Consumer choices, value and range – Ofcom Report – PART 2

Satisfaction with communications services
As far as the level of satisfaction with overall service is concerned, it remained stable. At the same time, services in the single service broadband market, the satisfaction level is lower than the satisfaction level in single services and the bundled service market. 81% of consumers are very satisfied or fairly satisfied with the services of broadband while 89% of fixed-line consumers are satisfied with the service. 90% of consumers of bundled services and digital TV and 92% of mobile consumers are also satisfied with the services offered to them. On the other hand 4% of bundled services consumers, 3% of mobile consumers, 5% of digital TV and fixed-line consumers and 11% broadband consumers are found to be “very” or “fairly” dissatisfied with the services they get.

Since 2010, among the age group 45-64, dissatisfaction with broadband services and dissatisfaction with a discounted bundle among 25 to 44 age groups have declined. At the same time among the socio-economic group AB, dissatisfaction in the fixed-line standalone market has gone up by 7% since 2010. Among the socio-economic group C1, the level of dissatisfaction in the standalone broadband market has gone up. It is to be noted that with regard to digital TV and discounted bundle, dissatisfaction level among the same groups has gone down. Among all sectors, the highest level of satisfaction was recorded by mobile customers.

According to the research conducted by Mr. Andrew Smith regarding customer rating of their main providers for value for money, home broadband which included bundle providers and mobile providers performed the strongest value for money. The least value for money was seen offered by banks and insurance companies.

With regard to the reliability of service, 90% of consumers of digital TV and fixed-line are ‘very’ or ‘fairly’ satisfied. Among the mobile and bundled markets also satisfaction level with reliability service remained almost 90%.The lowest percentage of the level of satisfaction with reliability was noted in the standalone broadband market (81%).

Since 2010, there have been some remarkable changes in the level of satisfaction with reliability. As far as the reliability of broadband services is concerned, the dissatisfaction level has increased to 14% as the females voiced their objection against broadband services. Among the socio-economic group C1, the level of dissatisfaction with the reliability of broadband increased by 12 points.

One of the most important aspects of the broadband is the speed and consumers are now a days very conscious about it. Ofcom’s consumer research indicates that 30% of consumers said that their broadband speed is slower than what they had been promised and expected.

In the year 2008, the regulator had published the Voluntary Code of Practice in Broadband Speeds with a view to impart accurate information regarding the broadband speeds to consumers so that they could purchase the best service.

During 2008, overall satisfaction with the speed of fixed broadband service, consumers were generally satisfied. In 2011, the percentage of “very” satisfied consumers of fixed broadband service has gone down to 39% from 49% in 2008. Thanks to the information provided by Ofcom through the Voluntary Code of Practice on Broadband Speeds, consumers get more information about broadband speeds and now they are aware of the speeds they can expect from their providers depending on their locality.

Spend on UK communications services
The average household expenditure on communications services in the UK has gone down despite the increase in the take-up of broadband, pay-TV and mobile services. In 2010 average household spend was 93.61 Pounds and in 2009 it was decreased by 2.9%. In 2010, expenditure on communications services was to the tune of 4.66% of total household expenditure, but it was 4.78% in 2005. It is to be noted that this decline in the household expenditure on communications services occurred at a time when providers offer enhanced communications services like increased broadband speeds, data services, and other bundled services. During the past years, the time that was expended on TV and radio remained almost stable while the time used on fixed internet declined. This is mainly due to the availability of broadband bundles with fixed voice or television services at a discount. Due to lower prices spend on mobile services fell by 5.1%.

In 2011 prices of telecoms services and equipment showed an increase but the increase was below the overall rate of inflation.

The average cost per minute for calls made from mobiles decreased while the average cost per minute from residential fixed lines remained almost stable. However since 2007 the cost of call per minute from residential voice increased and since 2005 as a result of lower prices offered by fixed-line operators, the cost per minute for international calls declined significantly. For consumers who pay an additional monthly charge, heavily discounted international calls are being offered by fixed-line operators as “add-ons”.

As per the data available with Ofcom, since 2005, the average cost of broadband service has fallen significantly because of the taking-up of lower-cost bundled services offered by operators who use local loop unbundling. Another reason for the fall was the introduction of bundled services by the largest communications operator in the UK, namely BT. Again the average ‘up to’ broadband speeds in the UK increased ten fold between 2005 and 2010.

During the last year there was an increase in pre-pay (Pay-as-you-go) prices. On the standard pre-pay tariffs17, in July 2011, Orange and Vodafone introduced notable price increase and later Everything Everywhere, O2 and Vodafone made an announcement that there would be no more subsidies on pre-pay handsets. The increase in pre-pay tariffs was followed by a decrease in mobile termination rates and at the same time providers incentivised customers to take-up post-pay tariffs. Ofcom’s International Communications Market Report indicates the increased availability and take-up of low-cost pay monthly contracts.

International comparisons of the cost of communications services
Ofcom’s International Communications Market reports compare the prices of communications services available to the consumers in the UK with the prices available to consumers in Germany, France, Italy US and Spain.

The prices offered to the consumers in the UK on a single service basis (excluding bundles) are found to be the lowest. The lowest price for standalone broadband services, the lowest price for basic pay-TV and the lowest price for mobile broadband are all available in the UK.