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| Q1
June 2000
3. The extent of UK Internet usage at home 5. Once they’re connected, how long are consumers on-line, and what are they doing? 1.1 This report provides an overview of the key findings in the Internet market, taken from Oftel’s residential consumer survey – quarter 1 2000/01. 1.2 It establishes baseline figures on which subsequent quarterly results can be compared to provide trend information, and examines differences between consumers with different social characteristics. 1.3 The survey was conducted for Oftel by MORI, amongst 2070 UK adults during May 2000, of whom 507 (25%) claim to have Internet at home. A follow up survey was conducted amongst 314 home Internet users during July examining their usage in more detail. These results have also been incorporated in this report. 1.4 The report covers: (i) the extent of UK Internet usage at home
(ii) Internet connection and ISPs used
1.5 And attempts to answer some of the following questions:
(Footnote 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. 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 survey of 507 consumers is about 2-4%, but is higher amongst smaller subgroups. Unless shown otherwise in the chart, charts exclude consumers who have said ‘don’t know’ (Back) Home Internet usage 2.1 25% (6 million) homes claim to be connected to the Internet. And a conservative estimate suggests at least 22% (14 million) of the UK population are using the Internet at home. 2.2 The profile of home users appears to be slowly changing, with an increasing number of older users, DE social grades, and those on lower incomes, but still has some way to go before seeing widespread use across all groups of the population. Generally home usage is comprised mainly of the higher income groups, who are making more use of a range of technologies including mobile, multi-fixed lines, and digital TV, and who are making greater use of the competition available in the fixed market. Time spent on-line at home 2.3 6 hours is the average weekly household time on-line, and this is primarily weekend and evening activity. However, these figures are inflated by a small number of heavy users, and in fact the majority of individual users are on-line for just over an hour each week. Only 1 in 10 households claim to be using the Internet for more than a couple of hours each day, and these tend to be longer-established users. 2.4 Although income and presence of children are contributing factors to getting connected, they were not key determinants in the amount of time spent on-line. Once online, heavier users tend to be younger (15-34), C2DE social grade, and living in larger, rented households. The longest-established home users (2+ years) also tend to have slightly heavier than average usage patterns. Internet on-line activity 2.5 Email was the most popular on-line activity, used by over 9 in 10 Internet homes. 3 in 5 users said they surfed with no specific purpose / to pass the time, and this was higher amongst those using unmetered packages. 3 in 5 home users said they had bought goods or services over the Internet at least once. Frequency of on-line shopping appears to increase with length of time with Internet at home. On-line shopping was least popular amongst older and lower income consumers. The most popular on-line purchases were books and music. 2.6 Barriers to on-line shopping included preference for seeing goods before purchasing, and ease of buying goods elsewhere. Concerns about leaving personal details and credit card fraud were discouraging 3 in 5 homes users from on-line shopping. Use of different ISPs and packages 2.7 Consumers were making use of the range of ISPs and packages available. Half of home users have switched ISP at least once, and this was higher amongst heavier and longer established users. Additionally, a sizeable minority (34%) use more than one ISP for their home access. 2.8 The survey failed to identify any significant barriers to switching ISP for the majority of home users. Potential barriers such as too much effort to change, contractual issues with current ISP, difficulty working out best deal, were each mentioned by fewer than 1 in 10 consumers. 2.9 Freeserve was the most popular ISP in the residential market used by 1 in 3 Internet homes, and already 16% claim to be using some form of unmetered access. Price was the main driver behind choice of ISP. The vast majority of home users (95%) claimed to be satisfied with their main ISP, although over half experience problems with ability to connect and speed of connection. 2.10 Initial results support predictions of growth in on-line activity resulting from unmetered access, although it is too early to assess the exact impact this will have, or the extent to which consumers might alter the time of day they go on-line. 2.11 The majority of home Internet connection is via the ordinary phone line, with a small minority of users claiming to use BT Highway or other ISDN products. Those upgrading to ISDN lines were largely longer-established users (2+years), and higher income groups, but was not determined by the number of users in the household. BT Highway on the other hand was more evenly spread by length of time with home Internet, and was favoured by multi-user homes. 1.5% claim to be accessing the Internet via their TV, and we will be tracking uptake of ADSL and cable modems in subsequent surveys. 2.12 Awareness and interest in ADSL services, in particular, fast Internet access, was highest amongst home Internet users, than other consumer groups. However, they were only willing to pay about £13 per month for these services.
(Footnote 2) Homes with more than 5 users were counted as 5 users (Back)
3. The extent of UK Internet usage at home 3.1 Across the UK, an average 25%, or 6 million homes are connected to the Internet. On average, there are just over two Internet users per household. This equates to a conservative estimate of at least 22% (14 million) of the population using the Internet at home. A further 7% of adults (3 million) who do not have home Internet access, claim to use the Internet at work / place of study, or elsewhere. 3.2 In larger households there were more users which although may be stating the obvious, at least indicates that everyone in the house is getting involved and making use of the Internet. In many instances, it was claimed that friends and family from outside the household were also making use of the facility. 3.3 Figure 3a shows home Internet connection trends since January ’99, during which time connections have doubled from 12%. PC ownership however, has remained fairly unchanged around the 40% mark, and until recently, has been the main means of home Internet access. 3.4 The cost of PCs may be prohibitive to uptake of Internet access for consumers who do not already own a PC, particularly for those on low incomes. However, the increasing availability of Internet via digital TV and mobile phones should encourage more consumers on-line.
Which consumers have Internet access at home? 3.5 Figure 3b shows the proportion of UK consumers who have Internet at home. It identifies that home Internet usage is still most common amongst:
3.6 Those least likely to have home Internet access included
3.7 Regionally, home Internet access was lower in Northern Ireland (11%), Wales (12%) and Scotland (16%) than elsewhere. Tenure was also an issue unsurprisingly affecting take-up rates. Consumers in rented accommodation may be reluctant to pay line connection charges if they are only staying for a short time.
Who are home Internet users? 3.8 The distinguishing feature of consumers with home Internet access is unsurprisingly that they claim to ‘like to try new products and services’ – the early adopters of new technology. They are more likely than average to have other technology including mobile phones and pay TV, particularly digital. 3.9 Perhaps associated with being early adopters, home Internet users also tend to make more use of competition in the fixed market. They are more likely to be using an alternative or additional supplier to BT and claim Internet usage is an important consideration when selecting a telecoms supplier. 3.10 Despite being more receptive to new products and services, they also tend to be more loyal and claim to ‘stick to a particular supplier/product’ when they find one they like. This is perhaps because they feel better informed about their telecoms decisions than their non-Internet peers, and hence have more confidence in their choice. 3.11 One in five Internet homes now claim to have more than one fixed lines, specifically for Internet use. As a result of their heavier telecoms usage, home Internet users unsurprisingly have considerably larger quarterly bills for their fixed telecoms service – on average £110 compared to the overall average of £80. 3.12 However, their Internet usage isn’t exclusively home-based as home users are also more likely to use the Internet at work or their place of study.
How has the profile of Internet homes changed? 3.13 Between January ’99 and May ’00 there was a slight shift in the profile of homes with Internet access. This is illustrated in figure 3d. Although still prevalent amongst the younger and middle age groups, and the working and higher social classes, distribution has seen a slight shift towards older users, lower social grades, and those not working. Overall however, it would appear that the Internet is still a relatively specialist home technology, and has some way to go before becoming a more universal home product.
3.13 26% of home users are relatively new, having only connected within the last six months, while 28% have had home Internet access for more than two years. In line with the changing profile of home Internet users, consumers with high annual incomes and the AB social grades tend to have had access for longer, while the low income groups and the DE social grades tend to be the most recent home connectors. 3.14 Length of time with home access could reasonably be used as some proxy for ‘experience’, and will be used in subsequent sections to examine how usage and consumer behaviour changes with increasing experience.
(Footnote 3) Homes with more than 5 users were counted as 5 (Back) How are consumers connecting to the Internet at home? 4.1 Only a small minority of home users (1 in 10) claim to use anything other than an ordinary phoneline for their Internet connection. The survey picked up 8% claiming to use BT Highway or other ISDN lines (4% each), and just over 1% using digital TV Internet access. 4.2 BT Highway was favoured by multi-user homes with a spread of experience in terms of the length of time they have had home Internet access. Other ISDN lines on the other hand are definitely for the more experienced home user (in terms of the length of time they have had Internet access of home), typically connected at least two years. It was solely the high income groups, and predominantly the AB social grades using ISDN. What’s the potential interest in ADSL services? 4.3 Awareness of ADSL was generally quite low which is unsurprising given that it is not yet widely available, nor likely to be marketed to consumers under the name ADSL. However, home Internet users were more likely to have heard of ADSL services and expressed greater interest in these services. 68% said they would be interested in faster Internet access compared with only 26% of consumers generally. Interest was highest amongst heavy and longer-established users. 4.4 Home Internet users also expressed greater interest in video on demand and interactive games and services, than consumers generally. But despite greater levels of awareness and interest in using ADSL services, they were not willing to pay any more for these than the average consumer – about £13 per month. Are consumers making use of the range of ISPs and packages available? 4.5 Consumers on the whole are making relatively good use of the range of ISPs and Internet packages available, given the relatively short length of time that some of the deals have been available. Use of the range of ISPs available 4.6 Overall, 1 in 3 Internet homes (34%) claimed to use more than one ISP and half said they have switched ISP at least once. These are shown in figures 4a and 4b. 4.7 Although there were no particularly notable demographic differences determining the number of ISPs used, the more ‘experienced’ users become (in terms of length of time with home Internet), the more likely they are to use more than one ISP. For example, only 19% of homes connected for less than 6 months have more than one ISP, compared to 43% of those connected more than two years. 4.8 Similarly, longer established users were more likely to switched ISP, while more recent users (established less than a year) and lighter users (fewer than 2 hours each week) were least likely to have switched ISP.
4.9 Freeserve was most popular in the residential market, used by 35% of home Internet users. This was followed by AOL, used by 10% of Internet homes. Freeserve was more popular amongst the lower income groups and more recently established users, while AOL (the majority of whose subscribers pay a subscription) was more popular amongst older and higher income users, and the longer established Internet users. It might be the case that these more ‘experienced’ users are prepared to pay for what they perceive to be a better quality or better range of services from specific ISPs, or they may have originally signed up with AOL, before subscription free packages became available, and decided not to change. 4.10 Figure 4c shows the share of the ISP market based on what ISPs consumers said they were using.
4.11 Consumers are also making use of the range of packages available to them, with fewer than 1 in 5 (18%) using the traditional "ISP subscription and cost of calls whilst on-line" package, which was the predominant pricing package until the end of ’98 when subscription free packages were popularised by Freeserve. 4.12 2 in 3 home users (65%) are using a subscription-free ISP, simply paying on-line call costs. And already, 16% are using some form of unmetered access package whether it be completely (7%) or partially (9%) unmetered. Figure 4d shows consumers’ use of ISP packages.
4.13 The type of Internet package used is widely expected to have a great influence on the amount of time users spend on-line. Durlacher estimate on-line will treble in the event of unmetered access. Early indications from this survey support predictions of heavier usage amongst those with unmetered access. This is examined in section 5. Future interest in unmetered packages 4.14 Of the 4 in 5 home Internet users who are still paying for the on-line call time, half (54%) expressed interest in partially unmetered packages at an average cost of about £10 per month, and a quarter (26%) in fully unmetered packages for an average monthly fee of about £25. 4.15 Interest in both options was higher amongst those currently paying a subscription fee in addition to their call charges. As might be expected, heavier users (more than 11 hours each week) expressed greater interest in fully unmetered packages, and lighter users were more interested in partially unmetered packages. How do consumers choose their ISP and are they satisfied with their choice? 4.16 Price was predictably the main consideration for consumers selecting their ISP, including free access, cheap calls, and free trial periods. Recommendations/word of mouth was mentioned by just over 1 in 10 home users, and a similar proportion used the ISP that was already pre-installed on their PC. 4.17 Fewer than 1 in 10 home users said they selected their ISP on the basis of its quality of service, content provision, or customer service / helpline facilities. Satisfaction and problems with ISP 4.18 The vast majority (95%) of home Internet users said they were satisfied with their main ISP. There was little difference between heavy and light users, between recent and longer established users, or between the types of package used. 4.19 Despite this high level of satisfaction, only 1 in 10 home users said they had not experienced any problems with their ISP. Problems consumers claim to have experienced with their ISP are shown in figure 4e. 4.20 The main problems focused on connection and speed issues, such as slow connection or downloading, inability to get connected, and connection freezing or crashing, experienced by more than 2 in 5 users and was higher amongst heavier users. 4.21 Consumers paying subscription fee and call charges, reported fewer technical problems such as connection, speed, poor email or customer service, but were more likely to say that it was more expensive than they had expected. This is perhaps partly as result of them being slightly heavier users than average. Why do more consumers not switch ISP ? 4.22 Despite price being the main consideration in ISP selection, only 1 in 5 of those who have not switched ISP, said that their reason for not having done so was that they believed their current ISP was best value for money. This was slightly higher however amongst consumers using subscription fee and unmetered packages. 4.23 Encouragingly there appeared to be few significant barriers to switching ISP for the majority of consumers such as contractual obligations, difficulties in working out best deal, or lack of awareness of choice. Good quality service / reliability was the main reason for not having changed ISP. Again this was slightly higher amongst those paying a subscription fee, or using unmetered packages. 4.24 A significant minority felt that it was not sufficiently important, they didn’t have enough time, or that it was too much effort to consider changing. A further 15% said they didn’t know why they haven’t changed ISP. Reasons for not switching are shown in figure 4f. ( Footnote 4 ) % consumers using each ISP differs slightly from the ISP market share data in figure 4a because some consumers use more than one ISP.(Back)
5. Once they’re connected, how long are consumers on-line, and what are they doing? 5.1 Although average weekly household usage is about 6 hours, the majority of individual users spend about little over an hour on-line each week, which takes place primarily at weekends and evenings. 5.2 On average Internet homes spend about 6 hours on-line in a typical week. This is inflated by a small number of heavy users however, and in fact the majority of homes are on-line for less than this, on average about 3 hours each week. With an average two users per home, this equates to about 1.5 hours on-line weekly activity per user, which is broadly in line with recent publications from MMXI Europe, an Internet monitoring group who estimate that British users spend an average five hours on-line each month. 5.3 Only about 1 in 10 households claim to be using the Internet for more than a couple of hours each day and these tend to be slightly longer-established users. 5.4 So is there a relationship between the length of time consumers have had home Internet access, and the amount of time they spend on-line? For example, as users become more confident in their use of the Internet do they spend longer eg browsing more sites, spending longer on their favourite sites etc, or, do they become more efficient in their usage eg locating what they want more quickly, and as a result, spend less time on-line? 5.5 The survey found that more experienced users who had been connected for longer tended to spend slightly longer on-line than more recently connected users, although the relationship between the two was not as conclusive as might have been expected. 5.6 Home Internet usage, as noted previously, is still predominant amongst AB social grades, high income and middle age groups, and to a lesser extent home owners and those with children. However, once online, heavy users tend to be younger (15-34), C2DE social grade, and to a lesser extent larger households and those in rented accommodation. Although income and presence of children were contributing factors to getting connected, they were not key determinants in the amount of time spent on-line. 5.7 Younger consumers (aged 15-34) claimed to spend longer online each week than their elder peers (aged 55+) – on average 7 hours and 4 hours respectively. Similarly, larger households spend longer than smaller (although presence of children alone was not a key driver in usage levels). More surprisingly perhaps, consumers of DE social grade claimed to be the heaviest weekly users with an average 8 hours, compared with AB grades spending an average 5 hours. Working status did not appear to have a major influence on this pattern. What impact does the type of package have on usage levels and patterns? 5.8 Despite small sample sizes in terms of the number of people picked up in the survey using partially or fully unmetered packages, early indications unsurprisingly support heavier use amongst those with unmetered packages, although differences at this stage were still relatively small (figure 5a). This might be a result of heavier users being earlier adopters of unmetered packages, and is something we will continue to track in subsequent surveys as availability and usage of unmetered packages continues to grow.
When do consumers go on-line? 5.9 Given that the majority of Internet users are still paying for their call costs, it is unsurprising that peak rate times were least popular for usage (16%), whilst weekends (44%) and weekday evenings (40%) were most popular. 5.10 There were no particularly notable differences between consumer groups, as to their preferred time on-line. It is perhaps more a lifestyle feature in that most consumers are either working, studying, or otherwise busy during the day, rather than cost alone that prohibits them from going on-line during this time. This is supported somewhat by a slightly higher than average proportion of consumers aged 55+ using the Internet during the day (22%). 5.11 Income, perhaps surprisingly, was not a major determinant of peak or off-peak usage, and variations were only slight between the three income groups (low, medium, high). Social grade (often a proxy for income) provided slightly more marked differences in preferred usage times, with DE grades conducting more of their on-line activity at weekends and less during the day, than their AB counterparts. 5.12 As indicated in figure 5b, it is too early to predict the impact that unmetered access will have on the level of peak-rate versus off-peak usage. We will be tracking any changes in preferred usage times in subsequent surveys as uptake of unmetered packages grows. Early evidence suggest no differences, perhaps indicating that lifestyle rather than cost is the main driver of usage patterns amongst most Internet users.
What would encourage consumers to make more use of the Internet? 5.13 There appeared to be no significant barriers to greater usage for the majority of home Internet users. 30% said that nothing would encourage them to use it more, and further 10% couldn’t think of any specific factors. 5.14 Amongst those who felt they could be encouraged to make greater use of the Internet, cheaper costs was the main factor that would encourage them, including cheaper call costs, cheaper subscription fees, and unmetered access. However, at most these would each encourage greater usage amongst 1 in 4 home users. This implies that cost is not a major barrier to greater Internet use for the majority of existing home users. 5.15 Other potential barriers to greater usage are shown in figure 5c. Some consumer suggestions included "would like to negotiate face to face over the Internet / more interactive", and "intrusion, I don’t want to receive any rubbish" which may refer to unsolicited emails.
What are home Internet users doing on-line? 5.16 Sending and receiving email was the most popular home Internet activity, used by over 9 in 10 home Internet users. The Internet was also popular for obtaining educational resources, travel information and for hobbies. 5.17 About 1 in 3 consumers said they used the Internet for banking activity, and a similar proportion for job hunting. 5.18 3 in 5 home users said they also surfed with no specific purpose / to pass the time. This was higher amongst those on unmetered packages as was use of chat groups. Home Internet activity is shown in figure 5d.
How many consumers are shopping on-line? 5.19 3 in 5 home Internet users said they have bought goods or services over the Internet at least once. However, the vast majority of these on-line purchases were fairly infrequent and on average less than once a month. 5.20 The longer consumers have had their home Internet connection, the more likely they were to purchase on-line. Those connected more than a year were almost twice as likely to buy on-line than those connected less than a year. Frequency of on-line purchasing is shown in figure 5e. 5.21 On-line purchasing was least popular amongst older consumers (55+), DE social grades and low income groups. It was most popular amongst heavy users, and longer established home users, and predictably, the higher income groups.
What are consumers buying on-line? 5.22 Books and CDs/tapes were the most popular on-line purchases, bought by about half of on-line shoppers. Other popular purchases included computer software and hardware, and flights or holidays. On-line purchases are shown in figure 5f. 5.23 Overall, longer established home Internet users were buying a wider range of goods and services on-line.
Barriers to on-line shopping 5.24 Preference for seeing goods before purchasing (80%) and ease of buying goods elsewhere (62%) were the main reasons for not conducting more on-line shopping. About 1 in 4 of consumers were put off by the cost of goods and were looking for greater savings before buying on-line (23%) and a small proportion felt it was more expensive to buy on-line that elsewhere (5%). Others said that there was nothing they wanted to buy (29%) and some consumers were unable to make on-line purchases because they didn’t have a credit or debit card (7%). 5.25 Security was a barrier for a high proportion of consumers, and included worries about leaving personal details (60%), and the risk of credit card fraud (59%). About 1 in 3 were worried about goods delivery and return arrangements. Security was a far greater concern amongst those who have never ordered anything over the Internet. 5.26 Other barriers for a smaller number of consumers included speed of on-line transactions (16%), difficulties in using / ordering on-line (7%), and cost of using Internet / call charges (13%). 5.27 Barriers to on-line purchasing are shown in figure 5g. Other customer comments included "sometimes the goods are in America or Japan and then you have to deal with exchange rates or banks", "I prefer to pay by cash", and " I don’t want to be buying stuff too much, and its easier on the Internet to buy".
5.28 Of those groups who were previously reported to be least likely to order on-line, the over 55s were more likely to report security concerns as a barrier to usage, while the lower income groups were more likely to be put off by insufficient savings, not having a credit/debit card, and amongst those who did, more were worried about fraud. 5.29 The more ‘frequent’ of these infrequent on-line purchasers, (ie those ordering about once a month, or slightly less frequently than this), were less concerned about leaving personal details, fraud, etc but expressed greater concern about delivery of goods. They were also more likely to say that there was nothing they wanted to buy (presumably ‘at the moment’ given that they make on-line purchases on a fairly regular basis) and that savings were insufficient. This perhaps suggests that these consumers are active users of the Internet for on-line purchasing in so much as they appear to be shopping around and comparing prices, and are prepared to order on-line when they need something and find it at an acceptable price.
6.1 Returning to the questions posed at the start of this report, the results provide a fairly good indication of the current shape of the Internet market, from the perspective and behaviour of the residential consumer. Is the Internet still a specialised consumer product or is it becoming more universal? And does Internet penetration have a lower ceiling than other technologies such as mobile, of interest only to early adopters? 6.2 Although home Internet usage continues to grow, it is still primarily the technology of ‘early-adopters’ who use a range of telecoms technology, and are generally from the AB social grades and higher income groups. However, the profile of users would appear to be slowly changing with the newest users from the DE social grades, lower income groups, and older age groups. There is still some way to go before home usage becomes truly universal. 6.3 Home PC ownership has remained fairly unchanged over the last year at about 40%, with prices discouraging particularly the lower income groups from moving online. Given that this, until recently, was the sole means of Internet access, home Internet usage growth might have reasonably been expected to peak at a similar level. However, with the increasing availability of Internet via alternative means such as digital TV, mobile phones, games consoles etc, growth is expected to continue. Does the amount of time spent on-line increase or decrease with experience/time connected? 6.4 Initial results indicate a slight predominance of longer-established users staying on-line longer. So although they may well become more efficient in their usage, they would appear to be visiting more sites, or their favourite sites for longer etc. We will be investigating the on-line behaviour of experienced and newer users, in terms of the types of site they visit, and what they do on-line eg shopping, banking, general browsing etc, in a follow-up study during July. Does the type of ISP package inhibit or encourage when, and amount of time, spent on-line? 6.5 Early indications from this survey appear to support predictions about the potential impact of unmetered access – on-line time did appear to be slightly longer amongst those using unmetered packages. This might be a result of heavier users being earlier adopters of unmetered packages. Due to the relatively small number of users to date, it is too early to assess to a high degree of accuracy, the impact it will have (eg Durlacher estimate on-line time will treble) on both the amount and pattern (ie peak vs off-peak) of home usage. What drives connection upgrades eg to ISDN, BT Highway? And who are the potential ‘early-adopters’ of ADSL? 6.6 While the majority of users use the ordinary phone line for their home Internet connection, a small proportion in the survey had upgraded to BT Highway or other ISDN lines. ISDN upgrades were for the truly ‘experienced’ user, established more than 2 years, and the AB social grades and higher income groups. It was not dependent on the number of users in a household, favoured as much by smaller homes with one or two users, as by homes with more than five users. 6.7 ‘Experience’ in terms of length of time connected was not key factor in upgrading to BT Highway, which was more widespread across a range of ‘experience’, social grades, and income levels. BT Highway, unlike other ISDN was predominant amongst the largest multi-user homes with five or more users. Both groups expressed greatest interest in ADSL services. Next steps 6.8 The next quarterly residential survey, October/September 2000, will continue to examine some of the above issues and any changes to the home Internet market. The results from this and subsequent surveys will feed into Oftel’s review of the Internet Market during the second half of 2000. [Footnote 6] Office for National Statistics Back
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