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Chapter 1 Introduction Chapter 2 Summary findings, conclusions and recommendations Main findings Chapter 3 UK Internet penetration at home Chapter 4 Suppliers, connection methods, ISPs, and packages used Chapter 5 General household use of the Internet Chapter 6 Satisfaction with Internet service Chapter 7 Switching behaviour – past and future Chapter 8 Internet use outside of the home Annex 1 Ad hoc questionnaire 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 seventh wave of Oftel’s quarterly residential consumer survey conducted in November 2001. An additional ad hoc survey was conducted in October 2001, in homes connected to the Internet via PC or laptop (rather than TV, mobile, other means). The survey was conducted with the adult responsible for the Internet decisions in the home, examining their decision-making in more detail. The results have been incorporated in this report, which as a result, focuses more on the decision-maker responsible for the Internet choices in the home. 1.2 The quarterly survey was conducted for Oftel by MORI amongst 2159 (see note 1) UK adults during November 2001, of whom 45% claimed to have Internet at home. The ad hoc survey was conducted by Continental Research amongst 750 UK adults responsible for the Internet decisions at home. This report has been prepared by Oftel (see note 2), based on the results provided by MORI and Continental. 1.3 The report covers: Chapter 3 Home Internet penetration, and profile of users Chapter 4 Connection methods, ISPs and packages used Chapter 5 General household use of Internet
Chapter 6 Satisfaction with home Internet service Chapter 7 Switching behaviour – past and future
Chapter 8 Internet usage outside the home
1.4 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. Note 1 The quarterly
survey was conducted face to face in respondents own homes, 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 897 home Internet users
is about 2-4%, but is higher amongst smaller subgroups. Note 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 Continental or any decisions taken by any
person in reliance on the report.
Summary findings, conclusions and recommendations Headline figures 49% UK adults use the Internet in a variety
of locations Internet use 2.1 About half of UK adults claim to use the Internet, and do so in a variety of locations. The majority of these have access at home, and of those who don’t have home access, 11% use the Internet in alternative locations. The majority (87%) of those without home access are satisfied with the locations where they access the Internet, and 73% (of those without home access) did not intend getting Internet at home in the next 12 months. Internet penetration 2.2 Home Internet penetration continues to rise, following a brief stabilisation in August 2001. Currently 45% of homes are connected. We can probably expect to see more fluctuations of this nature given that the gap between PC ownership (which remains the main means of Internet access) and Internet penetration has been narrowing steadily over the last two years. This indicates that the majority of homes with a PC are already connected to the Internet. The cost of a PC may become a more evident barrier to home Internet access, particularly amongst the lower income groups and older consumers where PC ownership is lowest. 2.3 Multi-line usage was significantly higher in Internet homes (3 in 10 had more than one line) than non-Internet homes. The majority of these multi lines were from the same supplier, 5% had both cable and BT lines. Three-quarters of Internet homes used their additional lines for Internet and email. Internet homes were also more likely to use cable (28%) compared with non-Internet homes (20%). Home access methods 2.4 94% of homes connected to the Internet had a PC for Internet use. Use of alternative access methods including TV (4%) and mobile (3%) remain niche market methods, used by a minority of consumers. Over four in five (83%) of all Internet customers used ordinary phoneline / dial up access, while subscriber figures show that about 2% of homes used broadband access via ADSL or cable modems. Interest in broadband Internet access 2.5 Just over half (55%) of narrowband users expressed interest in upgrading to broadband access. These tended to be longer established and heavier users, those already using unmetered packages and ISDN, and those dissatisfied with their current speeds. However, despite the significant interest, consumers were prepared to pay an additional £6 per month on average for broadband (or just less than £20 per month in total for their Internet service), which is approaching the bottom of the current range of broadband prices (£20 upwards per month, excluding installation costs). 2.6 Qualitative research conducted on behalf of Oftel (further details of which can be found in the main text) reported high levels of satisfaction among existing broadband users and unwillingness to return to narrowband access. It also reported significant levels of interest among existing narrowband users who were asked to test broadband services. Faster speed was the main attraction for most narrowband users, while the other features were seen as a bonus rather than fundamentally important. However, the general consensus was that faster speed was not sufficiently desirable to justify current costs for most consumers at the moment. New ‘broadband’ packages (at lower speeds) such as those being offered by ntl at £15 per month, may be more financially attractive to consumers, but are obviously available only to those in ntl cabled areas. ISPs and packages 2.8 Use of unmetered packages showed no change at about 40% since August 2001. A further 40% of those currently using metered packages expressed interest in upgrading to unmetered access – mainly heavier users, particularly those already paying a regular subscription as well as calls. The remainder felt that they didn’t use the Internet enough to need unmetered access, indicating awareness of their usage patterns, and at least some awareness of when unmetered would be viable. Satisfaction with home Internet service 2.9 Almost nine in 10 (89%) Internet customers were satisfied with their overall service. Although this was slightly lower than satisfaction with mobile and fixed services (both 93%), satisfaction with Internet was higher amongst the Internet decision-maker in the home, at 96%. This is likely to be more comparable with the fixed and mobile figures since the majority of ratings for fixed and mobile were given by the decision-makers for these services. All provide a more accurate measure of satisfaction as the decision-makers are likely to have more realistic expectations of the service. 2.10 91% were satisfied with overall costs. Slightly fewer were satisfied with speed of service (80%), which along with connection problems were mentioned as the main problems consumers had experienced with their Internet service (albeit by less than a fifth of customers). Issues to do with speed appear to becoming more important to Internet customers, perhaps reflecting increased usage and awareness of increasingly available faster alternatives. Use of competition and choices in the Internet market 2.11 There are continuing indications that a significant proportion of Internet customers are shopping around and making reasoned choices with regard to their home Internet service, particularly heavier users:
UK Internet penetration at home 3.1 Home Internet penetration (% UK homes connected) grew at a consistent rate until May 2001, after which it temporarily stabilised before continuing to rise to 45% by November 2001. This is shown in figure 3a. 3.2 However, these fluctuations in home Internet penetration may represent at least the short-term trend as PC ownership stands at 52%, and is still the main method of Internet access for the majority of consumers. The long-term trend shows that the gap between PC ownership and Internet penetration has been narrowing for some time. However, we might reasonably expect to see PC penetration rise over the next quarter following the Christmas period. Figure 3a % UK homes with Internet access
Internet usage outside the home 3.3 A further 4% of UK adults access the Internet from locations other than home. This equates to a total of 49% adults using the Internet. There has been no change in this figure since August 2001. Further details on use of alternative access points, and the possible impact this could have on home penetration are discussed in section 8. Which consumers are connecting to the Internet at home? 3.4 PC ownership follows a similar pattern to Internet penetration – most popular amongst younger to middle age customers and higher income groups – shown in figure 3b. As seen in figure 3a, the gap between PC ownership and Internet penetration has been narrowing for some time – in other words, most of those who have a PC are already connected to the Internet. Internet penetration has almost reached saturation point in relation to PC ownership, amongst older consumers (aged 65+), the DE socio-economic (semi/unskilled manual workers, and those relying solely to state provision) and lower income groups. As the latter two groups in particular are least likely to be able to afford a home computer, they are likely to rely more on alternative points to access the Internet. Figure 3b % adult population with PC
and Internet at home
How is the profile of Internet homes changing? 3.5 There was a small change in the age profile of Internet homes between August and November 2001 – comprising a rise in the proportion of older users and a subsequent fall in the proportion of younger users. There has been little change in the socio-economic and income profiles of Internet homes, and further change would be required before home Internet access more accurately reflects the distribution of the UK population. Figure 3c Changing profile of homes
with Internet access
Suppliers, connection methods, ISPs, and packages used Number of lines 4.1 Three in ten Internet homes have more than one fixed line – a small rise from 27% a year ago – and considerably higher than second line penetration in non-Internet homes which was 6% (also November 2000). 4.2 Multi-lines in Internet homes were most popular amongst:
4.3 And least popular amongst:
4.4 Internet access was the predominant reason for multi-line use. 76% of Internet homes with multi-lines used their additional line for Internet and email. Other uses of additional lines included business calls (34%), fax (24%), and a dedicated line for particular household members (17%). Suppliers used at home 4.5 Homes with Internet were considerably more likely than non-Internet homes to use a cable supplier (28% versus 16%), and this was higher still amongst multi-line Internet homes (47%). 15% of multi-line Internet homes (equivalent to 5% of all Internet homes) had both cable and BT lines. This is shown in figure 4a and 4b. 4.6 Of the 5% of Internet homes with both cable and BT lines into the home, 47% use BT to connect to the Internet, and 38% use cable (the remainder said they used someone else or weren’t sure). Figure 4a Supplier of fixed lines at homes
Figure 4b Suppliers used to connect
to the Internet
Method of connecting to the Internet at home 4.7 During November 2001, 94% of homes with Internet access had a PC or laptop to access the Internet. According to the decision-makers survey, which was conducted only amongst homes accessing the Internet via PC (rather than TV, mobile, or any other means), the vast majority of these (93%) used ordinary phone line / dial up access to connect to the Internet. Other methods are shown in figure 4c for all types of access (not just PC). Figure 4c Changing penetration of methods
used by consumers to access the Internet at home
4.8 1% of Internet homes claimed to use ADSL which is in line with current subscriber estimates from BT and Kingston. However, 6% of Internet homes claimed to use cable modems which is higher than subscriber estimates from the cable companies which indicate that this figure should be about 1-2%. Despite the use of consumer-friendly explanations of these technologies in the survey, some consumers remain confused about the type of Internet connection they have. This is likely to occur increasingly with the introduction of lower speed ‘broadband’ services, and is to be expected given that the quarterly surveys are conducted amongst any Internet user in the home, and not necessarily the Internet decision-maker. There has been little change in these figures since August 2001. Type of Internet package used 4.9 Use of calls only packages continues its downward trend, falling from 66% to 40% in the last 18 months. Unmetered usage stabilised for the first time during this period, also around 40%. For details on switching between packages and interest in upgrading from metered to unmetered packages see section 7.
Figure 4d Main type of Internet
package used at home
Reasons for choice of Internet package 4.10 Cost was the main driver behind choice of Internet package, particularly for customers using unmetered packages. There was little difference in reasons given between longer established home users and those who connected more recently. Figure 4e Reasons for choice of Internet
package (unprompted)
ISPs (Internet Service Provider) used 4.11 Just over eight in 10 (82%) homes said they currently used just one ISP, while 18% used more than one. This has remained largely unchanged since January 2001. Multi-ISP usage was particularly popular amongst heavy usage homes. Oftel’s August 2000 Internet survey reported that access; content; various amounts of inclusive usage; and preference of different household members were the main reasons for using more than one ISP. Figure 4f Number of ISPs used at home 
4.12 Consumers are making use of a range of ISPs as shown in figures 4g and 4h. The following chart and table show the individual ISP share of the residential market based on which ISPs consumers were using. [NB This is not the same as the proportion of consumers using each ISP as some consumers 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. Overall, there has been little change in the figures since August 2001. Figure 4g ISP share of UK residential
homes with Internet access (based on all ISPs consumer use)
Figure 4h ISP share of UK residential
homes with Internet access (based on all ISPs consumers use)
Reasons for choice of ISP 4.13 Reasons for choice of ISP are shown in figure 4i. In line with choice of package, ISP selection was driven by a variety of price issues primarily, although recommendations from family and friends were also important. These are consistent with findings from June 2000. Figure 4I Reasons for choice of ISP
General household use of the Internet Length of time connected Figure 5a Length of time with home Internet
connection
5.1 Lower income groups were more likely than average to have connected in the last year. More experienced users (connected for more than three years) tended to be slightly older than average, and predominantly from the higher income and professional classes. This is consistent with findings from previous Oftel surveys. 5.2 There was little difference in use of metered versus unmetered packages, between longer established users, and more recently connected homes. This perhaps indicates that the longer-established users have switched package, as unmetered packages became more widely available (following the introduction of the FRIACO wholesale product in August 2000), and are making use of the choices available. This is consistent with later findings (section 7) which report that longer established users were more likely than average to have shopped around for better deals since connecting and switched package. Reasons for getting the Internet at home 5.3 A significant proportion of Internet decision-makers got the Internet with no specific purpose in mind, but for general research and information purposes. Email was another popular reason for home connection. Reasons for getting the Internet at home are shown in figure 5b. 5.4 Consumers who said they got the Internet at home for work purposes or for their children’s education tended to be heavier users, compared with those who got it for more general reasons or for email. Figure 5b Reasons for getting the Internet
at home (unprompted)
Sources of information used to assist connect to the Internet 5.5 Over nine in 10 decision-makers used some sort of information before connecting to the Internet. This is slightly higher than reported in November 2000, most probably because this survey was conducted amongst decision-makers, whereas the previous research was gathered amongst any household member – not necessarily the Internet decision-maker – who are less likely to know what information was used. Apart from this, there has been little or no change in the results over the last year. The information sources used are shown in figure 5c. Figure 5c Sources of information used
to connect to the Internet
5.6 As reported in November 2000 recommendations and advice from family and friends was the most popular source of information when connecting to the Internet. This is not unique to the Internet market, but is common across both mobile and fixed telecoms. 5.7 Older customers (aged 55+) and more recently connected homes (within the last year) were more likely than other groups to have sought advice from family and friends (45% and 44% respectively). 5.8 Overall, three in 10 (29%) customers said that friends and family and played an ‘important role’ in their Internet decision-making. This rose to 35% amongst the 55+ age group; 36% amongst students; and 42% amongst customers who connected within the last year. 5.9 Earlier adopters (connected more than three years) were more likely to have sought advice from magazines and independent websites. There was little difference between those using different types of Internet package. The only notable difference was that those on unmetered packages were slightly less likely than average to have followed recommendations from family and friends and more likely to have used company literature. Comparing the choices available 5.10 Just over half (56%) of Internet decision-makers said they shopped around and compared different ISPs, packages, etc before they made their decision. 5.11 Heavy and more experienced users were more likely to have compared options before connecting. Customers who had connected more recently were less likely to have shopped around which is perhaps surprising, given the much wider choice of connection methods and types of package now available, but is consistent with results above which show them relying more heavily on the advice of family and friends. As the Internet has become more mass market there is perhaps an assumption that by default they will get a good deal. 5.12 Perhaps reassuringly, heavier users who potentially would suffer greatest detriment from being on the wrong deal, exhibited greatest awareness of the choices available, were more likely to have shopped around and switched, and were more confident they were getting the best deal. 5.13 The proportion of Internet decision-makers who compared offers both before and since connecting to the Internet at home is shown in figure 5d. Figure 5d % Internet decision-makers
who compared offers before making decision and since connecting
5.14 Just less than half (45%) of Internet decision-makers had compared the packages and deals available, since connecting to the Internet. There was less notable difference by age and social grade than for comparing prior to connection. 5.15 Heavier usage households were most likely to have shopped around for other deals, and hence in theory should be more likely to be getting the best deal (assuming their comparisons were reliable and accurate). They were more likely than average to have switched package, and were more aware of the range of deals available. They also had a slightly greater tendency than lighter users to think that they were getting the best deal in terms of both price and quality. Satisfaction with information sources used 5.16 Internet decision-makers were satisfied on the whole with the information sources they had used to assist them connect to the Internet. Overall, 86% were satisfied, 4% were dissatisfied, and 10% weren’t sure. The November 2000 survey reported that 59% of Internet users were satisfied with the information sources available to assist them choose their Internet service. The higher levels of satisfaction seen here are likely to again reflect the sample differences and more knowledgeable decision-makers opinion captured in this survey. 5.17 Decision-makers who had used magazine articles, company literature, and information on websites tended to be most satisfied with the information available (c. 95% were satisfied), followed closely by those who had sought advice from family and friends (93% were satisfied). 5.18 Satisfaction was slightly lower than average amongst those on calls-only packages (82%) compared with those paying for subscription and calls (90%) and those on unmetered packages (91%). There was little difference in satisfaction between more experienced households and those recently connected, or between heavy and light users, indicating that the information available was satisfactory for most types of Internet customer.
Online activities 5.19 Once online, households are using the Internet for a wide variety of activities, shown in figure 5e. Apart from a small rise in the proportion of customers shopping and banking online, and sourcing business information, there has been little change in online activities over the past 15 months or so. Email remains the most popular activity, along with sourcing educational and travel information. Figure 5e Household online activities
(prompted)
Weekly time spent online 5.20 The average Internet household spends about eight hours online each week. There has been no change in this figure in the last six months. These figures however are inflated somewhat by a small proportion of heavy usage homes, and indeed just over half of Internet homes spend less than five hours online each week. This is shown in figure 5f. Figure 5f Average weekly household
time spent online
5.21 Heavier users tend to be those using unmetered narrowband, or higher speed connections (ISDN or broadband); more experienced Internet homes (ie have been connected for longer); and homes with younger users and multi-users. This is shown in figure 5g. There was little difference across income level or social grade. Figure 5g Average weekly household time
spent online (hours)
Factors that would encourage greater Internet use at home 5.22 Just over two-fifths of Internet decision-makers could think of nothing that would encourage their household to make greater use of the Internet at home. There has been little change in this figure since June 2000. Although the most commonly mentioned factor that would encourage greater home usage was cheaper call costs, this was mentioned by just less than a fifth of decision-makers. Likewise was speed of service, again indicating that for the majority of Internet customers, these are not barriers to greater Internet use. 5.23 Call costs were mentioned by fewer customers than in June 2000, perhaps reflecting the greater range of deals now available and growth in the use of unmetered packages. Speed issues however received more mentions that in June 2000, perhaps a result of increased usage and awareness of faster alternatives that are increasingly becoming available. Figure 5h Factors that would encourage
consumers to make greater use of Internet at home (unprompted)
Chapter 6 Satisfaction with Internet service 6.1 Overall, 89% of Internet customers said they were satisfied with their home Internet service, slightly lower than in August 2001, but not a significant drop as the change is within the error margins of the survey. This figure remains slightly lower than overall satisfaction with fixed and mobile services, both of which were at 93% during November. Figure 6a % homes satisfied with home
Internet service
6.2 Satisfaction with home Internet service was higher than shown above, amongst the person responsible for the home Internet decisions – 96% of decision-makers said they were satisfied with their home Internet service. Having made the decisions, these customers are likely to have more realistic expectations of the service than perhaps other users in the home. There was little or no difference in satisfaction amongst users of different types of package, the length of time the household had been connected, or the average amount of time the household spent online per week. 6.3 Equally, there was little or no difference between customers who had and had not changed their Internet service provider or package, or between those who had and had not compared the choices available before or since they connected. Figure 6b % customers satisfied
with various aspects of their home Internet service
6.4 Speed was the least satisfactory aspect of home Internet service for decision-makers, although 80% were satisfied with this, and higher still amongst those using ISDN or broadband connections (82% and 95% respectively, although caution should be applied as the number of users is less than 100). Equally, the vast majority were satisfied with the cost of their service. Problems with home Internet service 6.5 Decision-makers were asked whether their household had any particular problems with their home Internet service. These are shown in figure 6c. Speed was the most frequent problem, although even this was spontaneously mentioned by less than one in five decision-makers. Access and connection problems such as inability to get connected, and the connection freezing or breaking were mentioned by just over one in 10 decision-makers. This indicates that these were not major problems for the majority of customers. Indeed half of decision-makers said they had experienced no problems with their service. Figure 6c Problems experienced with
home Internet service (unprompted)
Opinion on whether getting ‘best’ deal 6.6 The majority of decision-makers felt they were getting the best deal in terms of both price and quality (71% and 82% respectively). This is shown in figure 6d. The higher result for quality may indicate that consumers perceive there to be more marked differences between the prices of different suppliers, and fewer differences in quality. Or the difference might be an indication that consumers find it more difficult to compare the quality of different ISPs than prices, where they can see more readily where better deals are available. 6.7 Customers using unmetered packages were more likely to feel they were getting the best deal in terms of price (73%) compared to those using calls-only packages (69%) or subscription and calls packages (64%). In terms of quality, there w In terms of quality, there was less difference between types of package – those paying for subscription and calls were more likely to feel they were getting the best deal (86%) compared with those using calls-only (83%) or unmetered packages (81%). 6.8 Customers who did not feel their service offered the best quality tended to be less satisfied with the reliability of their service (42% compared with an average of 90%), which would explain this result. 6.9 Similarly, customers who did not feel they were getting the best price tended to be less satisfied with overall costs (58% compared with 91%) and about three-quarters said they were interested in changing to a cheaper deal (higher than the average 50%). Figure 6d % customers who feel they’re
getting the best price and quality for their home Internet service
Chapter 7 Switching behaviour – past and future 7.1 Almost half (46%) of decision-makers said their household had changed their ISP at least once. Switchers were more likely than average to be aged 35-54; higher income / professional classes; heavier usage households (more than 10 hours per week); and connected for more than three years. 7.2 Almost two in five (38%) Internet decision-makers said they had previously used a different type of package for their home service. Again, the same groups were most likely to have switched. 7.3 Almost half (49%) of unmetered customers said they had previously used a different type of package which is consistent with results from Oftel’s August 2001 Internet report. 7.4 The most popular switch was from calls only packages to an unmetered package – this accounted for about a quarter of all switches. Indeed, unmetered was generally the most popular package to move to, accounting for 57% of switches. 7.5 Two in five (42%) switches were from metered to unmetered packages. A further 7% were upgrading from partially to fully unmetered. About 12% of switches were from unmetered to metered packages and a further 2% were changing from fully to partially unmetered. 7.6 Just over one in 10 (13%) switches were to a similar type of package, but with a different provider. Figure 7a Switching behaviour
* NB switching to a similar type of package but with a different provider 7.7 Decision-makers who had shopped around and compared deals since connecting to the Internet at home, were more likely than average to have switched. However, three in 10 of those who hadn’t shopped around had also switched, whilst about four in 10 of those who had compared a lot of the deals available had decided not to change their package. This strongly suggests that neither shopping around nor switching should be regarded in isolation as indicators of the extent to which customers are aware of and making use of the choices available to them. Reasons for changing package 7.8 Cost was unsurprisingly the main reason for changing to a different Internet package, driving three in five switches. Other factors included reliability and service issues, and a change in the household usage patterns. These can be seen in figure 7b. Figure 7b Reasons for changing type
of package (unprompted)
7.9 Reasons for changing obviously differed depending on the type of package the customer was changing from and to. The main differences are as follows:
7.10 20% of customers who had changed their package said they planned to do so again within the next six months. A further 14% of customers who had not previously changed their Internet package, also had plans to change in the next six months. In total this equates to 16% of Internet customers planning to switch in the near future. These customers tended to be younger; AB social grades and students; heavy usage homes; and those using subscription and calls, and unmetered packages, more so than those on calls only packages. 7.11 Reasons for wanting and not wanting to change package in the next six months are shown in figures 7c and 7d. 7.12 Consistent with the drivers behind choice of Internet package, cost was the main reason for wanting to change package. And concordant with findings for non-switching behaviour in other markets, satisfaction with current package was the main reason for not planning to change in the near future. 7.13 Reasons for wanting to switch again varied by package type
Figure 7c Reasons for wanting to switch
package (unprompted)
Figure 7d Reasons for not wanting
to switch package (unprompted)
Awareness of choices in the home Internet market 7.14 9% of decision-makers said they were aware of a specific package / deal that was cheaper or better than their current deal, and a further 19% were aware of cheaper deals in general. 7.15 Awareness of better deals was higher amongst younger decision-makers (32%); higher income groups (31%); and increased with length of time connected – rising to 35% amongst those connected for more than three years. Customers with subscription and calls packages in particular, were aware of cheaper / better deals (35%). Interest in getting a better deal 7.16 Overall, half of decision-makers were interested in switching to a better deal. There was no difference between those who were already aware of better deals and those who were not. 7.17 Half (49%) of decision-makers who were satisfied with their home Internet service said they were interested in changing to a cheaper or better deal compared with 82% of those who were not satisfied. Interest in switching was highest amongst younger customers; lower income groups; those on unmetered packages; and heavy-usage homes. 7.18 Reasons for not wanting to switch were mostly positive as seen in figure 7e. Customers tended to be happy / have no problems with current ISP/package, or felt they already had the best deal and that any savings would be minimal. A quarter of customers paying only for their calls felt they didn’t use the Internet enough to warrant changing. Potential barriers to switching for a small proportion of customers included inertia ("can’t be bothered / too much hassle to change") perhaps indicating perceptions that the process would be difficult. A small proportion mentioned technical difficulties and concerns about changing email addresses. Figure 7e Reasons not interested in
changing to a cheaper or better deal
Interest in upgrading to unmetered packages 7.19 Decision-makers using metered or partially unmetered packages were asked how interested they would be in upgrading to fully unmetered packages. 7.20 In total, 40% said they were interested – in general these were heavier users. Interest was higher amongst those already paying a monthly or annual subscription charge in addition to call costs – partly unmetered (57%), subscription and calls (46%). Interest was lowest amongst those using calls only packages (33%). 7.21 Insufficient use was the main reason for not wanting to upgrade to fully unmetered packages (52%) and satisfaction with existing package (12%). Linked to this was cost (19%), and not wanting to pay for periods when not using the Internet eg when on holiday (5%). Interest in upgrading to broadband access 7.22 55% of narrowband users said they would be interested in upgrading to broadband access. Interest was higher among:
Interest was also higher than average (73%) among customers who were not satisfied with their current access speed. 7.23 Oftel’s quarterly survey in November 2000 found that the majority of Internet customers were interested in the various features of ADSL (unmetered access, always-on, faster speeds, and ability to make voice calls at same time as surfing). However, only a quarter thought they were likely to get broadband in the next 12 months, at a cost of about £40 per month. Evidenced previously in the different types of connection method used, the majority of homes who thought they would get broadband within the last year, have not done so. Although twice as many decision-makers expressed interest in upgrading to broadband in this current survey, no price was mentioned. Estimates of future take-up of services should be treated with extreme caution and used more as an indication of relative levels of consumer interest rather than a reliable prediction of take-up. Amount prepared to pay for broadband services 7.24 Decision-makers who expressed an interest in upgrading to broadband said they would pay an additional £17 per quarter (c. £6 per month), on top on what they already paid for their home Internet service. Customers using calls-only packages said they would pay an additional £19 per quarter on average, compared with £17 per quarter amongst those on unmetered packages, and £12 per quarter amongst those paying subscription and calls. 7.24 In line with those who expressed greatest interest in upgrading to broadband, higher income groups and more experienced surfers (connected more than three years, and using Internet more than 10 hours per week) were prepared to pay slightly more than average (c.£20 per quarter) quarter. These groups are potentially the ‘early adopters’ of broadband depending on geographic availability. 7.25 Estimating that the average metered household spends about £12 per month on Internet call charges (assuming use of five hours per week @ 1 penny per minute – just over half of homes were using this amount), and an additional £6 per month (the additional amount they’re prepared to pay for broadband), totals £18 per month that the average metered-package household would be prepared to pay for broadband. 7.26 Similarly, narrowband unmetered households would be prepared to pay a comparable amount, with a range of packages currently available, on average from about £10 and upwards per month. 7.27 Current broadband packages of £20-50 per month with an additional installation fee of between £50-150 are above what many consumers would be prepared to pay. This is particularly the case for light users, and those who already have the benefit of unmetered packages. However, the above examples are based on simplistic calculations and do not reflect the wide range of metered and unmetered packages available and being used by customers. Heavier users in particular, and those with second lines for their Internet use, may already be paying close to or more than broadband prices (particularly broadband packages starting at £20 per month) for their current Internet use. 7.28 New offerings (at lower speeds) such as the ntl £15 per month and £25 installation may be more financially attractive to the average consumer, but this is obviously not ubiquitous, available only in ntl cabled areas. 7.29 Further research conducted on behalf of Oftel examined use of broadband amongst the early adopters who already have it, and whether it was meeting their expectations. The research also asked existing narrowband users to test broadband and sought their opinions on it, and whether having tested it they were interested in upgrading to it and how much they would be prepared to pay. 7.30 The key finding amongst existing broadband users was a high level of satisfaction with the service, particularly those using cable modems, and a general consensus that they were unlikely to ever return to narrowband access. Narrowband users, whilst impressed with the speed of broadband services they tested, were unwilling to pay the additional costs of upgrading from narrow to broadband at the moment. They were less attracted to the other unique features of the service – always on / not having to dial up, and the ability to make voice calls at the same time as using the Internet – however these were aspects that broadband users felt were not fully appreciated until you had the service at home. The full report can be found at http://www.oftel.gov.uk/publications/research/2002/bbin.htm Reasons not interested in broadband 7.31 40% of decision-makers said they definitely weren’t interested in upgrading to broadband at home. The main reasons for this are shown in figure 7f. Cost was explicitly an issue for a fifth of those not interested, and a similar proportion were happy with their current access and package. Two-fifths said they didn’t use the Internet sufficiently to merit getting broadband, indicating a trade-off between their current usage and current costs of broadband, as faster speeds in particular are potentially of benefit to all surfers. Figure 7f Reasons not interested in
upgrading to broadband
7.32 In summary, whilst 55% interest in broadband is encouraging, it would be unrealistic to expect this level of take-up in the near future. For most Internet decision-makers it would appear that benefits of upgrading aren’t sufficiently attractive to warrant the additional costs at the moment. The broadband market is still in its infancy however and as availability and awareness of these services increase, more consumers, particularly those already paying close to broadband prices for their existing service, may upgrade to broadband Internet.
Internet use outside of the home 8.1 Almost half of adults claim to use the Internet in a variety of locations, the most popular outside of the home being work. Less than one in 10 of adults said they used the Internet in libraries or Internet cafés/outlets. There has been little change in this figure since August 2001. Figure 8a % adults using Internet in
various locations
8.2 Internet decision-makers were asked whether they used the Internet anywhere apart from the home, at least once a month. As seen in figure 8b, 65% of Internet decision-makers were using the Internet on a regular basis elsewhere, as well as at home. 8.3 Multi-location Internet usage was most popular amongst
8.4 Just over one in 10 adults (11%) who don’t have the Internet at home claim to access the Internet elsewhere. The vast majority however, don’t use the Internet anywhere. Alternative access points were more popular amongst customers who already have Internet access at home as shown in figure 8b. Figure 8b Adults use of Internet outside
of home, at least once a month (prompted)
8.5 Work and study purposes were the main reasons for using the Internet elsewhere. These and other reasons are shown in figure 8c. Few decision-makers specifically mentioned costs or issues about speed, as reasons for using the Internet elsewhere rather than at home, which indicates these are not significant barriers to home usage. This is consistent with previous evidence in figure 5h (factors which would encourage the household to make greater use of the Internet). Figure 8c Reasons for using the Internet
elsewhere rather than at home (unprompted)
Satisfaction with alternative access points 8.6 Of the 11% of consumers who do not have Internet at home but use it elsewhere, the majority (87%) were satisfied accessing the Internet in these locations. Equally, the majority (73%) did not intend getting the Internet at home in the next 12 months. 8.7 Previous Oftel research identified few barriers to home Internet penetration for the majority of consumers, rather lack of interest or perceived need was the main reason for not using the Internet either at home or elsewhere. 8.8 Lower income groups tended to be less satisfied, (although still in the region of 80%) and along with older consumers were least likely to plan to get home access in the near future. Again this may be a cost issue as these groups are least likely to have a PC at home.
Ad hoc questionnaire Q2 How often do you personally access the Internet from a PC or laptop from home? Please include receiving and sending emails from home?
Q3 And were you the person in your household who mainly decided on how your home became connected to the Internet. In particular was it you, or someone else in your home who decided on the ISP (Internet Service Provider) and the telephone service you used to connect your home to the Internet READ OUT
Q4 How important were friends relatives/ colleagues from outside your household in helping you decide on how you became connected to the Internet? READ OUT
Q5 How many telephone lines are there in your home? By this I mean the number of lines, not the number of extensions or phones.
Q6 Which company(ies) provide the telephone lines in your home? READ OUT
Q7 ASK ALL THOSE WITH MORE THAN ONE PHONE LINE AT Q5 What do you mainly use your additional phone line(s) for? READ OUT MULTICODE
Q8 Which telecoms provider supplies the phone service which you use to connect to the Internet?
Q9 Which of these types of connection does your household use to connect to the Internet at home. Please state all types of connection used. READ OUT MULTICODE
Q10 How long have you/ your household had access to the Internet at home? READ OUT SINGLE CODE
Q11 What were your main reasons for connecting to the Internet at home? Q12 How many people in total, including yourself, use the Internet at your home? Q13 How many hours
would you say you and members of your household spend using the Internet
at home in a typical week? Q14 For which of these services does you/ your household use the Internet? READ OUT MULTICODE Banking 1 Q15 What would encourage
you/ your household to use the Internet more? Q16 Apart from home
from which of the following locations do you also use the Internet at
least once a month? READ OUT MULTICODE Work 1 Q17 Why do you use
the Internet from these locations rather than at home? Q18 Which of the following best describes the package provided by your household's main Internet Service Provider (ISP) READ OUT SINGLE
CODE I/we pay monthly/annual
subscription and cost of calls made whilst online 1 Q19 What were your
reasons for getting that type of package? Q20 Have you ever
used a different type of Internet package? Q21 ASK ALL WHO
HAVE CHANGED PACKAGE AT Q20 What type of Internet
package did you have previously? READ OUT SINGLE
CODE Q22 ASK ALL THOSE
CHANGING PACKAGE AT Q20 What were your reasons
for changing Internet package? Q23 Do you plan
to change your Internet package in the next 6 months Yes 1 Q24 What are your
reasons for wanting to change/ not change Internet package in the next
six months? Q25 How many Internet
Service Providers (ISPs) does your household currently use? Q26 Which Internet
Service Providers do you/ does your household currently subscribe to
(including free ISPs) Q27 Thinking about
the Internet Service Provider you use most often...On what basis did
you / your household select your main Internet Service Provider? Q28 How many times
have you/ your household changed your Internet Service Provider? Q29 Overall, how
satisfied are you with your home Internet service? Very satisfied
1 Very satisfied
Q31 What problems
if any, have you/ your household experienced with your Internet Service
Provider? Q32 What sources
of information did you use to find out about Internet Service Providers
(ISPs), packages available, equipment needed, and costs when you were
getting connected to the Internet at home? Q33 How satisfied
were you with the information sources you used Very satisfied
1 Q34 When you were
getting connected to the Internet at home to what extent did you shop
around and compare ISPs/ packages/ prices/ offers available etc? Q35 Since you became
connected to what extent have you compared/ investigated different ISPs/
packages/ prices/ offers etc Q36 Are you aware
of any cheaper or better deals that are now available? Q37 How interested
are you in changing to a cheaper/ better deal? Q38 IF NOT INTERESTED
IN BETTER DEAL AT Q37 Price Q40 IF USING METERED
ACCESS AT Q18 Very interested
1 Q41 IF NOT INTERESTED
AT Q40 Very interested
1 Q43 IF NOT INTERESTED
IN UPGRADING AT Q42 Why are you not interested in upgrading to broadband
access? Q44 ASK ALL INTERESTED
IN UPGRADING TO BROADBAND AT Q42 Q45 Which of these do you have at home READ OUT (MULTICODE) Q46 IF DIGITAL
TV AT Q45 Go online and access
the Internet and send e-mails 1 Q20. Which of these
types of connection does your household use to connect to the Internet
at home? Please state all types of connection used. Q22. Which Internet
Service Provider(s) (ISPs) does your household currently use (including
free ISPs)? Q23. Which of these
statements best describes the package provided by your household's main
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