Consumer Empowerment – Ofcom Analysis

We live in an age of competition and everywhere consumers are being cheated. The market is highly competitive especially the communications market. To take advantage of the competition, consumers should be well aware of the market conditions. Now a days choices are many, and consumers are faced with a lot of questions like – what to purchase, when to purchase, where to purchase, how to purchase, how much to purchase etc. etc. Only when consumers are well equipped with the knowledge of the market conditions, they can make the best use of the competitive market conditions. This part of the report deals with aspects like – to what extent consumers are empowered with the knowledge of the market conditions, how far their information and knowledge about the competitions would help them to obtain the best deal and to what extent consumers are ready to switch their communications providers.

The report also analyses the reasons for the consumers to switch or to continue communications provider and the impact of their decisions on switching behaviour. Consumer information plays an important role in consumer empowerment and as such this report also explores whether consumers get reliable information, whether they know where to go for comparative information to enable them to take the right decisions etc. All data for individual services are based on single-service purchase only and have been updated. Consumers who purchase the respective service as part of a bundle are excluded from this data. Again, consumers who switched their service suppliers as part of shifting house are also excluded from the measures of switching reported in this chapter.

The findings in this report are analysed by demographic groups, age, socio-economic group, gender and urbanity. According to five metrics the findings are arranged. The five metrics are “participation in communication market” which is measured by looking at a wide range of ways in which consumer can participate in the market. The second metric is “Switching in communications markets”. It deals with the level of consumer participation including consumer’s actual and potential switching behaviour in each market. “Ease of switching in communications markets” is the third metric. Here, in the communications market, how consumers can take advantage of the increasing competition, how easy switching help the effective functioning of communications market etc. are discussed. The fourth metric is “awareness of trusted information sources” and the reliable sources of information given to consumers with regard to suppliers, different options, developments in mobile phone technology etc. are discussed. The fifth and the last metric is “ease of making cost comparisons between suppliers”. It deals with consumer’s opinion on the ease of making cost comparisons at different levels.

Participation in communications markets
There are a number of ways in which consumers can participate in communications market. Switching of suppliers, consumers staying informed, negotiation with current suppliers, awareness of changes in the markets etc are taken in to consideration while analyzing the consumer participation in communications market. To measure participation in communications markets, the metric considered past and present participation behaviour of consumers. Past behaviour means whether consumers have switched supplier or considered switching or whether they have made any change to an existing contract. Present behaviour denotes whether consumers are informed about the developments in the communications market, and they are aware of the better deals appearing in the market etc.

For the convenience of the study, consumers are grouped in to four segments namely inactive consumers, passive consumers, interested consumers and engaged consumers. Consumers who have low interest in the market and do not up date themselves with the market are considered as inactive consumers. The second category is also like inactive consumers but show some interest in the current market and they come under the passive consumers. The third category is the interested consumers who are more likely to keep an eye on the market conditions, ready to make use of better deals. Consumers who were active in the past and also show interest in the current affairs come under engaged consumers.

Of all the markets measured, the highest levels of engagement were found in the fixed broadband and bundle markets followed by the mobile market. The lowest level of engagement was in fixed-line market. The level of engagement in the mobile market may be due to take-up of long term contracts. Since 2007, overall participation in the fixed-line market has fallen. Around 33% of consumers who purchase fixed-line as a single service are found to be “inactive” and 15% “engaged” and 38% “interested”.

In the standalone mobile market, participation remained stable, 18% consumers “engaged” when compared to last year.

The participation level in the standalone broadband market reported some of the highest levels since 2010. At the same time there has been a decrease in the level of participation of “engaged” from 29% in 2010 to 24% in 2011. The participation levels of “interested” showed an increase from 31% in 2010 to 36% in 2011.

In the standalone digital TV market, levels of “engaged” remained stable at 10% but showed a decrease in “interested” customers from 42% in 2010 to 36% in 2011. Among purchasers of bundled services, levels of “engaged” remained stable compared to 2010 at 26%.The lowest proportion of “inactive” consumers is found in the bundled services market (20%).