4 November 2001

Contents

Chapter one - Introduction
Chapter two - Summary findings, conclusions and recommendations
Chapter three - UK Internet usage at home
Chapter four - Internet usage outside the home
Chapter five - ISP packages and connection methods
Chapter six - Amount of time spent online
Chapter seven - Satisfaction with Internet service
Appendix one - Internet questions

Chapter one

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 sixth wave of Oftel’s quarterly residential consumer survey conducted in August 2001. Results from previous quarters may be used for comparison purposes and referred to within 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 2063 (see note one below) UK adults during August 2001, of whom 39% claimed to have Internet at home. This report has been prepared by Oftel (see note two below), based on the results provided by MORI.

1.4 The report covers:

• how many, and which consumers have Internet access at home – social demographics
• Internet usage outside the home
• 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 747 home Internet users is about 2-4%, but is higher amongst smaller subgroups.

2. The report should not be seen as recommending 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 two

Summary Findings, Conclusions & Recommendations

2.1 The Internet market as a whole remains broadly unchanged this quarter, with 39% UK homes currently claiming to be connected. It is too early to tell from a single quarter’s results whether this represents a change in the long-term trend. We will continue to track home penetration and adult usage.

Alternative access points may negate the need for home Internet access

2.2 Almost half (49%) of all UK residential consumers are connecting to the Internet at home and/or via an alternative access point. 26% of these consumers (Internet users) do not have Internet access at home. These consumers may be satisfied with their alternatives and therefore unlikely to want a home Internet connection, we will be tracking this information in subsequent quarterly surveys.

Fully unmetered packages playing important role in getting people online

2.3 40% of Internet homes currently claim to use fully or partially unmetered packages. These consumers are spending twice as long online as those using calls based packages. Unmetered products are playing an important role in getting people online, in particular those in lower income groups. Growth is mainly in the fully unmetered packages.

2.4 The vast majority of customers are still using the traditional PC and ordinary phoneline / dial up method to access the Internet.

Satisfaction remains generally high

2.5 91% of customers are satisfied with the overall service provided by their home ISP. This is broadly in line with satisfaction in both the fixed and mobile markets.

Main Findings

Chapter three

UK Internet usage at home

How many consumers are connected to the Internet?

3.1 The number of UK homes with Internet access remains broadly similar to last quarter. Approximately 4 in 10 homes are currently claiming to be connected to the Internet at home.

Figure 3a % UK homes with Internet access

Base: *UK homes, Aug ‘01 (Base: 2063)

* 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.

3.2 The majority of households are using the PC to access the Internet at home. Home Internet users remain more likely than average to have other technologies including mobile phones and digital TV. As Internet usage increases consumers are more likely to have more than one fixed phone line. Consumers with Internet access in their homes are also increasingly more likely to use the Internet at work or place of study, up 2% since last quarter, (Internet access outside the home is covered in more detail in section 4).

Figure 3b Telecoms usage in UK Internet homes, Aug ‘01

Which consumers are connecting to the Internet at home?

3.3 This quarter sees apparent drops in Internet penetration amongst specific consumer groups, such as consumers aged 45-54, C1 social groups, and middle income groups (annual household income £17.5-£30K). This ‘drops’ are not statistically significant, but fall within the error margins of the sample. It is unlikely that they indicate consumers in these groups terminating their Internet access. We shall continue to track these groups in particular, in future quarters.

3.4 Internet usage remains most prominent amongst AB social grades, higher income groups, larger households and younger and middle aged consumers.

How is the profile of Internet homes changing?

3.5 Over the last year there has been a gradual rise in the number of C2DE households and lower income groups connecting to the Internet. This may be due to increased availability and affordability of access methods, such as digital television and mobile phones. On the whole the profile of Internet homes remains broadly unchanged this quarter.

3.6 Distribution remains most prominent amongst younger and middle age groups, higher social grades and the working population.

Chapter four

Internet usage outside the home

4.1 Approximately half (49%) of all UK residential consumers are currently accessing the Internet, from home and/or visiting an alternative Internet access point, as shown in figure 4a.

4.2 Currently slightly less than three-quarters of all UK Internet users access the Internet from home. The remaining 26% rely solely upon alternative Internet points to gain access. This proportion of consumers may be unlikely to connect to the Internet at home if these alternatives continue to be satisfactory, shown in figure 4b. The figures chart 4b total more than 100% as some consumers use the Internet in more than one location.

4.3 Looking at the profile of consumers using these alternative access points, men tend to be twice as likely to use Internet cafés than women. Younger consumers and higher social grades are also more likely to use this point of access.

4.4 The main users of the Internet within libraries and learning centres, such as schools and colleges, tend to be under the age of 34 with no real distinction by sex and social grade.

4.5 Men, higher social grades and younger to middle age groups are amongst those consumers who are more likely to access the Internet at work.

 Chapter five

ISP packages and connection methods

Which connection method are consumers using?

5.1 The PC and ordinary phone line/dial-up access, continues to be the most popular method of connection. UK residential consumers are also continuing to use other methods such as digital television and mobile phones to access the Internet.

5.2 Currently 7% of UK residential consumers own a WAP mobile phone. Only 2% state this as a method of connecting to the Internet. This is possibly because when asked about their connection methods consumers did not think about their WAP mobile phone as a means of Internet access.

5.3 Currently 1% of consumers are claiming to use ADSL technology. This figure is more in line with Industry estimates than last quarter.

5.4 Oftel is planning to carry out an additional benchmarking exercise for the broadband market. This research aims to establish whether and if so why, UK consumers are making more or less use of Internet broadband access than other countries. The report is expected to be published early next year.

How many ISPs are consumers using?

5.5 In line with the Internet market as a whole, this quarter sees very little change in relation to the number of consumers choosing to use 1 or more ISP, as shown in figure 5b.

Figure 5b Number of ISPs used at home
Base: UK homes with Internet access, Aug ’01 (Base: 747, 11% ‘don’t knows’ have been excluded)

	Feb ‘01	May ‘01	Aug ’01
One	78%	81%	80%
Two	15%	15%	17%
Three	3%	2%	3%
Four or more	4%	1%	*

* less than 1%

Which ISPs are currently being used?

5.6 Consumers are making use of a range of ISPs as shown in figures 5c and 5d. 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.

Which type of package are consumers using?

5.7 On the whole UK homes with Internet access are continuing to make use of the range of ISPs and packages available to them.

5.8 The proportion of UK Internet homes using calls-only packages has been falling since August 2000. Up until now these were the most popular package. However, since the introduction of unmetered products, and in particular fully unmetered, subscriber numbers to calls-only packages have been falling.

5.9 Currently 42% of UK Internet homes are using calls-only packages compared to a rising 40% who are connecting via unmetered packages, as shown in figure 5e. The number of consumers opting for either fully or partially unmetered packages has increased significantly from 25% to 40% over the last year.

5.10 The proportion of consumers paying subscription charges as well as call costs has remained fairly constant since February 2001, we will continue to track this to see whether these consumers choose to switch package as their contract ends.

5.11 Around half of UK homes with unmetered Internet access had switched from a metered package. The other half had never used a subscription and/or calls package. A third of consumers who connected straight to unmetered claimed that they would not have have connected to the Internet at all if unmetered packages did not exist. Those consumers tended to be DE social grades and lower income groups. This equates to 5% of UK Internet homes whose connection was driven by the availability of unmetered packages. This suggests that unmetered packages are playing a significant role in the overall uptake of Internet at home, as well as the amount of time consumers spend online, see figure 6a.

Chapter six

Amount of time spent online

How long are consumers spending online?

6.1 During August consumers claimed to be spending an average of just over 8 hours per week online, see figure 6b. The growth last quarter in the amount of time spent online has been sustained. This figure is inflated by a small number of heavy users and in fact the majority of homes are connected for less than this. Most UK Internet homes stated they are only online for up to 5 hours per week, as shown in figure 6a.

6.2 1% of consumers claim to be using an ADSL connection. The small proportion of ADSL users, currently claim to spend an average 23 hours online per week. 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?

6.3 Consumers using either partially or fully unmetered packages remain the heavier users in terms of time spent online. Consumers using these types of package are spending twice as long online per week as those consumers paying call charges.

Chapter seven

Satisfaction with Internet service

7.1 91% of UK residential consumers with home Internet access are satisfied with their overall service at home. Satisfaction levels are generally high across all connection methods and types of package. Accessing the Internet via digital television currently remains the least satisfactory connection method.

7.2 Recent Oftel research into consumers’ use of digital television suggests that consumers with PCs are unlikely to use their television to access the Internet. Those consumers with both methods may be comparing the two access methods and therefore rating the limited service offered via television, as less satisfactory.

Appendix 1

Q6 August 2001 Residential Questionnaire – Internet questions

Which of these types of connection does your household use to connect to the Internet at home? Please state all types of connection used.

Ordinary phone line/dial up access

BT Highway/other ISDN line

ADSL – always on, unmetered access, at least 10 times faster than an ordinary phone line, which enables you to make voice calls at the same time as using the Internet

High speed access offered by cable modem

TV

Mobile phone/device

Other

How many Internet Service Providers (ISPs) does your household currently use?

One

Two

Three

Four or more

Which Internet Service Provider(s) (ISPs) does your household currently use (including free ISPs)?

AOL

BT Click

BT Internet

Cable & Wireless

Compuserve

Freeserve

IC24

LineOne

Netscape

NTL

Supernet

TescoNet

Tiny Online

VirginNet

Yahoo

Zoom

Other

Which of these statements best describes the package provided by your household’s main Internet Service Provider (ISP)? Please just read out the letter that applies.

I/we pay monthly/annual subscription and cost of calls made whilst on-line

I/we pay no subscription fee, and pay cost of on-line calls only

I/we pay monthly/annual subscription which gives unlimited free usage, and pay no call costs

I/we pay monthly/annual subscription which gives free usage at certain times or for certain amount of time, but pay for call costs at other times

None of these

Did you previously use a metered package – where you pay for all the call costs?

Yes

No

If unmetered packages had not been available when you connected to the Internet, how likely would you have been to connect anyway?

Very likely

Fairly likely

Not very likely

Not at all likely

How many hours would you say you and members of your household spend using the Internet at home in a typical week.

Less than an hour

1-2 hours

3-5 hours

6-10 hours

11-15 hours

16-20 hours

21-30 hours

More than 30 hours

Overall, how satisfied are you with your home Internet service?

Very satisfied

Fairly satisfied

Not very satisfied

Not at all satisfied

Which, if any, of the following places do you go to, to access the Internet?

Work

Home

Internet café

Library

School/College/University/Other learning centre

Someone else’s house

None – don’t use the Internet

Other (PLEASE SPECIFY)