Contents

Chapter 1 Introduction

Chapter 2 Summary

Chapter 4 Consumers’ use of mobile packages and suppliers

Chapter 5 Mobile spend and calling patterns

Chapter 6 Text messaging

Chapter 7 Customer satisfaction

Annex 1 Details of changes to quarterly survey sample

Annex 2 Q9 May 2002 residential questionnaire: mobile telecoms questions

Chapter one

Introduction

1.1 This report provides an overview of the key findings of consumer behaviour in the mobile market, taken from the ninth wave of Oftel’s quarterly residential consumer survey, conducted in May 2002. Results from previous waves are used for comparison purposes where appropriate and referred to throughout this report.

1.2 The report provides trend information on which subsequent quarterly results can be compared and examines differences between consumers with different social characteristics. The sample and methodology have been changed this quarter. It is important to understand these changes and the effect this has on the results. Please see annex 1 for further details.

1.3 The survey was conducted for Oftel by Recom (Research into Communications) amongst 2258 UK adults during May 2002 (footnote 1), of whom 68% claimed to have a mobile. The report has been prepared by Oftel (footnote 2), based on the results provided by Recom.

1.4 This report covers:

• UK penetration of mobile phones, networks, packages and services used
• Which consumers are using mobiles
• Volume of calls made and received
• Volume of text messages sent and received
• Switching and porting behaviour
• Current and potential use of text services

1.5 A copy of the questions is attached in annex 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.

Footnotes

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 total sample of 2258 consumers is about 1-2%, but is higher amongst smaller subgroups. Results referred to as 'significantly' different, have been tested at the 95% level of confidence and hence are outside of the error margins and therefore can be considered real changes.

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 Recom or any decisions taken by any person in reliance on the report.

Chapter 2

Summary findings

Oftel changed the survey sample and methodology this quarter in order to better represent consumers in rural and deprived areas. Due to these changes, some results may appear to have fallen slightly compared with last quarter (eg fixed, mobile, and Internet penetration). This is not the case. A control survey using the original sample was conducted in parallel to the new survey – the results from both surveys are shown in the main sections of this report to assist understanding of whether any change is due to the sample differences or due to a real change in consumer behaviour. The results from the new survey are quoted in the summary below as subsequent reports will be compared with this information.

Headline figures

• 68% UK adults own/use a mobile phone
• 70% of mobile customers use a pre-paid package
• 24% subscribe to a monthly contract
• £18 was the average monthly spend
• 96% were satisfied with their mobile service overall

Mobile ownership increases in more affluent areas and pre-pay remains most popular

2.1 Mobile ownership remains relatively unchanged over the last year around the 75% mark as shown in the result from the control survey (76%) and stands at 68% (footnote 3)amongst the revised sample. The previous migration from fixed phone ownership has been sustained.

2.2 Just over half (52%) of UK adults in less affluent areas currently own a mobile compared to 74% within highly affluent areas. Mobile owners within areas of higher deprivation are most likely to use a pre-pay package – which remains the most popular mobile package in the UK. Mobile ownership is of similar levels in rural (70%) and urban (67%) areas.

Small but significant increase in the proportion of mobile customers switching and it appears that new numbers are being given by default

2.3 There has been a small but significant rise in the proportion of consumers choosing to switch mobile network or service provider – 23% have ever switched – and 18% of these ported their number. It is possible that the rise in the proportion of switchers in a reflection of consumer confusion surrounding the recent re-branding of two of the mobile companies – and not necessarily an actual increase. We will continue to monitor consumers’ switching behaviour in the mobile market.

2.4 Around 1 in 10 (11%) of those not porting since portability, asked to keep their number. This suggests that the majority are being given new numbers by default. Supported by the main reason given by those not porting since portability – 39% said they were automatically given a new number.

Social versus personal benefit of mobiles

2.5 The absolute levels of text messages and voice calls being both made and received vary however, all groups are making as many as they receive. There are few who use their mobile exclusively for making or receiving text or voice calls.

Satisfaction with text messaging is in line with satisfaction with mobile services as a whole - which in turn are in line with satisfaction in the fixed market

2.6 The majority of SMS users both send and receive personal text messages (95%). Use and potential use of other SMS services such as information, games, and competitions or voting is fairly low in comparison. Satisfaction levels are broadly in line with those for the mobile service as a whole – 86% are satisfied with the cost of texting, 85% are satisfied with the overall value for money and 92% are satisfied with the speed of text delivery.

2.7 96% (footnote 4)are satisfied with their overall mobile service and satisfaction is currently in line with satisfaction with the fixed market (96%). Satisfaction with both these markets remain higher than for the Internet (88%).

Footnotes

3. Lower than 73% reported last quarter due to sample changes and greater inclusion of deprived areas where mobile ownership is lower than average 

4. This is higher than reported in previous months due to the sample change which includes a higher proportion of deprived areas, where greater use of pre-pay is found. Pre-pay customers report higher levels of satisfaction than other packages - hence increasing overall average satisfaction

Chapter three

Mobile phone usage

3.1 Mobile ownership remains fairly unchanged over the last year at around 75%. Results from the new survey (see Annex 1 for details) are also shown in figure 3a for comparison purposes, and are consistent with previous quarters.

3.2 New features from this quarter onwards include whether the respondent lives in a rural or urban area and the relative affluence of the area (footnote 5 ). Generally cities tend to have significantly higher levels of deprivation while rural areas tend to be more affluent.

3.3 Mobile phone penetration is broadly similar within urban (67%) and rural areas (70%), and significantly lower in less affluent areas (52%), as shown in figure 3b. The increased sample of the latter group in the survey from this quarter onwards results in lower levels of mobile ownership (68%) from which subsequent quarters’ trend information will continue.

3.4 A further 11% of adults said they live in a household with at least one mobile phone, keeping the current level of mobile ownership within UK households stable at 79%.

* 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.

** figure using previous sample to indicate continuous trend

3.5 Mobile ownership remains prominent amongst under 55’s, higher social grades, working adults and those with an annual income in excess of £17,500. As mentioned earlier, consumers living in areas with higher deprivation are less likely own a mobile.

3.4 During February 2002, 95% of UK homes claimed to have a fixed phone, a small but statistically significant rise of 2% for the first time since May 2000 (when this survey began). Figures from May 2002 indicate that this rise has been sustained.

Footnotes

5. Deprivation index is based on a composite score of the level of unemployment, overcrowding, non-car ownership and non-home ownership in an area. The index is only available for the UK mainland (ie excluding Northern Ireland) this quarter. 46% of GB adults are classified as living in areas of low deprivation, 47% in areas of medium deprivation and 7% in areas of high deprivation.
The urban definitions are as follows: urban (large) - cities/large towns, urban (medium) - medium towns, urban (small) - small satellite or isolated towns, rural - accessible rural. These definitions cover over 99% of the UK population. It is estimated that just over 1% of the population are in remote rural areas difficult to access - about half of this group (those in the Highlands and Islands of Scotland) are excluded from our sample.

Chapter four

Consumers’ use of mobile packages and suppliers

Packages used

4.1 7 out of 10 mobile customers are using a pre-paid mobile package, remaining the most popular mobile package in the UK.

4.2 This survey’s pre-pay figure is slightly higher than the 67% reported last quarter and the monthly subscription figure slightly lower. Again this is due to the more accurate representation of less affluent areas where mobile owners are more likely than average to use a pre-paid package (shown in figure 4b). This does not represent a rise in pre-pay usage. In fact the fall in use of pre-pay reported last quarter has been sustained, as has the corresponding rise in use of monthly subscription packages – currently 24% - this is shown in the control sample figures which are based on the old sample for comparison purposes.

4.3 Following the reduction in handset subsidies we may see a continuing shift in the proportion of customers using these two packages. The reduction meant higher prices for consumers wishing to buy a pre-pay package. This may prevent take up of pre-pay amongst lower income groups and social grades and possibly sway these consumers into using contract packages for less initial outlay. Alternatively, the rise in use of contract packages could be existing pre-pay customers converting to contract packages. We will continue to monitor take up and use of all packages.

Base: UK mobile customers aged 15+ May ’02 (Base: 1481, 3% ‘don’t know/other’ have been excluded)

4.4 Older mobile owners, those in lower income groups, lower social grades, and consumers living in areas defined as ‘high deprivation’, are more likely than average to have a pre-pay mobile phone. Higher income groups and social grades and younger mobile customers are more likely than average to use a monthly subscription package, as shown in figure 4b.

Suppliers used

4.5 Figure 4c shows a comparison between Oftel’s survey and published sources of mobile market share information (in terms of numbers of subscribers using each of the four networks). The results indicate that the survey remains broadly reflective of the current mobile market in terms of the proportion of customers using each network. It should be noted that industry figures include business subscribers.

NB rounding of data may result in totals of 99% or 101%

Switching behaviour

4.6 Almost a quarter (23%) of mobile customers have ever switched mobile network or service provider – which is a small but significant rise on last quarter. 10% have switched within the last 12 months which is consistent with the recent shift from pre to post pay while overall ownership remains virtually unchanged. This rise in switching could also be a reflection of consumer confusion surrounding the recent re-branding of O2 (formally BTCellnet) and T-mobile (formally One2One) and not a real increase in the proportion of switchers. We will continue to monitor switching behaviour in the mobile market. Younger consumers and monthly subscription users remain amongst those most likely to switch.

4.7 Higher spending mobile customers are also more likely to have switched mobile network, 43% of those paying £31+ per month have done so, compared to 27% of those spending £11 - £30 and 17% of lower spending customers (up to £10). This is consistent with previous Oftel research, which indicates that cost is one of the main reasons for switching.

4.8 Mobile number portability was introduced three years ago - 84% of switchers had switched since then and around 1 in 5 (19%) of these, ported their number. Use of portability is slightly lower amongst more recent switchers (16%) compared to those who switched 1-3 years ago (22%) – however base sizes for these groups are small so apply caution.

4.9 We asked consumers who had switched and not ported whether they had in fact asked to keep their number. Since portability was introduced around 1 in 10 (11%) of these consumers had asked to retain their number. Others appear to have been given a new number automatically suggesting that mobile portability is not actively being promoted. Research conducted during May ’01 found that 14% of mobile customers who asked to retain their number were given incorrect advice, we will be repeating the exercise later this year to see whether there has been any improvement.

4.10 The survey explored the reasons given by those who changed mobile number when switching since portability, shown in figure 4d. These confirm that a significant proportion of consumers are being given new numbers automatically, mentioned by around 2 in 5 (39%) of those who switched and changed number since portability became available. In total, 1 in 10 (12%) consumers did not port when switching due to a barrier such as expense, number being locked or the whole process being too much hassle.

Chapter five

Mobile spend and calling patterns

5.1 On average mobile customers are spending £18 per month on mobile services including line rental and text messaging, similar to February 2002 (£20). Average spend does not appear to have been affected by the sample alteration, those living in areas of higher deprivation have an average spend (£18) similar to those in more affluent areas (£17 in areas of low deprivation).

5.2 Average mobile spend is inflated by a proportion (15%) of higher spending of mobile customers spending £30+ per month. Figure 5a shows that half (51%) of mobile consumers actually only spend up to £10 per month.

5.3 Men, 15-34 year olds, monthly subscription package users and higher income households remain amongst the higher spending mobile customers, as shown in figure 5b. Men are spending an average £5 more per month on their mobile (£20) than women (£15), and monthly subscription users are spending around three times as much (£34) as pre-pay customers (£12). While the 15-34 year olds still feature as higher spending mobile customers, May 2002 sees spend amongst this group fall by £5 and is currently only £4 per month higher than that spent by 35-54 year olds.

Mobile calling patterns

5.4 On average mobile customers make 13 calls per week from their mobile phone and receive around 14 per week. Generally heavy users, in terms of the volume of calls made are also heavy receivers of calls. These heavier users tend to be men, younger mobile owners, those with a high annual household income and monthly contract users as shown in the chart below. There are few people using their mobile exclusively for calling or receiving.

5.5 Men generally tend to both make and receive almost twice as many calls per week than women. Younger mobile customers (15-34) are also making more than twice as many calls per week (average 15) than over 55 year olds (average 6) and receiving more than three times as many (17 and 5 respectively).

5.6 Higher earning households and higher social grades tend to make and receive more calls than lower income groups and C2DE social grades, this corresponds with the lower monthly spend amongst the latter.

5.7 Monthly contract users both make and receive 24 calls per week, making three times as many as pre-pay customers – again this corresponds with higher spend amongst contract users.

Chapter six

Text messaging

Text message users

6.2 Over 55’s (77%) and to a lesser extent lower spending (51%) and pre-pay (41%) mobile customers are amongst those least likely to use SMS at all.

6.3 As shown in figure 6a, use of text messaging varies across different groups. Younger mobile customers send and receive around three times as many messages per week than those aged between 35-54.

6.4 There are no significant differences in the proportion of texts sent and received according to the package or network used.

6.5 Mobile only homes currently send 13 more messages per week than those with a fixed line, and receive 10 more per week.

Types of text messages

6.6 The most popular type of messages sent or received amongst the ‘texting community‘ are personal, as shown below. 95% of these consumers send and receive personal text messages. Around 1 in 10 mobile customers who ‘text’ do so for information services and fewer still claim to use text for interactive games (5%) or to enter competitions or vote (5%).

Base: UK mobile ‘texting’ customers aged 15+, May ’02 (Base: 912)

6.7 Most consumers not currently using text messaging for the above services (excluding sending personal texts) thought they were unlikely to do so in the future. Interactive games texts and responding to competitions or voting are least likely to be used by those not already doing so. 6% and 7% respectively, are likely to use these services in the future. Perhaps this is a reflection on these being relatively new services and consumers unfamiliarity with them, we may see use and potential use change over time, possibly as more services and/or opportunities become available.

6.8 Information services appear slightly more appealing, with 12% likely to use these in the future. On the whole those most likely to use these services in the future are men, younger consumers and lower income groups.

Satisfaction with text messaging services

6.9 The majority of mobile customers (92%) who send or receive text messages are satisfied with the speed of text message delivery. Similar proportions are satisfied with the overall value for money (85%) and the overall cost of text messaging (86%), as shown in figure 6c.

Base: UK mobile ‘texting’ customers aged 15+ (Base: 912)

6.10 Satisfaction with each of these aspects varies slightly according to mobile spend – higher spending customers are on the whole slightly less satisfied with each aspect than those spending less per month.

Chapter seven

Customer satisfaction

7.1 This quarter sees an apparent small, but significant rise in satisfaction with the overall mobile phone service amongst UK mobile customers (96%), as shown in figure 7a. However, this is a reflection of the revised sample which more accurately represents less affluent areas. Consumers living in these areas are more likely to use pre-pay than contract packages. Satisfaction amongst pre-pay users is generally higher – hence an increase in the overall average level of satisfaction.

7.2 There was little difference between users of the four mobile networks however, as mentioned above monthly subscription users remain significantly less satisfied (93%) than those using a pre-paid package (97%).

7.3 Overall satisfaction levels with mobile service was similar to comparable measures in the fixed telecoms market. However, satisfaction levels in both these markets are slightly higher than reported for the Internet market (88%). This figure remains broadly similar to recent quarters and is unlikely to have been influenced by the amended sample, as the increased sample in deprived areas tend not to have home Internet access.

Base: UK mobile customers aged 15+, May ‘02 (Base: 1481, 1% ‘don’t knows’ have been excluded)

7.3 Satisfaction with the overall value for money stands at 89% this quarter.

Annex 1

Details of changes to Oftel’s quarterly residential survey, May 2002

In April 2002, Oftel changed the market research agency we use to conduct the fieldwork for our UK quarterly residential surveys. At the same time we took the opportunity to refine the sample and methodology used to conduct these surveys.

The changes are as follows:

Methodology

Our surveys were previously carried on a national in home, face-to-face, CAPI omnibus survey. They are now conducted as a stand-alone Oftel survey (ie not on a shared omnibus), conducted on paper rather than CAPI, and remain in home and face-to-face.

The advantages of this new methodology include:

• giving us more flexibility in terms of who and where we interview (see below for further details).
• shorter interview for respondents (reducing potential respondent fatigue) as it is now a stand-alone Oftel survey, and is not combined with a variety of other topics on an omnibus survey
• enabling respondents to focus on telecoms issues specifically (and hence provide potentially better quality answers) rather than thinking about the variety of diverse topics that can appear on an omnibus

Sample

The sample remains a representative sample of UK adults aged 15+, representative in terms of age, gender, social grade, working status, and region.

The changes include:

• Greater representation of rural and deprived areas (due to the limitations of an omnibus in reaching some of these areas).
• Controls are now set on the proportion of interviews conducted in cabled and non-cabled areas to ensure they are included in their natural proportions. Since the omnibus is not telecoms-specific, cabled status was left to fall out naturally, and no quotas were set on the number of interviews in cabled vs non-cabled areas.

These refinements enable us to control or investigate in greater detail issues that are particularly likely to influence telecoms usage. The implications of these changes are that some of the results will be affected. To understand what changes are due to these sample and methodology changes, and what changes are real changes in the market, the key tracking questions were repeated on the omnibus this quarter, in parallel to the new survey.

The main measures affected are take-up of mobile and Internet. These are lower amongst the new sample as would be expected given the higher proportion of deprived areas now included in the sample – respondents who traditionally are less likely to have these technologies. Results from both surveys are discussed where appropriate in the report to distinguish changes resulting from the sample and real changes in consumer behaviour. This should enable the reader to place the new figures (from which subsequent quarters’ trend data will continue) in the context of the previous trend data.

Annex 2

Q9 May 2002 residential questionnaire – Mobile questions

Q1. How many mobile phones in total do you and members of your household have or use?

Q2. Do you personally have or use a mobile phone?

Q3. Which mobile phone supplier do you personally use?

BTCellnet (O2)
One 2 One (T Mobile)
Orange
Virgin
Vodafone

Q4. Which of these statement best describes the mobile package you have?

Pre paid package 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 phone and any line rental is paid in advance and calls are either billed monthly or paid by call vouchers

Q5. Approximately how much would you estimate the total monthly cost of your mobile phone to be? Please include the cost of VAT, calls, line rental and messaging services.

Q6. Thinking of the number of mobile voice calls you make and receive in a typical week. Can you tell me how many you make, and how many you receive?

Q7. Approximately how many text messages do you send and receive in a typical week?

Q8. Which of the following types of text message do you send or receive

Personal text messages to other people
Information services, eg news sports
Interactive games
Responding to games/competitions

Q9. How likely are you to use the following types of text messaging services in the future?

Information services, eg news sports
Interactive games
Responding to games/competitions
Very likely
Fairly likely
Not very likely
Not at all likey

Q10. How satisfied are you with the following?

Cost of text messaging
Overall value for money of text messaging services
The speed and reliability of text messaging services
Very satisfied
Fairly satisfied
Not very satisfied
Not at all satisfied

Q11. How satisfied are you with the following

Your mobile service overall
Overall value for money from your mobile phone supplier
Very satisfied
Fairly satisfied
Not very satisfied
Not at all satisfied

Q12. Have you ever changed your mobile phone network or service provider?

Q13. When you changed your mobile phone network or service provider, did you change your mobile phone number or did you keep your original number?

Q14. Did you ask to keep your original number?

Q15. Why did you change your mobile number?