Business use of Mobile Telephony - Oftel Small and Medium Business Survey Q6 August/September 2001, 4 November 2001



	Business use of Mobile Telephony – Oftel Small and Medium Business Survey Q6 August/September 2001



			4 November 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 – Q6 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 sixth wave of Oftel’s quarterly business survey, conducted in August/September 2001. 1.2 The survey sample was changed in wave five, and hence results are not directly comparable with waves previous to that. 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 Ł50,000. 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 mobiles used, and mobile telecoms spend; service providers and packages used; porting of numbers; satisfaction with mobile service; level of complaints about fixed and mobile providers; and 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 816 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 increases slightly since May 2.1 In August 2001, 61% of small businesses and 85% of medium businesses owned at least one mobile phone, which represent a slight rise over the previous quarter. Within small businesses there was significant variation, ranging from 56% of one-person businesses, to 75% of 26-50 person businesses. Similarly, the average number of mobiles per business varied by business size, ranging from one in one person businesses, to 23 in businesses with 101-250 employees. Mobile spend per phone down since May 2.2 Businesses spend on average Ł46 per month on each mobile phone they own, although this figure is inflated by a small number of heavy users. In Q5 (May 2001), this figure was Ł51. Post-pay packages increasingly popular amongst small businesses 2.3 Over three-quarters (80%) of SMEs with mobiles were using post-pay packages, just under and 19% were using pre-pay and 11% using all in one packages. This represents a small shift towards post-pay since May (77% were post-pay, 20% pre-pay and 13% all in one). Satisfaction with overall mobile service remains high 2.4 94% of businesses were satisfied with their mobile service overall (94% small businesses, and 91% of medium businesses), which is in line with overall satisfaction with fixed telecoms services (also 95%), and is very similar to May (95%). Lower levels of satisfaction with cost of calls whilst roaming 2.5 Amongst those that expressed an opinion (ie after removing ‘don’t knows’), ability to access the network (ie lack of congestion) and overall value for money were considered the most satisfactory aspects of service. The least satisfactory aspect of mobile service was the cost of off-net calls (ie calls from one network to another) – 51% of SMEs were satisfied with this. 2.6 Satisfaction with quality and coverage abroad was high at 91%, but considerably fewer were satisfied with overseas call costs (36% satisfied). Medium-sized businesses more likely to have changed supplier 2.7 Just over a quarter (26%) of all SMEs that used mobile phones had ever changed their mobile phone network. Medium businesses were significantly more likely to have changed supplier, with 46% ever having changed, compared to 25% of small businesses. Less than half of all SMEs ported numbers when switching supplier 2.8 Of all the SMEs that had switched supplier 39% had ported all their numbers. Medium sized companies were more likely to have ported all their numbers (47% did so), than small companies (38% did so). Porting appears to becoming easier over time 2.9 Amongst those that switched providers over a year ago, 34% kept all their numbers, but amongst those that have switched more recently, 45% kept all their numbers. Fees are main barrier to porting 2.10 Of all the companies that changed some of their numbers, over a quarter (27%) said they did so because they said they would have had to pay fees to keep them the same, and that to do so was too expensive. A further 22% said that they were told by the new supplier that they had to have new numbers. 13% said that their old supplier informed than that they couldn’t keep their numbers. 4% actually wanted new numbers. Chapter 3 – Main Findings Business use of mobile telephony *Ownership of mobiles* 3.1 In August 2001, 61% of UK SME businesses owned at least one mobile phone (up marginally from 59% in May) – 61% of small businesses (58% in May), and 85% of medium businesses (81% in May). Small businesses had on average two mobiles (no change since May), compared to an average of 17 among medium-sized businesses (up from 15 in May). 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) August ’01 (Small: Base – 516, Medium: Base – 300) *Use of service providers and mobile packages* 3.2 The survey found that of all SMEs that use mobile phones, 45% are with Cellnet, 30% are using Vodafone, 26% using Orange, and 10% using One2One. In addition to these main suppliers, 6% were using a range of other service providers. Smaller businesses were again slightly more likely to use Cellnet and One2One while medium-sized businesses were still more likely to use Vodafone and, to a lesser extent, Orange. 3.3 80% of SMEs with mobiles were using post-pay monthly subscription packages (up from 77% in May), and just under a fifth (19% – no real change since May) were using pre-pay/ pay as you go packages. ‘All in one’ packages (where line rental is paid in advance and calls are either billed monthly or paid by call vouchers) were used by 11% of SMEs (a minimal drop since May). 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 (NB. for each bar in the chart, the white/light-grey portion on the left represents Post-pay, the black/dark-grey bar in the middle represents Pre-pay, and the patterned bar on the right represents All in one) *Figure 3b – Use of mobile packages by UK SME businesses* Base: UK SME businesses with mobiles, May ’01 (Small: Base – 311, Medium: Base – 245), August ’01 (Small: Base – 334, Medium: Base – 253) *Business spend on mobile telecoms* 3.4 The average monthly spend on mobile telecoms services by small businesses that use mobiles was Ł146 (down from Ł164 in May) and Ł1,532 by medium-sized businesses (down from Ł1,727 in May). This compares with spends of Ł284 and Ł2,733 respectively on fixed telecoms services. Most businesses were spending less than these averages, which were inflated by a small number of heavy spenders. The median spend for small companies was approximately Ł75, and for medium-sized businesses it was Ł2,000 3.5 Figure 3c compares small and medium businesses' average spend per phone. Medium businesses are not only using more phones than small businesses, but they are also spending more per phone than smaller businesses, although this difference is not as pronounced as in May (where average spend per phone in medium-sized businesses was more than double that of small 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), August ’01 (Total base – 587, "don’t knows" have been excluded) 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 94% (95% in May), which is in line with satisfaction with fixed line services (95%). However, satisfaction with individual aspects of the services tended to be lower than in May. 4.2 Overall value for money and dropped calls were the particular areas where satisfaction had fallen most sharply. There is no immediately apparent reason for these declines as there has been no real change in prices during this period. We shall continue to examine these issues in future 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,). August ’01 (Small: Base – 334, Medium: Base – 253) "don’t knows" have been excluded) 4.3 Unlike in May (where 89% of small businesses were satisfied with the overall value for money of their service, compared with 75% of medium-sized businesses), there was negligible difference between these two groups with respect to value for money (81% and 83% respectively). There was however a difference with regard to satisfaction with the overall cost of calls from their mobiles. 76% of small businesses were satisfied, compared to 69% of medium sized businesses. An even bigger gap (between 84% and 68% respectively) was observed in May. 4.4 The least satisfactory aspects of mobile service were the cost of calls to other mobiles (off-net calls), and the cost to others of calling the company’s 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. 4.5 Other areas that received low satisfaction are the cost of calls to mobile phones on other networks (off-net calls), and the cost to others of calling the company’s 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. There was also lower satisfaction with calls being dropped (68%). 4.6 With regard to off-net calls, Oftel has proposed licence changes that would require BT Cellnet, One2One, Orange and Vodafone to reduce the amount they can charge other telecoms operators for incoming calls to their networks over the next four years. These reductions should result in lower retail prices for calling mobile phones, whether from a fixed line or from another mobile, saving the consumer an estimated Ł800million over the four years. 4.7 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. 4.8 The chart should be interpreted as follows: of all the businesses who were satisfied with network coverage (of which there we 459 – 81% of all mobile users), 99% of them were satisfied with their mobile service overall, and only 1% were dissatisfied. However, of the businesses who were dissatisfied with network coverage (of which there we 108 – 19% of all mobile users), just 71% were satisfied overall, while 29% were dissatisfied. 4.9 Similarly, satisfaction with overall value for money seems to have quite a significant impact on overall satisfaction, in relation to other factors (as was observed in May). Satisfaction with network congestion also has a noticeable impact on overall satisfaction, and to a greater extent than in May. Satisfaction with call costs remains an important factor. However it should be noted that although satisfaction with cost attributes has fallen since May, overall satisfaction with the mobile service has not fallen. Actual costs have largely remained the same over this period, so it appears that perhaps media coverage regarding perceived ‘overcharging’ by the networks has had an influence on how customer regard the various cost levels. 4.10 15% of all mobile users had ever made a complaint to their mobile provider (10% of all respondents) which compared to 26% of respondents that made a complaint to their fixed line supplier. Nearly twice as many medium-sized companies (that use mobiles) than small companies had made a complaint (26% and 14% respectively). 4.11 Two-fifths of those making a complaint (39%) were either very or quite satisfied with the way that their complaint was handled. Nearly two-thirds (61%) were not satisfied, with 27% stating they were "not at all" satisfied. Levels of satisfaction with complaint handling were lower for complaints to mobile suppliers than for complaints to fixed line suppliers. *Figure 4b – Impact of individual measures on overall satisfaction with mobile service* Base: UK SME businesses with mobiles, August ’01 (Base: 556, "don’t knows" have been excluded) 4.12 So although network congestion (or rather, lack of it) was previously reported to be one of the most satisfactory aspects of mobile service (figure 4a), dissatisfaction with this appears to have quite a significant negative effect on overall satisfaction. 4.13 Conversely, whilst the costs of making and receiving calls abroad were reported in 4a as the least satisfactory aspects of mobile service, dissatisfaction with these 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. NB Satisfaction with mobile usage abroad is covered in Chapter 5. Switching mobile network and number porting 4.14 Just over a quarter (26%) of all SMEs that used mobile phones had ever changed their mobile phone network. 11% had done so in the previous 12 months, and 15% had done so over a year ago. Medium businesses were significantly more likely to have changed supplier, with 46% ever having changed, compared to 25% of small businesses. 4.15 Of all the SMEs that had switched supplier, 50% had not ported any of their numbers, and a further 11% had only ported some of their numbers. 39% had ported all their numbers. Medium sized companies were more likely to have ported all their numbers (47% did so), than small companies (38% did so). 4.16 Companies that switched supplier in the previous 12 months were more likely to have kept all or some of their numbers than those that switched network longer ago (see figure 4c) *Figure 4c – % UK SME businesses that had kept numbers when switching networks* Base: UK SME businesses with mobiles that switched their supplier, August ’01 (Base – 207) 4.17 Of all the companies that changed some of their numbers, over a quarter (27%) said they did so because they said they would have had to pay fees to keep them the same, and that to do so was to expensive. A further 22% said that they were told by the new supplier that they had to have new numbers. 13% said that their old supplier informed than that they could not keep their numbers. 4.18 A third (33%) of those that had changed mobile networks in the last 12 months stated that they had changed numbers because the new company told them they had to, compared to 15% of those that had changed network over a year ago. Conversely, of those that had changed over a year ago, 20% stated that the old company had told them they could not keep their numbers – no one who had changed in the previous 12 months stated this. However, these figures should be viewed with a degree of caution, as the base sizes are less than 100. Chapter 5 – Use of mobiles abroad 5.1 Overall, over half (59%) 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, August ’01 (Small: Base – 334, Medium: Base – 253. "don’t knows" have been excluded) 5.2 The majority of businesses who had used their mobiles abroad were satisfied with quality and coverage of service overseas (91%). Only a third of businesses however, were satisfied with the cost of making and receiving calls when abroad. Those that used their phone abroad frequently were less satisfied (across all four measures) than those that use them sometimes or rarely. There were no significant differences between small and medium businesses. *Figure 5b – % UK SME businesses satisfied with various aspects of their mobile service abroad* Base: UK SME businesses who have used their mobiles abroad, August ’01 (Base: 387, "don’t knows" have been excluded) 5.3 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 August 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 Ł50,000), 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 Ł50,000 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 800 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 from wave five onwards 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 – Q6 business questions on mobile telephony Q22 Does your company own any mobile phones which are currently connected to a network? Q23 How many mobile phones which are currently connected does your company own? Q24 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. Q25 Which suppliers provide your mobile phone services? By that I mean who sends you a bill? Q26 Which of the following best describes the mobile phone packages your company uses? Pre-paid (ie after paying a one-off fee for the phone, top up is bought as and when required) Monthly subscription contract (ie line rental and call charges are paid each month) All in one package (ie line rental paid in advance and calls either billed monthly or paid by call vouchers) Q27 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 range and quality of information available on call charges for using your mobile abroad The quality and coverage of service whilst abroad The cost of making mobile calls whilst abroad Cost of receiving incoming calls whilst abroad Q28 How often if at all, are your company's mobile phones used abroad for work purposes? Frequently Sometimes Rarely Never Q29 Have you changed your mobile phone network or service provider? IF YES Was it in the last 12 months or longer ago? Q30 When you changed mobile phone network or service provider, did you keep all the same mobile phone numbers that you had with your old supplier? Yes – all Not all, but some No – none No - none Q31 Why did you change your mobile phone numbers? Q32 You said you wanted new numbers, why was that?