Contents

Chapter 1 Introduction

Chapter 2 Fixed line market

Chapter 3 Mobile market

Chapter 4 Internet market

Annex 1 Details of changes to question on Internet package

Chapter 1

Introduction

1.1 This report provides the trends in business behaviour within the fixed and mobile telecoms market and the Internet. The results are subject to an error margin of about 2-4%, this is slightly higher amongst smaller subgroups. Results referred to as ‘significantly’ different, have been tested at the 95% level of confidence. Please see footnote for further sample details.

1.2 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.

1.3 In some cases throughout the report, data on a rolling basis is shown. This combining of two periods increases the sample size and allows trends in the data to be analysed and interpreted with greater confidence. For example, where identical questions have been asked over the past two waves (May and August 2002), combined data have been used.

1.4 this report covers:

Fixed

• suppliers used;
• spend;
• satisfaction.

Mobile

• penetration;
• package;
• spend;
• satisfaction.

Internet

• penetration;
• access methods;
• packages;
• satisfaction.

Footnote

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) 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 831 businesses is about 2-4%, but is higher amongst small 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. 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.

Chapter 2

Fixed line market

Suppliers used

2.1 Little change has been seen in the use of fixed suppliers amongst businesses over the last year. 92% of SMEs use BT for some or all of their fixed telecoms services. Medium businesses are more than twice as likely as small businesses to use suppliers other than BT or cable (42% and 15% respectively).

Figure 2a: UK SME business use of fixed telecoms suppliers

Base: UK SME businesses, May/August '02 (Base: 1, 641)

Average Spend

2.2 Spend continues to fluctuate - the average monthly spend on fixed telecoms services amongst all SMEs in May/Aug ’02 is £367. This ranges from an average £288 amongst small businesses to £3,086 amongst medium businesses. Figure 2b shows the trend over time. 

Figure 2b: Average monthly UK SMEs spend on fixed telecoms services (including call costs, rental, maintenance and VAT for all voice, fax, Internet and data services)

Base: UK SMEs, May/Aug '02 (Base: 1641, 'don't knows' have been excluded)

Satisfaction

2.3 Satisfaction has remained fairly stable over recent quarters - currently 93%. Small businesses are generally more satisfied with the overall service of their fixed line services (93%) than medium sized businesses (88%).

Figure 2c: % UK SMEs satisfied with overall service of their fixed telecoms services

Base: UK SMEs, May/Aug '02 (Base: 1641, 'don't knows' have been excluded)

2.4 Satisfaction with the reliability of fixed telecoms services amongst all SME's has remained level at 95% and satisfaction with value for money also remains stable (77%).

Chapter 3

Mobile market

Growth and penetration

3.1 Around 6 in 10 UK businesses (61%) have at least one mobile – the latest figures show a recovery after the slight drop in May. Overall penetration has remained level around 60% over the last year. Medium businesses remain more likely to own mobiles (83%) than small businesses (60%).

Figure 3a: % UK SMEs with mobiles, by business size

Base: UK SMEs, May/Aug '02 (Base: 1641)

Packages used

3.2 The most popular mobile package for SMEs is still the monthly contract (post-pay) package used by 75% of SMEs with mobiles – this figure is in line with recent periods, but remains lower then the same period last year.

Figure 3b: Use of mobile packages by UK SME businesses

Base: UK SME businesses with mobiles, May-August '02 (Base: 1641)

NB packages used total more than 100% as some businesses using more than one type of package

3.3 Small businesses are more likely to use pre-pay packages (21%) than medium size businesses (9%). Use of monthly contract packages amongst medium businesses fell last quarter – this has been sustained (79%). Small business use of monthly subscription packages remains level at 75%.

Average spend

3.4 Average monthly spend on mobile telephony amongst UK SMEs appears to have stabilised at around £200: average spend per month in May/Aug ’02 was £194. Small businesses are currently spending £149 per month on mobile services compared to an average £1,395 spent by medium sized businesses. 

Figure 3c: Average monthly business spend on mobile telecoms services

Base: UK SMEs with mobiles, May/Aug ’02 (Base: 1155 ‘don’t knows’ have been excluded)

Satisfaction

3.5 Overall satisfaction with mobile services fell from 94% in May ’02 to 89% in August ‘02. This drop appears to have been driven by a drop in satisfaction with value for money and cost to others of calling your mobile among small businesses.

3.6 Calls to off-net (different networks) mobiles remains the least satisfactory cost aspect of mobile usage amongst businesses with mobiles - satisfaction has stayed below 60% since May 2001. 

Figure 3d: % UK SME businesses satisfied with various aspects of their mobile service

Base: UK SME businesses with mobiles, ‘don’t knows’ have been excluded

Notes

1 Before August 2002 'Geographic coverage' was worded in the questionnaire as 'Network coverage'.

2 Before August 2002 'Ability to make calls without being cut off' was worded in the questionnaire as 'Dropped calls ie ability to make calls without being cut off'.

Chapter 4

Internet market

Growth and penetration

4.1 The proportion of SMEs with Internet access has risen slightly this wave, mainly amongst small businesses. Just under 7 in 10 SMEs have Internet access (67%) – 66% of small businesses and 96% of medium. The number of medium sized businesses with Internet access appears to be reaching saturation.

Figure 4a: % UK SMEs with Internet access

Base: UK SMEs, May/Aug '02 (Base: 1641)

Note - The apparent drop in Feb '02 at 59% is not statistically significant but within the error margins for the survey, and therefore it is unlikely to be a real drop.

Access methods

4.2 The number of SMEs connecting to the Internet via ordinary phone line dial-up has fallen significantly over recent quarters, however this wave sees a slight reversal of this trend. Currently 61% are connecting using this method compared to just over half (55%) in May ’02, however usage remains lower than at the same point last year (73% Aug ‘01).

4.3 The rise in use of PSTN experienced this quarter is mainly driven by small businesses where penetration has increased slightly this quarter. 

4.4 1 in 10 SMEs access the Internet using a broadband connection, either via DSL or cable modem. Figure 4b shows that there has been a steady rise in the use of broadband since May ‘01. Industry subscriber figures suggest this is around 15% as at August 2002. 2% of businesses claim to be accessing the Internet by some other method.

Figure 4b: Internet access methods used by UK SMEs

Base: UK SMEs with Internet access, May/Aug '02 (Base: 1332, 'don't knows' have been excluded)

Note - figures add to more than 100% as some businesses are using more than one access medium

4.5 Broadband, ISDN or leased lines are more likely to be used by medium businesses than small businesses.

Type of package used

4.6 The increase in the proportion of SMEs using an unmetered package observed in May ’02 has been sustained (currently used by 62% of businesses) – as has the corresponding fall in calls only packages. The drop in unmetered usage between May and May/Aug ’02 is not statistically significant.

4.7 The questions asked to establish the type of package being used have been revised to reduce confusion over the definition of Internet packages (revised questions have been running since February ’02 as shown below). For more details on this change see annex 1.

Figure 4c: Main type of Internet package used by businesses

Base: UK businesses with Internet access May/Aug '02 (Base: 1332, 'don't knows' and 'others' have been excluded)

Satisfaction

4.8 9 in 10 (88%) businesses are satisfied with the overall quality of service from their Internet. This figure has remained fairly stable over recent quarters.

Figure 4d: % UK businesses satisfied with aspects of Internet service

Base: UK businesses with Internet May/Aug '02 (Base: 1332, 'don't knows' have been excluded)

* due to the changes made to question phrasing on type of package used, these figures vary slightly from previous results – full details of this change can be found in annex 1

4.9 The rise in satisfaction with the speed of access amongst all SMEs (currently, 75%), has been sustained. The level of satisfaction is higher in medium businesses (84%) than small (75%), this is consistent with the use of faster access methods such as ISDN preferred by medium businesses.

4.10 The fall in satisfaction with subscription charges has been sustained. This could be because of the changing profile of the group (businesses are upgrading to faster subscription based services).

4.11 As shown above other aspects of Internet service such as call charges and customer care have remained fairly stable over recent quarters.

4.12 All current reports, produced in August 2002 for fixed line, mobile and

Internet markets are available on the Internet along with all reports from previous quarters. www.oftel.gov.uk/consumer/research/research_index.htm

Annex 1

Details of changes to question on Internet package

Internet packages

Since February ’02 the quarterly surveys have included alternative questions to establish the type of Internet package being used. The original question was fairly complex and lengthy with scope for misinterpretation.

Original question

Q. Which of these best describes the package provided by your business' main ISP (Internet Service Provider)?

Monthly/annual subscription and cost of calls whilst online

No subscription fee and pay cost of online calls only

Monthly/annual subscription which gives unlimited free usage, and pay no call costs

Monthly/annual subscription which gives free usage at certain times or for certain amount of time, but pay for calls costs at other times

Revised questions

Q. Thinking about the main ISP that your business uses, do you have to pay a subscription fee for the package provided? This might include free usage time, and normally is paid on a monthly or annual basis.

Yes/No

Q. Do you ever pay any per minute call charges for the time you spend online?

Pay per minute call charges for all the time spent online

Pay per minute call charges for some but not all the time spent online

Do not pay any per minute call charges for being online

The implications of changing the phrasing of questions are that some of the results will be affected. To understand what changes are due to the revised questions and what changes are real changes in the market, the original question phrasing was run concurrently with these revised questions for three quarters. Results from both sets are shown below. 

Figure a: Original question

Figure b: Revised questions

As shown in figure a and b above, the main impact of changing the questions was a slight increase in the proportion of businesses using an unmetered package.

As shown above the rise in use of unmetered packages was sustained in August and both sets of results reflect this rise.