Contents

Chapter 1 Introduction

Chapter 2 Summary

Main findings

Chapter 3 Mobile phone usage

Chapter 4 Consumer’s use of mobile packages and suppliers

Chapter 5 Switching behaviour

Chapter 6 Mobile SIM locking

Annex A Q12 February 2003 residential questionnaire

Chapter 1

Introduction

1.1 This report provides an overview of the key findings of consumer behaviour in the mobile market, taken from the twelfth wave of Oftel’s quarterly residential consumer survey, conducted in February 2003. Results from previous waves are used for comparison purposes where appropriate and referred to throughout this report.

1.2 The report provides trend information and examines differences between consumers with different social characteristics.

1.3 The survey was conducted for Oftel by Recom (Research in Communications) amongst 2289 UK adults (see note one below) during February 2003, of whom 75% claimed to have a mobile. The report has been prepared by Oftel (see note two below), based on the results provided by Recom.

1.4 This report covers:

• UK penetration of mobile phones, networks, and packages;
• Which consumers are using mobiles;
• Switching behaviour; and
• Awareness of SIM locking procedure.

1.5 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. This survey was conducted amongst a representative sample of UK adults, reflecting the UK profile of sex, age, social grade, region and employment status and representative of cabled/non cabled areas, rural/urban areas and levels of deprivation. Data has also been weighted to ensure the sample is representative of the UK adult population.

2. 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 the total sample of 2289 consumers is about 1-2%. 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. 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. 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.

Summary

Headline figures

• 75% of UK adults own/use a mobile phone, 83% of households have at least one mobile;
• 7% of mobile only homes;
• 71% of mobile customers use a pre-paid package, 26% subscribe to a monthly contract, 3% use an all in one package; and
• 26% of mobile customers have ever switched network/supplier.

Significant rise in mobile ownership following Christmas period – confirmed by Industry subscriber figures

2.1 Between November ’02 and February ’03 mobile penetration amongst UK adults rose to 75% from 69%, equating to approximately a total of 34.5 million adults with mobile phones. Penetration rose most notably amongst older consumers, middle income groups and C2DE social grades. Consistent with this rise in mobile ownership, the proportion of fixed line only homes fell to 16%.

Rise in switching last quarter partly a reflection of confusion over re-branding and partly due to rise in mobile penetration

2.2 The proportion of mobile customers claiming to have ever switched network returned to the lower level of just over a quarter during February ‘03. Just under a third of this drop was caused by the increase in mobile penetration, and two thirds is likely a reflection of consumer confusion surrounding the re-branding of two of the mobile networks. During February, 3% of claimed switchers were confused by the re-branding of these mobile operators.

One in ten mobile customers have changed network more than once

2.3 Around 1 in 10 (9%) mobile customers have switched network at least twice since owning a mobile. This includes customers switching back to an operator used previously. Multiple switching was most prominent amongst men and younger mobile customers.

2 in 5 mobile customers aware of ability to swap SIMs and that handsets may be locked and possible charges for unlocking

2.4 7 out of 10 mobile customers were aware that different SIM cards can be used in mobile phone handsets. Just over half were aware that handsets may be locked to network providers and most of these were also aware that they may be charged to unlock them. In total, 37% of mobile customers were aware of all these aspects, falling to a quarter aware at time of purchase.

  Main findings

Chapter 3

Mobile phone usage

3.1 Over the past 18 months mobile ownership has remained stable, this quarter however, sees a significant rise with penetration amongst UK adults reaching 75%, as shown in figure 3a. This equates to approximately 34.5 million adults with mobile phones. Household penetration has also increased to 83%. The increase in mobile penetration follows the Christmas period and is confirmed by a rise in Industry subscriber figures.

3.2 The growth rate amongst adults is higher than amongst households suggesting that some new subscribers are within homes that already had a mobile phone. Oftel estimates that around half of these new adult users live in existing mobile-owning households.

Figure 3a: Mobile growth - % UK* adults and households who have a mobile phone
Base: UK adults aged 15+, Feb 03 (Base: 2289)

* 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

3.3 Mobile penetration has risen amongst various demographic groups. Most notably amongst 55+, C2DE social grades and middle income groups – the latter currently as likely as those with high household income to own a mobile phone (88% and 90% respectively), as shown in figure 3b.

3.4 Penetration remains highest amongst younger consumers, ABC1 social grades and consumers currently in employment. As reported previously, consumers living in rural areas are as likely as those in urban areas to own a mobile phone, 72% and 75% respectively.

Figure 3b: UK adults with mobiles
Base: UK adults aged 15+, Feb 03 (Base: 2289)

3.5 Fixed phone penetration amongst UK households currently stands at 92%. Consistent with the rise in mobile ownership this quarter the proportion of fixed line only homes has fallen to 16%, indicating that penetration of mobiles is in addition to, rather than replacing, fixed line phones.

Figure 3c: Penetration of fixed and mobile telephony in UK homes
Base: UK homes, Feb 03 (Base: 2289, less than 1% ‘don’t knows’ have been excluded)

*Sample was changed in May ’02 results were broadly unaffected and control sample was conducted to establish whether any changes were due to sample or ’real’ changes in the market
Note – rounding of data results in occasional months showing totals of more or less than 100%

Mobile only homes

3.6 7% of UK homes continue to only use a mobile phone with no fixed line. Consistent with previous reports these consumers tend mainly to be younger (15-34), DE social grades, and lower income groups.

3.7 Prepay users were significantly more likely to use a mobile only (12%) than contract customers (5%). Previous Oftel research reported that one the main reasons for having a mobile instead of a fixed phone was for convenience and the ability to control costs via prepay.

Chapter 4

Consumers’ use of mobile packages and suppliers

Packages used

4.1 February 2003 sees little change in mobile customers’ choice of packages. Pre-paid phones remain the most popular by far with 7 out of 10 mobile customers choosing to use this package, and a quarter (26%) preferring a contract package. 3% of mobile customers continue to use an all-in-one mobile package. There has been little change in the last nine months in the overall profile of packages used. This suggests that the additional 6% of mobile owners have adopted pre and post pay packages in their already established proportions.

Figure 4a: Profile of mobile package usage
Base: UK mobile customers aged 15+, Feb 03 (Base: 1654, 2% ‘don’t know/other’ have been excluded)

*Note that sample and method was changed in May 2002, see annex 1 in previous reports for full details

4.2 Mobile customers using a monthly contract package are more likely to be men, younger consumers (15-34), higher social grades and those living in higher income households, as shown in figure 4b. The notable rise in mobile penetration amongst middle income groups appears to be largely driven by additional contract customers.

4.3 Prepay phones remain most popular amongst older mobile customers, lower income groups, and lower social grades. As discussed in the November report, the main reasons these consumers chose this package was either because they felt it was cheapest for their needs, or they valued the ability to control costs – full details can be found at http://www.oftel.gov.uk/publications/research/2003/q11mobr0103.htm. 

Figure 4b: Distribution of mobile packages across demographic groups
Base: UK mobile customers aged 15+, Feb 03 (Base: 1654, ‘don’t know/other’ have been excluded)

Suppliers used

4.4 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. 

Figure 4c: % mobile customers using each network
Base: UK mobile customers aged 15+, Feb 03 (Base: 1654, 2% ‘don’t know/other’ have been excluded)
Industry data: Fintec Mobile Communications, Jan 03

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

  Chapter 5

Switching behaviour

Proportion of switchers

5.1 During November ‘02 it was reported that 34% of consumers claimed ever to have switched mobile network. It was noted that this rise may have been partly caused by consumer confusion over the re-branding of O2 (formally BTCellnet) and T-mobile (One2One). This rise has not been sustained this quarter and the actual proportion of mobile switchers has returned to the previous level of just over a quarter (27%). Just under a third of this drop has been caused by increased mobile penetration (up 6% points since last quarter), and two-thirds appears to be due to consumer confusion over the re-branding.

5.2 During February ‘03, 7% of T-mobile customers that claimed to have switched, said they previously used One2One, and the same proportion of O2 customers claimed to have switched from BTCellnet. This equates to 3% of all switchers that were confused by the re-branding of these mobile operators during February. Excluding these ‘confused’ consumers, the total proportion of mobile customers ever having switched mobile network currently stands at 26%.

Multiple switching

5.3 Around 2 in 10 (18%) mobile customers have only ever changed their mobile network once, and 7 out of 10 have never switched network. Therefore, around 1 in 10 (9%), have switched network at least twice – results are summarised in figure 5a. Multiple switching includes returning to a previously used network.

Figure 5a: Average number of times mobile customers have switched
Base: UK mobile customers aged 15+, Feb 03 (Base: 1654)

5.4 Male (37%) and younger switchers, 15-34 (38%) appear most likely to have switched more than once. There were no significant differences in the number of switches according to type of package, 36% of contract customers that had previously switched network had done so more than once, compared to 33% of prepay switchers. However, contract customers remain more likely to have switched (38%) than prepay (23%).

5.5 A quarter (24%) of single switchers changed network in the last 6 months, compared to 3 in 10 (28%) of those that have switched twice and 43% of those that have switched 3 or more times. Base sizes for multiple switchers are low so please apply caution to these results.

  Chapter 6

Mobile SIM locking

Awareness of ability to use additional or alternative SIMs

6.1 Mobile handsets contain a SIM card that can be changed to enable the phone to be used with additional or alternative networks. Overall 7 out of 10 mobile customers were aware of this – 52% were aware when they bought their mobile phone, and 18% became aware at some point after. The remainder were unaware, as shown in figure 6a. This indicates significant improvement since November ’01 (overall awareness stood at 63%). Awareness remains highest amongst men, younger consumers and those using a monthly contract package.

Awareness that handsets may be locked

6.2 In addition, mobile handsets may be locked to the network provider, and would need to be unlocked if the customer wanted to use a different network. There are variations in each operator’s policy in this respect. Vodafone and O2 only lock prepay phones and specific contract phones depending on the type of handset, while T-mobile and Orange lock all their phones.

6.3 Just over half (54%) of all mobile customers were aware that handsets may be locked and unlocked by network providers – 40% were aware at time of purchase and 14% found out later on. These results are summarised in figure 6a.

Figure 6a: Awareness of SIM swapping/handset locking
Base: UK mobile customers aged 15+, Feb 03 (Base: 1654)

6.4 During November ’01, 7% of all mobile customers had switched network and retained handset, therefore may have had to unlock their phone. During February ’03, customers that had previously switched mobile network were significantly more aware that handsets may be locked to providers but could be unlocked to use other networks (66%), than non-switchers (50%). Perhaps these mobile customers became aware of this at time of switching, alternatively awareness that handsets could be unlocked may have increased their likelihood to switch. This is consistent with the higher awareness amongst contract customers (68%) and their higher propensity to switch (38%), compared to prepay customers (49% aware and 23% switched).

6.5 Awareness that handsets may be locked was highest amongst Vodafone customers (58%), significantly more so than Orange customers who were least aware (51%). Awareness amongst O2 and T-mobile customers both stood at 54%.

Awareness of charges for unlocking handsets

6.6 Mobile providers may charge to unlock phones. Each operator has individual policies regarding these charges. Charges range between £15-£20 across operators.

6.7 Of those mobile customers aware that phones may be locked to their provider, the majority (72%), were aware that there may be a charge for unlocking. Just over half (55%) were aware of this when they bought their phone. A quarter, (26%) were not aware.

Figure 6b: Awareness of possible charges for unlocking handsets
Base: UK mobile customers aged 15+ aware of handset locking, Feb 03 (Base: 854)

6.8 Overall, awareness of the ability to swap SIM cards within mobile handsets was higher than awareness that handsets may be locked to providers. The majority of those aware of handset locking were also aware that there may be a charge to have phones unlocked. In total three-quarters of mobile customers were aware of at least one aspect (74%), around 2 in 5 were aware of all aspects (37%) and a quarter were aware of all these aspects at the time they bought their phone (26%). Results are summarised in figure 6c.

Figure 6c: Awareness of using alternative SIM cards and procedure for unlocking phone
Base: UK mobile customers aged 15+, Feb 03 (Base: 1654)

Annex A

Q12 February 2003 residential questionnaire – Mobile questions

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

One
Two
Three
Four or more
None
Don’t know / no answer

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

Yes
No
Don’t know/no answer

Q3. ASK THOSE WITH MOBILE
Which mobile phone supplier, do you personally use?

O2
BT Cellnet
T-mobile
One2One
Orange
Virgin
Vodafone
Other (write in)
Don’t know/no answer

Q4. ASK THOSE WITH MOBILE
Which of these statements best describes the mobile package you have?

Pre-paid package (i.e. after paying a one-off fee for the phone, 'top up' is bought as and when required)
Monthly subscription contract (i.e. line rental and call charges are paid each month)
All in one package (i.e. phone and any line rental is paid in advance and calls are either billed monthly or paid by call vouchers)
Other
Don’t know/no answer

Q5. ASK THOSE WITH MOBILE
Have you ever changed your mobile phone network or service provider?

Yes in the last 6 months
Yes – between 6 – 12 months ago
Yes – between 1 – 3 years ago
Yes – more than 3 years ago
No – never changed mobile phone network or service provider
Don’t know / no answer

Q6. ASK THOSE EVER SWITCHED
What was the name of the mobile network that you used to use?

O2
BT Cellnet
T-mobile
One2One
Orange
Virgin
Vodafone
Other (specify)
Don’t know/no answer

Q7. ASK THOSE EVER SWITCHED
How many times have you changed your mobile network since you first got a mobile phone?

Once
Twice
Three times
Four times
More than four times
Don’t know/no answer

Q8. ASK ALL WITH MOBILE
Mobile handsets contain a SIM card, which can be changed to enable you to use your phone with additional or alternative networks? Which of the following best describes whether you were aware that you could use your mobile in this way, before now?

I was aware of this when I bought my mobile phone
I was aware of this at some point after I bought my mobile phone
I was not aware of this before now
Don’t know/no answer

Q9. ASK ALL WITH MOBILE
Your mobile phone handset may be locked to your network provider meaning that to use different networks you may have to ask your provider to unlock it. Which of the following best describes whether you were aware of this before now?

I was aware of this when I bought my mobile phone
I was aware of this at some point after I bought my mobile phone
I was not aware of this before now
Don’t know/no answer

Q10. THOSE AWARE HANDSETS CAN BE LOCKED

Your current provider may charge you for unlocking your handset. Which of the following best describes whether you were aware of this before now?
I was aware of this when I bought my mobile phone
I was aware of this at some point after I bought my mobile phone
I was not aware of this before now
Don’t know/no answer