line phones.

4.20 Only 8% of mobile customers said they didn’t use their mobile to call any mobile phones, and these were predominantly older customers and very light spenders.

Figure 4g % calls from mobiles to other mobile phones (any network)

Base: UK mobile users, May ’01 (Base: 1411)

Chapter 5

Customer satisfaction with mobile service

5.1 Overall customer satisfaction remained fairly stable at 94% during May, compared with recent quarters, as seen in figure 5a.

Figure 5a % UK mobile customers satisfied with mobile service overall

Base: UK mobile users, May ‘01 (Base: 1411, 3% ‘don’t knows’ have been excluded)

5.2 Differences between customers of different networks and mobile packages are shown in figure 5b. There were only small variations in satisfaction levels between customers of different networks and using different mobile packages, and there was little other difference in satisfaction levels between consumer groups. Heavy mobile spenders (more than £30 per month) tended to be slightly less satisfied than average with their mobile service.

Figure 5b Customer satisfaction with mobile phone service

Base: UK mobile users, May ‘01 (Base: 1411, ‘don’t knows’ have been excluded)

* Caution should be applied as base less than 100

5.3 Despite relatively consistent and high levels of satisfaction in comparison with previous quarters and other markets (a survey conducted on behalf of Oftel by Ipsos-RSL during April 2001, found that consumers’ rating of their mobile service was slightly lower than fixed line services, but of a similar level to Internet), consumers remain less satisfied with specific aspects of their mobile service. In particular, cost of calls to other mobile phones was previously reported to be a key area of dissatisfaction, and remains so, with only 51% of mobile customers satisfied with this aspect of service during May.

5.4 There was little difference in satisfaction between customers whose calls comprised a high proportion of mobile to mobile calls, and those making only a small proportion of mobile to mobile calls. However, customers who were previously aware that it would cost them more to call someone who switched to a different network, were less satisfied with the price of calls to mobiles than those who thought the cost would remain about the same.

Use of mobiles abroad

5.5 Almost 1 in 5 residential adult mobile customers said they have used their mobile phone when abroad (14% frequently/sometimes, 5% only once). There has been little change in these figures since September 2000. Frequency of use abroad remains highest among the AB social grades and higher income groups and those using monthly subscription packages.

5.6 Research conducted in September reported that the 80% of customers who had used their mobile abroad said that the quality and coverage of service was generally good/fair, but that considerably fewer (59%) considered the price of calls good or fair.

5.7 More recent results from May 2001 examined consumers’ awareness of charges for receiving incoming calls when abroad. Those using their phone abroad frequently or sometimes were generally more aware that they would be charged for incoming calls when abroad. However, even 1 in 5 frequent users were not aware whether they were charged. Customers who have never used their phone abroad were understandably less familiar with the various charges they could incur.

Figure 5c Awareness of charge for receiving incoming calls when abroad

Base: UK mobile users, May 01 (Base: 1411)

5.8 Overall, 58% of mobile customers who had used their phones abroad, said they were satisfied with the range and quality of information available on call charges for using their mobiles abroad. This is somewhat lower than satisfaction with information available to assist choice of mobile network and package, which 78% of mobile customers were satisfied with in Oftel’s August/September survey.

5.9 There was little difference in satisfaction between frequent and less frequent users. Those who knew whether or not they would be charged for incoming calls were more satisfied with the information available than those who didn’t know whether or not they would be charged. The February survey reported than less than a quarter of customers (23%) were aware of the cost of using their mobiles whilst abroad, before they had bought their mobile.

Annex 1

Q5 May 2001 Residential Questionnaire: mobile questions

ASK ALL

ASK Q21 – Q31 ONLY OF MOBILE PHONE OWNERS OR USERS

ASK THOSE WHO HAVE CHANGED SERVICE PROVIDER OR MOBILE NETWORK

ASK MOBILE PHONE USERS WHO HAVE CHANGED HANDSET

ASK Q28 – Q30 of all mobile phONE OWNERS OR USERS

ASK ALL MOBILE PHONE OWNERS/USERS FOR Q31A/B

ASK ONLY THOSE WHO HAVE USED THEIR MOBILES ABROAD FOR Q31C