4 November 2001

Contents

Chapter 1 – Introduction
Chapter 2 – Summary & Conclusions
Chapter 3 – Main findings
Chapter 4 – Switching network and number porting
Chapter 5 – Awareness and potential usage of corporate numbering services
Chapter 6 – International calling
Appendix 1 – Changes to Oftel's Quarterly Business Survey
Appendix 2 – August 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 sixth wave of Oftel’s quarterly business survey, conducted in August/September 2001.

1.2 The survey sample changed from wave five onwards, and hence results are not directly comparable with waves one to four. Details and implications of the changes can be found in Appendix 1. The survey is now conducted among 816 businesses (previously 700), comprising 516 (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 August/September 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 fixed lines and telecoms spend;
- awareness and use of suppliers;
- satisfaction with fixed telecoms service;
- level of complaints to suppliers, and satisfaction with handling;
- porting of numbers;
- awareness and potential usage of corporate numbering;
- awareness and usage of international calling methods;
- reasons for selecting current international phone service supplier; and
- interest in Carrier Pre Selection.

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, which was also observed in May. 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.

2.2 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).

2.3 On average, small businesses spend about £284 per month on fixed telecoms services, and medium businesses spend on average £2,733 (see note three below).

Use of fixed line suppliers

2.4 Medium businesses were twice as likely as small businesses to use more than one supplier for their fixed telecoms services (61% and 30% respectively).

2.5 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. 59% of medium businesses used BT and other suppliers (including indirect access suppliers), compared with 29% of small businesses.

Awareness of indirect access operators rises slightly and usage remains constant

2.6 85% of small businesses (up from 80% in May) and 92% of medium businesses said they were aware of indirect access (IA) operators. 25% of all SMEs said they currently use these suppliers, almost two-thirds have at least considered them as options and just over half of these, (equivalent to just over a third of all businesses) have ever used them.

Satisfaction with fixed telecoms services remains relatively high

2.7 95% of small businesses and 84% of medium businesses were satisfied with their fixed telecoms services overall (these represent a small, but not statistically significant drop from May). Similar proportions were satisfied with the reliability of their service. Satisfaction with value for money was lower, with 76% of small and 71% of medium businesses satisfied with this aspect of their fixed telecoms services. This represents a fall from May (which was also noticed with regard to satisfaction with mobile phone value for money), despite no major changes in pricing. It is therefore possible this is due to consumer perception of costs, rather than actual changes.

2.8 A quarter of businesses had ever complained to their fixed service supplier, and only half of these were satisfied with the way the complaint was handled.

Switching network and number porting

No obvious barriers to switching. Medium-sized businesses more likely to have changed supplier

2.9 Just over a quarter (27%) of all SMEs had ever changed their fixed line supplier. Medium businesses were significantly more likely to have changed supplier, with 53% ever having changed, compared to 26% of small businesses.

2.10 94% off SMEs stated they found it easy to switch supplier, this was slightly lower for medium sized companies (83%).

2.11 Satisfaction with the current supplier is the main reason for not switching.

Large majority of all SMEs ported numbers when switching supplier

2.12 Of all the SMEs that had switched supplier 90% had ported all their numbers (compared to 39% had ported their numbers when they switched mobile network). There was no significant difference between small and medium-sized companies.

Information from suppliers is main barrier to porting

2.13 Of the companies that changed some or all of their numbers (10% of all those that had switched supplier), over a quarter (27%) said they did so because they were told by the new supplier that they had to have new numbers (NB this represents only 1% of all SMEs, and is based on just 40 respondents).

Corporate numbers

Less than one in five aware

2.14 17% of all SMEs were aware of corporate numbers (which are dialling codes starting with 05 that are unique to that company).

Potential usage higher amongst medium sized businesses

2.15 A quarter of all SMEs stated they would consider using them. 24% of small companies stated this, compared to 45% of medium sized companies.

2.16 On average, SMEs said they would apply for nine numbers with a corporate code. Corporate numbers are likely to be issued in blocks of 10,000, so it appears that a more flexible policy may need to be considered.

International calling

2.17 Half of all SMEs make fixed-line international calls.

Most SMEs use just one supplier for international calls

2.18 80% of SMEs making international calls use just one supplier for all their international calls.

2.19 Medium-sized companies are more likely to use more than one supplier.

Medium sized companies have higher awareness and usage of the different methods of calling abroad

2.20 Small companies were less likely than medium sized ones to be aware of most methods of international calling (particularly methods aimed at larger businesses such as Private Circuit and Virtual Private Network), and were also less likely to use each one.

Convenience appears to be main reason behind choice of international call supplier

2.21 Over half (56%) of all SMEs stated that they didn’t choose their international call supplier based on their international call prices. This was considerably lower (31%) amongst businesses with heavier international calling needs. 17% did base it on the call charges to specific countries it was likely to call, 10% selected a carrier that had cheap international calls generally, and 4% based their choice on the groups of countries or regions they were likely to be calling.

2.22 39% of SMEs stated they might use Carrier Pre Selection to make international calls (CPS is a mechanism which allows customers to select alternative carriers in advance, but without dialling extra digits or needing to use an autodialler. The customer continues to have a BT line, and simply chooses an alternative carrier and the type of calls that will be routed to that carrier). This figure was higher amongst medium sized companies and those who make a higher proportion of international calls.

In Summary:

2.23 Some businesses are making good use of the choices available to get a better deal on their fixed-line telecoms services. Behaviour includes:

- using a range of alternative suppliers, including indirect access operators;
- switching phone suppliers, and the vast majority that had done this kept their original telephone numbers;
- there is interest amongst some businesses (medium more so than small) in newer services such as carrier pre selection and corporate numbering; and
- just over a quarter that make international calls select their supplier based on cost. However, this does mean that most companies do not select their international calls supplier based on cost – most just use the same supplier as for other calls.

2.24 Others are making less varied use of the choices available but overall satisfaction remains high, although value for money is less satisfactory than other aspects, and has also fallen slightly since May.

2.25 There is still scope for the industry to improve the way in which it handles complaints.

Note:

3. These averages are somewhat inmflated by a small number of heavy spenders – see main text for further details.

3.1 Small businesses in the UK had on average five separate lines for their fixed telecoms services (including voice, faxes, and data lines), while medium businesses had on average 37 lines. One-person businesses had an average of just under three lines. Business use of fixed lines per employee is shown in figure 3a. 24% 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, August ’01 (Small: Base – 516, Medium: Base – 300; "don’t knows" have been excluded)

*

* NB the apparent drop in the average number of fixed lines amongst some business sizes are not statistically significant but are within the error margins of the survey, and therefore not likely to represent real declines.

3.2 There was a positive relationship between use (and likely use) of Internet, and the 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 £284, compared with £2,733 for medium sized businesses. At the previous wave in May, the same figures were £354 and £3,478 respectively. These averages were inflated by a small number of heavy spenders, and this also occurred in August, but to a lesser extent. There have been no significant price cuts by the main suppliers that are likely to have directly led to a drop in average bills. However the drop may be the result of a seasonal effect, due the members of staff going on holiday during the summer months before the research was conducted.

3.4 The median spend for small businesses was in the region of £75 per month (£125 in May), and £2000 for medium businesses (the same as in May). Average spend levels per employee, per fixed line, and as a proportion of businesses’ annual turnover, are shown in figure 3b.

3.5 Small businesses have more fixed lines per employee and spend more on fixed telecoms services per employee, than medium businesses. Companies with less than 26 employees spend less per line however than those with 26 or more employees, as they tend to have fewer advanced services, such as Internet, ISDN, and leased lines. These same findings were made in May. Additionally, medium businesses were found in previous Oftel research to have a more expensive call mix such as making more international calls, etc.

3.6 Small business spend on fixed telecoms services accounts for a slightly smaller proportion of the business turnover (0.3%), compared with medium businesses (0.4%). 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 will be examined in future quarters once sufficient sample has been collected in each category to enable analysis by type of industry.

Figure 3b – Average monthly spend on fixed telecoms services, by business size
Base: UK SME businesses, August ’01 (Total base: 816, "don’t knows" have been excluded)

Use of fixed telecoms suppliers

3.7 As per May, the majority (69%) of businesses use only one supplier for their fixed line services. 30% of small businesses use more than one, compared with 61% of medium businesses. Figure 3c shows multi-supplier usage among different types of businesses.

3.8 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. A similar pattern occurred in May, but to an even greater extent.

Figure 3c – % UK SME businesses using more than one supplier for fixed telecoms services
Base: UK SME businesses, May ’01 (Total base: 801). August ’01 (Total base: 816)

3.9 Overall, 92% of SMEs use BT for some or all of their fixed telecoms services (this figure is identical to May). 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, August ’01 (Small: Base – 516, Medium: Base – 300)

Awareness and use of indirect access operators

3.10 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. 85% of small businesses (80% in May) and 92% of medium businesses (no change since May) said they were aware of indirect access operators. Nearly nine in ten (86%) of businesses with 1-5 employees were also aware of this option (77% in May).

3.11 Overall, as per May, a quarter of businesses said they currently use indirect access operators – this was higher among medium (39%) than small businesses (25%).

3.12 6% of SMEs were currently considering using indirect access operators. 12% of businesses said they had used indirect access operators in the past and a further 19% of businesses had considered using them but decided against it. This equates to 37% ever using them, and a further 25% that have considered or are currently considering. Over a third (38%) of businesses said they had not considered using these operators (this includes 15% of businesses who were not aware of these operators) – a slight drop from 42% in May. This is shown in figure 3e.

Figure 3e – Business situation with regard to indirect access operators
Base: UK SME businesses, May ’01 (Base: 802), August ’01 (Base: 816) "don’t knows" have been excluded

3.13 The May survey found that 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.

3.14 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.

Satisfaction with fixed telecoms services

3.15 Overall satisfaction with fixed telecoms services remains high amongst UK SMEs at 95% (no change since May) which is of a similar level to satisfaction with mobile services (94%). This is shown in figure 3g. Medium businesses were less satisfied overall (84%) than smaller businesses (95%). Similarly, 95% of businesses were satisfied with the reliability of their fixed telecoms services (no change since May), but slightly fewer were satisfied with the overall value for money (76% – down slightly from May).

3.16 As prices for fixed phone services have in reality remained relatively unchanged during this period, the reason for the apparent fluctuation in this result is unclear, and we shall continue to track it in future quarters.

Figure 3g – % UK SME businesses satisfied with various aspects of their fixed telecoms services
Base: UK SME businesses, May ’01 (Small: Base – 501, Medium: Base – 301. August ’01 (Small: Base – 516, Medium: Base – 300), "don’t knows" have been excluded

Satisfaction with complaint handling

3.17 A quarter (26%) of all respondents had ever made a complaint about their fixed line service. Twice as many medium-sized companies had made a complaint (50%) than small companies (26%). This compares with 10% of businesses who had made a complaint about their mobile service.

3.18 51% of businesses who had complained about their fixed service were satisfied with the way their complaint had been handled. This was higher than for complaints to mobile suppliers, where 39% were satisfied.

3.19 Overall, medium sized businesses tended to be slightly less satisfied than small businesses with the way their complaint was handled.

Chapter 4 – Switching network and number porting

4.1 Just over a quarter (27%) of all SMEs had ever changed their fixed-line supplier. 10% had done so in the previous 12 months, and 17% had done so over a year ago. Medium businesses were twice as likely to have changed supplier, with 53% ever having changed, compared to 26% of small businesses.

4.2 Amongst companies that had not changed their supplier (see figure 4a), the most common reason was simply that they didn’t need to (30%), a further 21% were satisfied with the service they were currently receiving, and 16% were happy with the cost.

Figure 4a – Reasons for companies never changing fixed line telephone supplier
Base: UK SME businesses that have ever changed fixed supplier, August ’01 (Small: Base – 345, Medium: Base – 142)

4.3 Businesses that had ever made a complaint to one of their fixed line suppliers were more likely to have ever switched suppliers, 38% having done so. Of those that had never made a complaint to their fixed line provider, just 23% had ever switched. This is in line with findings from qualitative research which showed that problems with suppliers are a key driver to switching service.

4.4 The majority (94%) of SMEs that had switched stated they found it easy to do so, with two-thirds stating it was very easy.

4.5 Small businesses found it significantly easier to switch than medium sized ones, with 67% stating it was very easy (compared to 46% of medium businesses).

4.6 Of all the SMEs that had switched supplier, just 9% had not ported any of their numbers (this contrasts with 50% of mobile users who had not ported any numbers when switching), and 1% had only ported some of their numbers. 90% had ported all their numbers. Unlike companies that switched mobile suppliers (where medium sized companies were more likely to have ported all their numbers), there was no significant difference between small and medium sized businesses with regards to how likely they were to have ported all or some of their numbers.

4.7 Of the 10% of companies that changed some of their numbers, over a quarter (27%) said they did so because they said they were told by the new supplier that they had to have new numbers. 26% stated that they wanted new numbers, and the reasons they gave for this included needing a new or separate line, the number was for a new department, and that it didn’t matter to them what number they had. Another reason for not keeping the same numbers was that 13% moved property or changed area (NB These figures are based on a total of 40 companies that had changed some or all of their numbers, therefore these results should be viewed with caution).

Chapter 5 – Awareness and potential usage of corporate numbering services

5.1 Corporate numbers are numbers beginning 05, followed by four to six digits and are dedicated dialling codes that are allocated to one specific company instead of a geographic or special rate number. This dialling code can be used for all their lines, and will not be used by any other company. The advantages for businesses are that they would bring SMEs the benefits of increased ownership and flexibility in the use of numbering. An allocation of corporate numbers could be used to bring simplicity and flexibility to the management of a company's network. The 05 numbering scheme is already in place, but has yet to be fully implemented.

5.2 Respondents were read out a description of the corporate numbering scheme, (NB no indication was given of whether there would be a charge or not for being allocated the corporate number), and overall, 17% of respondents were aware of corporate numbers. This figure was slightly higher for medium-sized businesses (20%) than for small businesses (16%). With regard to industry sector, highest awareness was amongst transportation companies (50%) although caution should be applied due to the small base size of respondents in this sector (40).

5.3 A quarter (24%) of SMEs stated that they would consider using corporate numbers. This figure was considerably higher for medium sized companies (45%), than for small companies (24%).

5.4 SMEs said they would apply for an average of nine individual numbers starting with their own dedicated code. This was significantly higher for medium-sized businesses (164 numbers), than for small businesses (four numbers). The average for medium-sized companies was increased substantially by a small number of companies applying for a very large amount of telephone numbers. It is envisaged that the corporate numbers will be issued in blocks of 10,000, indicating that they may not necessarily suited to SMEs, or perhaps that a more flexible policy should be considered.

5.5 Amongst those that were previously aware of corporate numbers, an average of 17 corporate numbers would be requested, compared to eight for those that were previously unaware.

Chapter 6 – International calling

6.1 Half (51%) of SMEs stated that none of their phone bill was for international calls. Of the remaining half that do make fixed-line international calls, 80% use just one supplier for these calls. A quarter of medium-sized businesses used more than one supplier. Across all SMEs an average of 1.2 suppliers was used.

Figure 6a – Number of fixed-line international suppliers* used by UK SMEs
Base: UK SME businesses making fixed-line international calls, August ’01 (Small: Base – 259, Medium: Base – 230

6.2 On average, calls to international numbers accounted for 6% of the fixed line telephone bill for all SMEs. This was higher for medium-sized companies (15%), and marginally lower for small companies (just under 6%). A correlation can be noticed between the proportion of their bill that was for international calls, and the mean number of suppliers that they used:

Figure 6b – Average number of fixed-line international suppliers used by UK SMEs
Base: UK SME businesses making fixed-line international calls, August ’01 (Base: 489)

Figure 6c – Prompted awareness of international calling methods amongst UK SMEs
Base: UK SME businesses August ’01 (Small: Base – 516, Medium: Base – 300)

6.4 The pattern of usage is similar to that of awareness. The majority use the same supplier as for their domestic calls, and a quarter of medium businesses use an indirect supplier. Most services are used by a greater proportion of medium-sized businesses than the small businesses, and some of the contrasts are even greater than for awareness. 48% of medium businesses use mobile phones for international calls, but just 31% of small businesses do so, and video conferencing is used by 8% of medium businesses, compared to just 1% of small companies that doing so.

Figure 6d – Usage of international calling methods amongst UK SMEs
Base: UK SME businesses making fixed-line international calls, August ’01 (Small: Base – 259, Medium: Base – 230, "don’t knows" have been excluded

6.5 Companies that make a higher proportion of international calls (ie that spend more than 10% of their phone bill on them) are more likely to make use of the alternative methods, particularly mobile phones (45% do so) and indirect suppliers (35%).

Reason for selecting international call supplier

6.6 Over half of the SMEs that make international calls stated that the reason they use their particular supplier is because they use that same company for their domestic calls (see figure 6e). A further 16% stated it was because they used the same supplier for all calls.

6.7 One in five companies stated it was because of cost/value for money. This was a reason for 37% of medium sized businesses, compared to just 20% of small businesses.

Figure 6e – Reasons for using companies for international calls by UK SMEs
Base: UK SME businesses making fixed-line international calls, August ’01 (Small: Base – 259, Medium: Base – 230)

6.8 Amongst companies that make a lot of international calls (those whose international calls account for 11% or more of their fixed line bill), just over a third stated that value for money was the most important reason. Issues such as convenience, and using the same company as for domestic/all calls are more important to companies with a lower proportion of international spend.

6.9 With regard to the decision making process behind choosing which companies to use for international calls, over half (56%) of companies did not choose the operator based on their international call prices (49% for medium businesses). 17% thought about the specific countries it was likely to call and chose suppliers who offered cheap rates for those individual countries. 10% selected the suppliers that offered cheap international calls generally, and 4% thought about groups of countries or regions that it was likely to call and chose suppliers that offered cheap rates overall for those groups or regions.

6.10 The only significant difference between small and medium companies was that twice as many medium businesses (21%) as small businesses (10%) selected the company that offered the cheapest international calls.

6.11 Unsurprisingly, the companies that had the largest proportion of international calls (11% or more of their fixed line bill) were more likely to have based their choice of international supplier based on an aspect of their call charges. Less than a third (31%) of this group stated they did not choose their supplier based on their international call charges.

Carrier Pre Selection (CPS)

6.12 Indirect access allows customers on BT’s network to keep their BT line but make calls to alternative carriers by adding three or four digits in front of the dialled number. These extra digits allow the call to be routed beyond the local exchange to the carrier of the customer’s choice. The process of dialling the extra digits can be done automatically if the customer has special dialling equipment, called an autodialler.

6.13 Carrier Pre Selection is similar to indirect access in that it is a mechanism which allows customers to select alternative carriers in advance, but without dialling extra digits, or needing to use an autodialler. The customer continues to have a BT line, and simply chooses an alternative carrier and the type of calls that will be routed to that carrier. The call routing is done automatically in BT’s exchange.

6.14 39% of SMEs (that make international calls) stated that they might use CPS for making international calls. Over half (54%) of medium-sized businesses stated they might, compared to 38% of small companies.

Figure 6f – Whether might use Carrier Pre Selection for international calls
Base: UK SME businesses making fixed-line international calls, August ’01 (Small: Base – 259, Medium: Base – 230)

6.15 As can be seen in figure 6f, there is a correlation between the proportion of their bill made up by international calls, and their likelihood to use carrier pre selection.

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; and
• 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):

(i) 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 816 businesses – 500 small, 300 medium;
• increasing the overall sample will provide greater scope for a wider variety and more detailed analysis among subgroups.

(ii) 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.

(iii) 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 five 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 – August business questions on fixed telephony

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 Has your business ever made a complaint to any telecoms supplier including suppliers of both fixed and mobile telecoms services? IF YES, Was it for your fixed line, your mobile supplier or both?

Yes – fixed
Yes – mobile
No

Q11 Overall how satisfied were you with the way the company handled your complaint?

Very satisfied
Quite satisfied
Not very satisfied
Not at all satisfied
Don’t know

Q12 Have you ever changed the company which provides your fixed line telecoms service? Was it in the last 12 months or longer ago?

Yes – in the last 12 months
Yes – more than a year ago
No – never changed supplier
Don’t know

Q13 Why has your company never changed to another supplier?

Q14 Overall how easy was it to change your fixed line suppliers?

Very easy
Fairly easy
Not very easy
Not at all easy
Don't know

Q15 When you changed suppliers, did you keep all the same phone numbers that you had with your old supplier?

Yes – all
Not all, but some
No – none

Q16 Why did you change your fixed line telephone numbers?

Q17 You said you wanted new numbers, why was that?

Q18 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.

Q19 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

Q38 Moving on now to special rate numbers. It may soon be possible to allocate identifiable blocks of telephone numbers to individual companies. The code would start with 05, followed by four to six digits that are unique to your company. An example might be 05 123 123 followed by the rest of your usual number – and then all your current and future numbers could start with that code.

This is known as Corporate Numbering. It can simplify the management of companies’ private networks, can forward calls to users regardless of their location within that network, gives companies more freedom when negotiating billing with the supplier, and can also be used to provide multimedia services such as voice calls over the Internet, enable sharing of documents with remote sites, and transferring files and video.

Have you already heard anything about these Corporate Numbers beginning with 05?

Yes
No

Q39 Is this something that you would consider using for your company?

Yes
No
Don’t know

Q40 If you were to get your own 05 code, how many individual telephone numbers starting with your specific code do you think your company would apply for?

Q41 Now thinking about International calls. Approximately what percentage of your fixed line phone bill is for calls to International numbers?

Q42 ASK ALL THAT MAKE ANY INTERNATIONAL CALLS

Can I just check, how many different telephone suppliers does your company use for making fixed-line international calls?

Q43 I’m going to read out a list of ways people can make international calls, please can you tell me which of the following are you aware of?

Q44 And which of these does your company currently use to make International calls?

Using the same fixed-line supplier as for your domestic calls
Using an indirect fixed-line supplier PROMPT IF NECESSARY "this is where you enter a short code before dialing the number you wish to call or you may have a box attached to the phone that does this for you"
Pre-paid calling cards
Charge card
Mobile phone
Video conferencing
Voice over Internet
Private circuit
Virtual private network
None

Q45 Which companies do you use for your international calls?

Q46 Why do you use them?

Q47 Which of the following statements best describes your company’s decision on which suppliers to use for international calls from your fixed line phones.

My company thought about the specific countries it was likely to call and chose supplier(s) who offered cheap rates for those individual countries
My company thought about groups of countries or regions that it was likely to call and choose supplier(s) that offered cheap rates overall for those groups or regions
My company selected the supplier(s) that offered cheap international calls generally
We did not chose the company that supplies our international calls based on their international call prices
Don’t know

Q48 In the near future it will be possible for you to use operators other than BT to make most types of calls, including international calls, without the need to dial a four digit access code, or to have a box fitted at your business, or to change your phone line.

All that you would need to do is set up a contract with the supplier you would like to use for each type of call, eg International calls, and return a confirmation slip to BT. These calls would be automatically routed via this new supplier. You will continue to receive a bill from BT for line rental and for any calls carried on BTs network, and you would get another bill for calls carried over the other operators network.

Do you think that you might use this method for making International calls?

Yes
No
Don’t know