Oftel qualitative research – March 2003

Contents

Chapter 1 Introduction

Chapter 2 Methodology

Chapter 3 Summary

Chapter 4 Main findings

Annex A Screening questionnaire

Annex B Topic guide

Chapter 1

Introduction

1.1 Oftel commissioned research agency SMSR to undertake qualitative research into the telecoms needs and usage patterns of low-income groups.

1.2 Oftel was interested in researching consumers from low income groups who have heavy telecoms needs and usage, for example, those calling abroad regularly. In particular, Oftel wished to explore the experience of people from different ethnic groups, recent immigrants, and those with limited English, and identify in particular any factors that inhibit their telecoms usage.

1.3 A key aspect of this work was to determine whether ethnicity itself is a distinguishing factor in telecoms needs and uses, e.g. language barriers or specific calling patterns/routes, or whether more general factors such as low income or access to telecoms services have greater impact than ethnicity.

1.4 A variety of issues were examined including:

• Current usage patterns vs desired usage;
• Monthly telecoms spend compared to disposable income;
• Awareness and use of the available choices to reduce costs; and
• Satisfaction with telecoms services and any particular problems e.g. line / sound quality of calls overseas, comparable convenience versus cost of different calling methods and barriers to internet use.

1.5 The work took place in February 2003 and consisted of 6 focus groups and 14 depth interviews with either individuals or friendship pairs, comprising a total sample of just over 60 individual respondents.

1.6 This report has been prepared by Oftel, based on the results provided by SMSR. As the research was qualitative rather than quantitative, the findings must not be seen as providing definitive conclusions on how consumers perceive various companies nor should it be seen in any way as a buyer’s guide to any of the relevant services or companies named in the report. Oftel has conducted its own checks on the findings in this report in so far as it is possible to check this type of research, and whilst we consider it to be correct, Oftel accepts no liability in respect of any of the results provided to it by SMSR or any decisions taken by any person in reliance on the report. The quotes shown in the report should be regarded as opinions and not statements of fact. Publication should not be seen as an endorsement by Oftel of any of the information or statements therein.

Chapter 2

Methodology

2.1 Selection criteria for low income and heavy telecoms usage were agreed. Low income was defined as being ‘below the average income for that area’. This meant that the actual income varied across the locations, as obviously low income in London is different in absolute terms to somewhere like Hull. In practice respondents tended to be from the lowest income groups and were largely in part-time manual labour or unemployed.

2.2 A spread of telecoms usage was agreed including fixed, mobile and Internet, although respondents were selected on the basis of being relatively heavy users eg making frequent International calls (see screening questionnaire attached in Annex A).

2.3 Respondents were recruited from a number of ethnic groups across a number of geographic locations as follows:

• Turkish – London, Tower Hamlets – Group discussion;
• Bangladeshi – London, Tower Hamlets - Depth & friendship pairs;
• Chinese – Manchester – Group discussion;
• Afro Caribbean - Warwick/Leamington - Group discussion & depth interviews;
• Asylum Seekers – Hull – Group discussion & depth interviews; and
• White British – Tower Hamlets & Manchester – Group discussion & depth interviews.

2.4 Recruitment was via two methods – telephone and face to face. For telephone recruitment, SMSR used randomly generated telephone data to contact potential respondents. For the face-to-face recruitment, SMSR employed ethnic translators and an SMSR supervisor assisted the translators in administering the survey.

2.5 The discussion groups/depth interviews were held at venues familiar and local to the respondents. Light refreshments were provided in order to aid relaxation and ease of participation. Each respondent was offered a cash incentive to compensate them for time and travel.

2.6 Due to a variety of reasons, some cultural, if respondents were unable to attend, SMSR arranged for these respondents to be interviewed in their homes.

2.7 The discussion agenda for the focus groups and depth interviews was produced by SMSR based on a topic guide produced by Oftel (see Annex B).

2.8 Given the nature of qualitative research, Oftel plans to quantify over the next few weeks some of the findings from this research, to ensure that the conclusions reached are representative of the wider population which this qualitative sample was designed to reflect.

Chapter 3

Summary

3.1 In terms of the main objective of this work, there was little evidence of telecoms usage patterns or problems related specifically to ethnicity. Most issues identified were generic across all low income groups. The exceptions were:

• international calling patterns and coping with time zone differences – which distinguished white and non-white groups;
• language difficulties, which particularly related to Directory Enquiries, accessing information, and coping with sales staff / dealing with suppliers – which distinguished English and non-English speakers; and
• asylum seekers – whose financial and housing situation set them apart from the other groups in terms of their general telecoms usage.

3.2 The main feature of these low income groups as a whole was their high use of telecoms to maintain family links and resulting large spend as proportion of the total household budget. Telecoms was considered as vital as gas and electricity and the vast majority had fixed phones at home and/or mobile phones, and were satisfied with their telephony provision. The exception was asylum seekers whose housing arrangements and financial constraints appeared to prohibit their ability to get a fixed line phone, and hence they relied on mobiles and payphones, but most would have liked to have a fixed line phone.

3.3 Internet was an age related activity, popular among younger consumers, many of whom would have liked access at home, but generally considered it a luxury rather than necessity, which is similar to opinion among the majority of the population. Asylum seekers made most effort to seek out and use public Internet access, which they used for job hunting and sourcing news from their home country.

3.4 Despite the financial constraints of these groups, quality was considered as important as price in selecting and using telecoms suppliers. As such, most used and had greatest regard for BT, which they felt was more expensive than cable options but offered better overall quality both in terms of reliability and customer services. The exception was again asylum seekers whose primary driver was price.

3.5 There was a strong association of telecoms with other utilities and a multitude of personal or related ‘bad experiences’ with gas and electricity – mostly inadvertent switching resulting from unscrupulous door-to-door sales techniques. As a result there was a reluctance to switch telecoms supplier, which was exacerbated among non-English speaking respondents by the language difficulties they encountered dealing with suppliers. That said, most used calling cards for their international calls, suggesting they are not necessarily at a significant financial disadvantage as a result of not switching their main supplier.

3.6 There was a general low awareness of suitable information sources to assist telephony choices, and a resulting perception that they were not aware of all the choices and deals available to them. Most however (apart from asylum seekers), were satisfied with the value for money they received from their telephony services, and due to the effective ‘grapevine’ in most communities, respondents across all groups were aware of and using choices to help reduce costs and get the best deal. Some examples included:

• Awareness and use of off-peak call periods where possible;
• Awareness of more expensive call types eg calls to mobiles and international calls, and attempts to keep these calls short or getting the recipient to call back and pay the cost. And avoidance of some calls altogether eg DQ and PRS numbers; and
• Awareness and use of cheaper suppliers, mostly calling cards, for international calls, and some ability to assess the various costs and quality of these to determine which offer the best overall value for money for individual needs. n the case of asylum seekers, use of payphones rather than mobiles for international calls.

3.7 There was a general feeling of constrained calling behaviour for financial reasons, and most of those without a fixed phone aspired to having one but were concerned about the ability to control running costs and avoid further debt. Mobiles and calling cards were particularly attractive because of the ability they afforded to monitor and control spend. Awareness of services/schemes such as ‘call my bill’, ‘In contact plus’, and more general IA/CPS suppliers was low, and these low income groups may usefully benefit from knowing about these opportunities.

Conclusions

3.8 There was a perception of not being aware of the choices and deals available, but in reality, most seemed to be broadly aware of and making use of choices to assist reduce costs, evidenced in particular in their use of calling cards. As such, it is possible that they are already getting a reasonable deal for their needs, and most were satisfied with their services and value for money. More thought may also need to be given to information asymmetries around the use of calling cards, and in particular the difficulty users face in ensuring that they get full value from their purchase. Increased awareness of more general IA / CPS suppliers might benefit and be of interest to some. The exception was asylum seekers who aspired to having a fixed line, but recognised that the costs were currently beyond their means.

3.9 A key feature was the ability to monitor and control costs, and some may benefit from raised awareness of schemes to facilitate this need, eg ‘call my bill’, ‘in contact plus’ of which they were largely unaware.

3.10 Any plans for information for these groups needs careful consideration. A variety of languages would need to be considered and ‘technical’ explanations need to be significantly simplified, perhaps more so than for the population at large. Achievable savings may be modest, and tenure circumstances may restrict the options available for some. The impact of such information may be disproportionate to the effort and cost involved in production and distribution. Any proposed information should be tested with a sample of recipients in advance of any ‘mass’ production, and dissemination would need to be carefully targeted if it were to have any impact.

Chapter 4

Main findings

High importance/role of telecommunications in lifestyle

4.1 Telephony was of high important for all groups; indeed most stated it was ‘essential’ and was of equal importance to gas and electricity. This high importance value was mainly associated with the need to communicate with their respective family unit. This was compounded by the fact that many respondents had large/extended families and for the non-white groups, these families were geographically spread over more than one country/continent.

4.2 Telephone was their preferred method of keeping in touch because it was considered convenient and provided instant communication. It was especially important to those with families overseas as it was often not possible to visit due to cost.

4.3 As a consequence, their spend on telecommunications was a major part of the household’s spend, along with other utilities, food and clothing. Estimates of expenditure on telecoms as a proportion of the household’s disposable income ranged from between two per cent to 50 per cent, the variations being similar across all ethnic groups.

4.4 The main stated areas of expenditure were

• Utilities – Gas, Electric, Water - all groups;
• Food/Groceries – all groups;
• Rent – all groups;
• Council Tax;
• Telephone bill;
• Mobile phone calls/credit;
• Clothes;
• Cosmetics;
• Transport;
• Entertainment/Leisure;
• Children; and
• Study.

Types of telephony used

4.5 Apart from the asylum seekers, most respondents had a fixed phone at home. Few of those who worked had access to a work phone although many households also had a mobile. Only a few had Internet access at home.

4.6 A common view across all groups was to recognise the value of a fixed line. This perceived value stemmed from the understanding that fixed phones generally cost less than mobiles and payphones, were considered better quality lines than a mobile, and were associated with the comfort of in-home usage.

4.7 A significant proportion of those without fixed phones at home aspired to having one, but felt constrained by access charges and the ability to successfully control costs. Few however expressed concerns about safety or exclusion from social contact, because they owned a mobile phone.

4.8 Asylum seekers were largely in temporary accommodation and claimed that the rules governing their tenure prevented them from installing a fixed line phone. In the absence of these rules however, perceptions of high installation costs were considered a barrier to connection. A few respondents had been disconnected mainly due to debt issues. They now preferred to use mobiles because of the ability afforded by prepay phones to control costs ie they could only use the amount of credit they had in the phone and were able to check the remaining credit. They suggested that these facilities be made available on a fixed line, indicating their lack of awareness of similar fixed line services and schemes such as ‘Call my Bill’ and ‘In Contact Plus’.

4.9 With the exception of the asylum seekers, mobiles tended to be a ‘back up’ rather than a substitute for fixed lines. Mobiles were seen as important to have for emergencies and among younger respondents were more accepted as a social aide. Convenience and ability to monitor/control costs were the main reasons for mobile preference, although inconveniences included lack of signal, batteries run down, and having to turn mobiles off eg in hospitals, airports.

4.10 Payphones were used fairly regularly by asylum seekers and to a lesser extent by the white groups, mainly in the absence of mobiles eg credit/battery low. Asylum seekers primarily used payphones, rather than their mobiles, for international calls. The other ethnic groups rarely used payphones. Although payphone use varied across the groups, generic issues mentioned included problems with hygiene and vandalism, and having the correct coins or sufficient money to make the call.

4.11 Awareness and use of the Internet had no relation to ethnicity, but rather age and income. Age was a definite discriminator, young persons using it relatively frequently and expressing greater desires to have Internet at home, whilst older respondents had limited awareness/knowledge and felt the Internet was for their children. Typing skills was another age related issue impacting on use of email among older respondents across all groups.

4.12 Most considered the Internet a luxury, and income was a barrier to accessing the necessary hardware. This was most prevalent among asylum seekers, although this group were the most successful at seeking alternative public access points including libraries, colleges and Internet cafés. Their main online activities were job hunting and accessing news from their home country. More generally respondents who used the Internet did so for a range of activities including general information, personal study/children’s homework, and information on hobbies. The only obvious differences across ethnic groups were non-whites going online for news from their home country.

4.13 The only aspect of Internet that related to ethnicity was in terms of language barriers to finding providers and understanding costs and set up requirements, which was a recurring issue not unique to Internet.

4.14 Apart from asylum seekers and some desire amongst younger respondents for home Internet, most were satisfied with their current telephony provision.

Calling patterns

4.15 Respondents were deliberately recruited for their heavy telecoms use in relation to their household income levels, eg due to an expensive call mix such as international calls, or sole/heavy reliance on mobiles. Average monthly telecoms spend varied considerably, ranging from just less than £15 to over £100, comprising a significant proportion of monthly household income which for the majority of households was less than £800.

4.16 Overall there was mixed awareness across the groups of the actual cost of specific types of calls, although there was awareness that calls to 090 premium rate numbers were more expensive than national calls which in turn were more expensive than local calls etc. This is consistent with findings from the rest of the population.

4.17 General opinions about costs and pricing were that fixed lines tended to be cheaper on the whole than using mobiles, and that calls to mobiles from fixed phones were ‘very high’, as were off-net mobile calls, which was considered to be a way of discouraging use of different networks. Most were aware that calls from fixed phones tended to be cheaper after 6pm, and often constrained their calls to these times – exceptions to this are discussed below.

4.18 Generally calling patterns and opinions on usage were a consequence of income and consistent across all ethnic groups with the exception of international calling which proved to be directly related to ethnicity and the need to communicate with extended families overseas. Differences were evident in both the frequency and method of international calling.

International calling, calling cards, and calling shops

4.19 White respondents made hardly any international calls and mostly used the supplier and method they used for the rest of their calls. They largely made their international calls from home which they considered most comfortable and cost effective. Those aware of calling cards and shops didn’t consider them relevant to their personal needs and use.

4.20 In comparison, the non-white groups made significantly more international calls, to a wider variety of destinations, and mostly used calling cards rather than their main home supplier. Asylum seekers used these cards in payphones and the other groups from their fixed phone at home. Familiarity and cost were the main reasons for favouring calling cards, generally a result of advice from friends and family who had introduced the respondent to the method, explained that it was cheaper than other methods, and explained how to use it.

4.21 Some respondents tended to keep their calls short because of the high costs while others would call until the credit on the card was finished giving little thought to the length or cost of the call. Regardless of behaviour however, the added attraction of calling cards was their ease of use and the ability to control costs without the worry of a surprise bill at the end. The main drawbacks mentioned were variable and sometimes long connection times, and having to exercise caution over the variable deals available eg checking what is included in the price, how much goes on connection vs call time, and variable time limitations on the 'life' of the card before the credit expired. All non-white groups had developed a good knowledge of the different types available and had developed a brand loyalty to one or more card providers based on some attempt to assess connection times, price, and line quality.

4.22 There was limited awareness and use of calling shops, which were generally associated with specific ethnic communities. A couple of respondents had used these and opinion varied as to their value for money. The perceived benefit of calling shops was their ease of use and multi-lingual staff which was considered useful for people with limited English and unfamiliar with the process of calling abroad. Most respondents however preferred the comfort of using calling cards from the comfort and privacy of their own home.

4.23 The main complaint from non-white respondents was the conflict between the cheap call rate after 6pm and international time zones. Most wanted to call at the cheaper rate but often this would mean either the caller or the recipient having to stay up late or get up very early to make or receive the call. Due to the inconvenience of this, mostly their international calls were made at peak rates before 6pm. White respondents tended to be less affected by time differences (mainly a consequence of making significantly fewer international calls and calling a different set of countries) and made most of their calls after 6pm.

4.24 Most respondents would avoid calling abroad to mobile phones because of price (considering them more expensive than international calls to fixed line phones), and difficulties with connection and signal loss. Again the exception was asylum seekers whose overseas families often used mobiles as their main or only means of contact. Similarly, many respondents made a conscious decision to avoid calling Directory Enquiries. White groups felt primarily constrained by cost and non-white groups primarily by language. As a result, few were aware of the proposed number changes, and the subsequent variety of opportunities, such as multi-lingual services, that may ensue.

4.25 Across all groups about half of respondents currently felt constrained by price and expressed a desire to make greater use of telecoms services. However, this appeared to be a factor of their income levels rather than not getting the cheapest deal for their needs, as most respondents considered their current telephony provision offered them good value for money. They had a variety of behaviours for keeping costs down such as

• using calling cards;
• different types of telephony for different types of calls;
• calling at off peak times;
• getting friends and family to call them back, sometimes signalling with a ‘two ring call’ knowing that the recipient would dial 1471 and return the call;
• keeping calls short eg to mobiles and international numbers; and
• not making more expensive types of calls eg to DQ services and premium rate numbers.

Supplier choice and usage

4.26 A variety of factors were considered important when choosing a telecoms supplier, including:

• Company reputation;
• Family/friends recommendation;
• Price of calls;
• Fixed costs e.g. standing/connection charges;
• Convenience of payment method;
• Convenience of bills – quarterly or monthly;
• Multi-media package – pay TV & email included; and
• Line quality.

4.27 Reputation was considered the most important attribute of fixed line suppliers across all groups (the exception being asylum seekers). The almost universal view was to value quality over price when choosing and using telecoms suppliers. This is partly a consequence of the respondents’ stated values towards purchasing any form of goods. Whilst not exclusively quality at the expense of other criteria, quality figured highly. The exception was asylum seekers who almost universally stated price as the main criteria on which they selected and used suppliers.

4.28 Most respondents were able to provide an assessment of their supplier’s quality performance, and considered two separate criteria in this evaluation – technical quality (eg line quality, reliability) and administrative/customer service quality (eg flexible billing, customer service experiences and technical backup eg repair, helplines etc).

4.29 In terms of customer service, access was considered important – this included access via a freephone number, long opening hours enabling contact at any time of the day, and a personal service rather than an automated system. Good standards of customer service were judged in terms of speed, ability to assist and not being put on hold.

4.30 BT was most widely used. Some respondents had tried alternative suppliers who they felt offered cheaper but lower quality services with poor technical help / customer services. Comments included ‘staff are not trained, and pass you about or keep you on hold’, ‘advice is inconsistent’. BT was considered more expensive than the other options but opinion was that this was due to provision of a higher quality service (many respondents considered it the ‘gold standard’ in terms of quality) and trustworthy brand. However, in some instances it was the case that the other suppliers were perceived as ‘poor’ rather than BT being ‘good’ i.e. it was relative rather than absolute. The perceived overall service of other suppliers was generally regarded as poor compared to BT, and the general view was ‘you get what you pay for’. Often however, this judgement was based on word of mouth rather than personal experience of an alternative supplier.

4.31 Most respondents associated telecoms with the other utilities. Whilst this is not altogether surprising, many reported a bad experience with these other utilities (either personally or via word of mouth). These experiences were mainly a result of switching supplier and included voluntarily trying to change and experiencing difficulties with the switching process, being ‘tricked’ into changing supplier by a sales person, or changing for the promise of cheaper bills which subsequently failed to materialise. Respondents assumed that telecoms suppliers would be no different. These bad experiences were mentioned by all groups but were exacerbated for non-white groups by language difficulties. When an English speaking family member had tried to address a problem, some companies had refused to deal with anyone but the signatory, who was unable to speak English.

4.32 As a consequence, there was a natural reluctance to either search for or try to change operator – again across all groups, but most notable among non-white groups. This was coupled with the fact that most respondents felt their current arrangements offered them good value for money, hence reducing any incentive to switch. White respondents were more confident with the prospect of dealing with providers generally, in particular when difficulties arise, and exhibited a greater willingness to consider using other suppliers, because of their advanced ability with English compared to the majority of non-white respondents. Non English speaking respondents were concerned primarily about being misled or taken advantage of due to their lack of English. Other factors raised when asked if they intended to change supplier included lack of awareness of the options available, and lack of information / difficulties comparing choices.

Awareness and use of information and choices available

4.33 A common issue across all groups was a lack of awareness on where/how to get suitable information outlining the choices available, comparing suppliers, and making choices. Language was the common concern – for non-whites this related to lack of information in their native language and their lack of English, whilst for English speaking white groups the technical language used in any information they had seen was the main problem. Even overcoming the native vs English language difficulties of the information available, the non-white groups are likely to encounter similar difficulties to their peers with the technical lingo.

4.34 Both issues created difficulties in being able to understand either what was on offer/what it contained, how to compare one to another. Most respondents said that they had not seen any information comparing providers. There was significant awareness of doorstep selling by utilities more generally, but this information was regarded as untrustworthy and unreliable. The few respondents who had tried to make their own comparisons deemed it too difficult and confusing, as they felt there were no clear comparators between suppliers.

4.35 The impact of these information issues was an overriding perception that they were not fully aware of the choices and deals available. Everyone felt there were probably better deals available but were unsure where. To some extent these perceptions appeared to be inaccurate and to some extent they did reflect reality, evidenced by varying awareness and use of the choices available, some examples are discussed below.

4.36 There was a general consensus that there were too many choices, which was confusing and made comparisons difficult. This in itself indicates awareness of at least some of the choices and deals available. In addition, as discussed above, most respondents had an opinion on who they considered to be cheapest, best quality, best overall value for money etc, which indicates some discrimination between the choices available, albeit based largely on perception and word of mouth rather than empirical evidence.

4.37 There was significant awareness and use of calling cards and to a lesser extent calling shops for international calls among the non-white groups. Among the white groups, awareness of these methods was low, but there was greater awareness of alternative suppliers such as cable and indirect access. There was evidence across all groups of the relative costs of using different types of telecoms and behaviours indicating attempts to get the cheapest deal and constraining expensive calling patterns eg premium rate numbers and Directory Enquiries services.

4.38 In general, whilst there were claims of insufficient suitable information, evidence points to fairly good awareness and use of at least some of the choices available. Areas on which respondents could potentially benefit from greater awareness include schemes and services to assist control fixed phone bills such as ‘call my bill’ and ‘In Contact Plus’ of which there was no awareness. Similarly, despite significant awareness and use of calling card services, awareness of home services via more general indirect access/carrier pre-selection operators was on the whole low. With significant use of calling cards however, many groups may realise only small savings by switching their main supplier, and most were satisfied with their current arrangements and value for money.

Annex A

Recruitment Guide

Good morning/afternoon/evening, my name is.............and I work for SMSR an independent research company. We have been commissioned by Oftel to gain the views of people in this area on telephone usage. Can you spare a moment to answer a few questions?

Topic guide

Attitudes

Calling patterns

Household use of telephony

Homes without fixed line

Price perceptions and spend

- Spend on telecoms compared to disposable income
- Awareness of varying costs according to method used – perceptions of most expensive/cheapest
-Price – do they think they’re getting good value for money
-Do they know how much they pay for different calls – local rate, national rate, premium rate, mobiles - exactly, approximately or no idea
-Do they think suppliers differ on call charges or quality of call/line/sound
-Do they think their current supplier(s) are cheapest or could they get a better deal elsewhere
- If think could get cheaper deal elsewhere – why not use different supplier
- If costs were lower/higher would they use telephony more, less, same as now
- Payphone users awareness of varying costs of payphones – does this affect decision on which payphone to use; are other things taken into consideration when choosing which payphone to use? Eg. convenience/security/privacy/vandalism/cleanliness/incoming calls barred – tradeoffs?
- Awareness of cost and availability of Internet access points

Choice of fixed supplier and awareness of alternatives/comparisons

Method of international calling

- Account (from any phone – pay in advance for calls with selected supplier)
- Payphone
- Calling shop
- Other

Reasons for choosing method

Price perceptions regarding International calls

- Price – do they think they’re getting good value for money on international calls
- Do they know how much they pay to call individual countries – exactly, approximately or no idea
- Do they think suppliers differ on international call charges or quality of call / line / sound
- Do they think their current supplier(s) are cheapest for international calls or could they get a better deal elsewhere
- If think could get cheaper deal elsewhere – why not use different supplier?

Satisfaction

Developing telephony usage

Any other comments/experiences – summing up