Contents

Chapter 1 – Introduction

Chapter 2 – Summary

Chapter 3 – Fixed telecoms spend

Chapter 4 – Use of fixed telecoms suppliers

Chapter 5 – Satisfaction with fixed telecoms services

Chapter 6 – New Directory Enquiries numbers

Annex A – Q12 business questions on fixed telephony

Chapter 1

Introduction

1.1 This report provides an overview of the key findings of business behaviour in the fixed telecoms market, taken from the twelfth wave of Oftel’s quarterly business survey, conducted in February 2003 amongst 827 UK businesses. The results are subject to an error margin of about 2-4%, and 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 (see note one below).

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 (November 2002 and February 2003), combined data have been used.

1.4 The survey was conducted on behalf of Oftel by Continental Research during February 2003. This report has been prepared by Continental Research based on the results (see note two below).

1.5 The report covers:

• fixed line telecoms spend;
• suppliers used;
• satisfaction with fixed telecoms services; and
• awareness of changes to Directory Enquiries numbers.

1.6 A copy of the questions is attached in Annex A. Topics to be researched each quarter are requested by Oftel project teams, and results feed into current investigations and reviews in individual market areas.

Notes:

1. The survey was conducted amongst a representative sample of small and medium enterprises (SMEs) in the UK, reflecting the UK profile in terms of business size, sector and region. As small businesses (1-50 employees) 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 827 businesses is about 2-4%, 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. All data shown is weighted data. Unweighted base sizes are shown on charts and tables to show the number of businesses who were asked the question.
2. The report should not be seen as recommended best buys and should not therefore be relied upon when making purchase decisions. Oftel has conducted its own checks on the data in this report and whilst we consider it to be correct, Oftel accepts no liability in respect of any of the results provided to it by Continental or any decisions taken by any person in reliance on the report.

Chapter 2

Summary findings

Headline figures

• Average monthly fixed telecoms spend: small - £258, medium - £3,147;
• Overall satisfaction with fixed telecoms services - 94%;
• 91% of SMEs use BT for their fixed line services;
• 16% of SMEs use a cable supplier; and
• 58% of SMEs are aware of changes to Directory Enquiry numbers.

Significant rise in awareness of the introduction of new numbers for Directory Enquiries

2.1 New directory enquiry numbers were launched at the end of 2002. 54% of businesses are aware that new numbers are going to be or already had been introduced, a rise from 19% in August.

Very little change in overall fixed line market since last quarter

2.2 Average spend remains virtually unchanged at £337. Spend as a proportion of turnover is unchanged since the last wave at 0.4%, and monthly spend per employee is very similar (£33). Small businesses continue to spend more per employee (£38) than medium (£27).

Proportion of businesses using each type of supplier remains constant

2.3 91% of all SMEs use BT. Medium businesses continue to be more likely to use other suppliers in addition or as an alternative to BT or cable (33%) than small businesses (15%).

2.4 Cable is used by 16% of small businesses and 21% of medium businesses.

Fixed line satisfaction remains consistent with recent waves

2.5 Overall satisfaction with fixed services remains consistent with recent waves. Currently 94% are satisfied, compared to 93% at the last wave, and 95% in February ’02. Small businesses remain slightly more satisfied than medium businesses.

2.6 Satisfaction with reliability also remains high at 96%. This has been consistent over the past 18 months.

2.7 Satisfaction with the overall value for money with fixed line services has risen slightly since the last wave to 81%, but has remained fairly consistent over recent waves.

Increases in awareness of changes to Directory Enquiries

2.8 Over a third (35%) of SMEs are aware that the old numbers will be withdrawn, but only 17% of these (6% of all SMEs) know this is happening this year.

2.9 In total, 58% of SMEs are aware that new numbers are being introduced, or that the old numbers are being withdrawn. 31% of are aware of both, but the majority are not aware of the precise details.

2.10 42% of SMEs are not aware of any changes to Directory Enquiries

2.11 The main sources of awareness about the changes are press, TV and radio, and are each mentioned by at least one in five of all those aware.

2.12 Of those businesses that are already aware of at least one aspect of the changes (and employ more than one person), 88% have not told their employees about the changes. Two-thirds of these state that are not likely to do so.

  Chapter 3

Fixed telecoms spend

3.1 The average monthly spend on fixed telecoms services (which includes call costs, rental, maintenance and VAT for all voice, fax, Internet and data services) amongst all SMEs for Nov ‘02/ Feb ’03 is £337. This ranges from an average £258 amongst small businesses to £3,147 amongst medium businesses. Figure 3a shows the spread of monthly business spends and figure 3b shows the trend over time.

3.2 Monthly spend amongst businesses connected to the Internet has also remained largely consistent, at £450 in Nov ‘02/ Feb ’03 compared to £446 in Aug/ Nov ‘02.

Figure 3a: Spread of business monthly spend on fixed telecoms services
Base: UK SME businesses, Nov ‘02/ Feb ‘03 (Base: 1,673)

3.3 As shown in figure 3b, the average amount spent on telecoms remains consistent within the £300 to £400 mark. This quarter’s spend is very similar to last quarter’s and similar to what it was at this point last year, and thus the higher spend reported in May ’01 and May ’02 may be seasonal. Please note though that spend has remained fairly stable since August ’01, and these fluctuations are likely to be related to the nature of asking businesses to estimate this type of information.

Figure 3b: Average spend on fixed telecoms services
Base: UK SME businesses, Nov ‘02/ Feb ’03 (Base: 1,673, ‘don’t knows’ have been excluded)

* combined data from two waves used to calculate average monthly spend - see 1.3

3.4 Average spend levels by business size, per employee, and as a proportion of businesses’ annual turnover, are shown in figure 3c.

3.5 As reported in previous quarters, small businesses spend more on fixed telecoms services per employee than medium businesses.

3.6 Amongst all SMEs, annual spend on fixed telecoms services accounts for less than 1% of annual turnover. There is very little difference between small and medium businesses, at 0.5% and 0.4% respectively. These figures are again very similar to the last wave.

Figure 3c: Average monthly spend on fixed telecoms services, by business size
Base: UK SME businesses, Nov ‘02/ Feb ’03 (Base: 1,673, ‘don’t knows’ have been excluded)

Chapter 4

Use of fixed telecoms suppliers

4.1 Overall 91% of SMEs use BT for some or all of their fixed telecoms services. As shown in figure 4a use of BT has remained stable for over 18 months, and is unchanged since the previous wave. Use of cable has remained broadly similar in recent months (and is also the same as the last wave). This is consistent with Oftel’s market information data.

4.2 It was observed in November 2002 that usage of other operators had fallen significantly from 20% (in August ‘02) to 16%. This fall has been sustained at this quarter, and is consistent with the fall in use of indirect access (IA), as discussed in the November 2002 report.

Figure 4a: UK SME business use of fixed telecoms suppliers
Base: UK SME businesses, Nov ‘02/ Feb ‘03 (Base: 1,673)

4.3 Small businesses are much more likely to be reliant on BT with over two-thirds (69%) using BT as their only supplier, compared to under half (49%) of medium businesses.

4.4 Medium businesses remain more than twice as likely as small businesses to use suppliers other than BT or cable (33% and 15% respectively) – similar findings were observed in previous waves.

Figure 4b: UK SME business use of fixed telecoms suppliers
Base: UK SME businesses, Nov ‘02/ Feb ‘03 (Base: 1,673: small base – 1066, medium base – 607)

Chapter 5

Satisfaction with fixed telecoms services

5.1 The current level of overall satisfaction with fixed telecoms is virtually unchanged since that reported in February ‘02, at 94%. Small businesses remain slightly more satisfied (94%) with their overall service than medium sized businesses (90%), as shown in figure 5a.

5.2 Overall satisfaction with fixed telecoms remains comparable to overall satisfaction with mobile services (95%) and to a lesser extent Internet (88%).

5.3 Those with an Internet connection are again significantly less satisfied (92%) with their overall fixed line service than those without (98%). This lower satisfaction is more likely to be related to the higher monthly spend amongst this group (where satisfaction is generally lower), than a reflection on their Internet service.

Figure 5a: % UK SME businesses satisfied with various aspects of their fixed telecoms services
Base: UK SME businesses, Feb ‘03 (Base: 827, ‘don’t knows’ have been excluded)

	All SMEs					Small (Base: 522)	Medium (Base: 305)
	Nov ’01	Feb ‘02	May ‘02	May/Aug 02	Feb ‘03	Feb ‘03	Feb ‘03
Overall service	88%	95%	93%	93%	94%	94%	90%
Reliability of service	94%	95%	95%	95%	96%	96%	93%
Value for money	76%	81%	77%	77%	81%	81%	77%

Chapter 6

New Directory Enquiries numbers

6.1 At the end of 2001, Oftel announced plans to replace the existing national (192) and international (153) directory enquiries (DQ) services with a range of new numbers. Previously, consumers were most likely to use the DQ service provided by their network operator, as only network operators had access to the ‘192’ DQ number. The new arrangements mean that consumers have an easy choice of DQ service provider no matter what network they use, and that all DQ service providers will be competing on a level playing field as regards the number used to access their DQ services.

6.2 In late 2002, new numbers in the range 118XXX were introduced for directory enquiries services. These are available in conjunction with the exiting 192 and 153 DQ services until August 2003, when 192 and 153 will no longer connect to DQ services.

6.3 These changes are expected to lead to the introduction of a range of new services using short telephone numbers, such as call completion facilities where the operator can connect people directly to the number they have requested, or services in a range of languages for people whose first language is not English and visitors from overseas. In fact, some of these new services are already available. The presence of new firms in the market should promote competition in quality of service and on price, encouraging better customer service and lower prices.

Awareness of introduction of new numbers

6.4 Nearly a third (32%) of all UK SMEs state they are aware that new numbers for Directory Enquiries (192) and International Directory Enquiries (153) have already been introduced. A further 22% are aware of the introduction of new numbers but are not aware that they have actually already been introduced.

6.5 Awareness has increased significantly since the launch of the new numbers. In August ‘02 just 19% of SMEs were aware that the new numbers were going to be introduced, compared with 54% in Feb ’03 who were aware that the new numbers were going to be or had already been introduced.

6.6 There is a significant difference between small and medium businesses with 42% of medium businesses aware that new DQ numbers have been introduced, compared to 32% of small businesses. 

Awareness of what the new numbers will be

6.7 Of those aware that new numbers are being introduced, 7% know that the 118 prefix is going to be used for the new DQ services. This is a significant increase from before the launch – in August ‘02 less than 1% were aware. Medium businesses are significantly more likely (13%) to have mentioned the 118 prefix than small businesses (7%).

Awareness of the old numbers being withdrawn

6.8 Over a third (35%) of businesses know that the old 192 and 153 numbers are going to be withdrawn, up from 13% in August. Again, medium businesses are significantly more likely (43%) than small businesses (35%) to be aware of this. Of the businesses that are aware of the numbers being withdrawn, the majority (80%) are unsure when it is happening. 17% know it is happening in 2003 (3% narrowed it down to August/ summer 2003), and 3% think it is happening in 2004.

6.9 As shown below, overall, 58% of SMEs are aware that new numbers are being introduced or the old numbers are being withdrawn. 31% of SMEs are aware of both, but the majority are still unclear as to what the numbers are changing to and when the old numbers will be withdrawn.

Figure 6a Awareness of the forthcoming changes to DQ
Base: UK SME businesses, Feb ‘03, (Base: 827)

Sources of awareness of the changes

6.10 The three main sources of awareness regarding the changes are the press (28%), TV (27%) and radio (20%).

6.11 Less common sources included, 5% aware from direct mail, 4% aware via word of mouth, 4% heard about the changes from their phone company, 3% state they heard from BT and a further 3% state their 'phone bill' (whether BT or another phone company). Other sources mentioned include the Internet, Yellow Pages, and from Directory Enquiries themselves.

Informing employees

6.12 Amongst all businesses (with more than one employee) that are aware of at least one aspect of the DQ changes, 12% have already informed at least some of their employees. There were no significant differences between small and medium businesses.

6.13 Amongst the 88% that have not informed their employees, two-thirds claim they are not likely to do so, including nearly half (46%) stating they are 'not at all' likely to do so. Small businesses are significantly less likely to inform their employees than medium sized businesses (see figure 6b).

Figure 6b: Likelihood of businesses to inform their staff about changes to Director Enquiries
Base: UK SMEs with more than one employee and aware of the changes to DQ services but not having already informed their staff, Feb ‘03 (Base: 424)

Annex A

Q12 business questions on fixed telephony

Base: All SMEs
Q1 What is the approximate MONTHLY telecoms bill of your company for all your voice, fax, internet and data requirements. Please include all call costs, rental, maintenance costs and VAT. Please exclude any bills from mobile companies.

Base: All SMEs
Q2 Which of the following does your business use for its fixed line telephone services? Please include all you use but do not include mobile phone companies.

BT
NTL
Telewest
Cable and Wireless
Colt
Energis
MCI Worldcom
Any other supplier(s) SPECIFY

Base: All SMEs
Q3 Thinking about all your fixed line telecoms services and suppliers, are you satisfied with them on the following attributes? Firstly

The overall service they provide
The reliability of their service
Providing value for money

Base: All SMEs
Q4 New numbers for directory enquiry services have recently been introduced. Which of the following best describes whether you were aware of this before now?

I was aware that new numbers had already been introduced
I was aware that new numbers were being introduced but was not aware that they were already available
I was not aware that new numbers were being introduced

Base: All aware of introduction of new DQ numbers
Q5 Do you know what the new numbers for directory enquiries are?

Yes - 118(xxx) - any mention of 118
Yes - any other numbers mentioned (NOT 118xxx)
No - don't know

Base: All SMEs
Q6 The national 192 and international 153 directory enquires numbers are going to be withdrawn from service. Before now, were you aware of this?

Yes
No
Don't know

Base: All aware of withdrawal of old DQ numbers
Q7 Do you know when these numbers - 192 and 153 - will be withdrawn from service?

Summer/ August 2003
This year (no mention of Summer or August)
Next year/ 2004
In 2 years time/ the year after next/2005
Other WRITE IN
Don't know

Base: All aware of introduction of new or withdrawal of old DQ numbers
Q8 Where did you hear about the changes that are currently being made to directory enquiry services?

Base: All aware and with more than one employee
Q9 Have you already informed any your company's employees about the changes to directory enquiry services?

Yes
No

Base: All aware of changes but not informed employees
Q10 How likely are you to do so?

Very likely
Fairly likely
Not very likely
Not at all likely