Switching in the communications markets – Ofcom Report

To calculate the level of consumer participation, various data points like consumer’s potential switching as well as actual switching behaviour are to be considered. If a consumer actively change supplier while remaining at the same address, it is termed as “switching behaviour”. The number of consumers who claim to have switched their suppliers in the last 12 months, who purchase single service, remained almost stable compared to that of last year. Since 2008overall switching in mobile, broadband and standalone markets has declined.

In 2008, there was high level of switching of bundled services. Around 24% of consumers either switched all or part of their bundle. Since last year overall switching levels for each market almost remained stable. About 9% of mobile consumers, 7% fixed-line consumers, and 7% of fixed broadband consumers switched their providers during the last 12 months. Only 3% of digital TV consumers switched providers during the relevant period. In the fixed broadband market, the proportion of consumers considering or looking for an alternative provider is high (14%).

At present, almost 64% of fixed-line customers buy this as a standalone service. In the last 12 months 6% of these consumers switched supplier. Among the 24-44 age groups switching in the fixed-line market has decreased during the last 12 months. There is no difference in switching levels in the fixed-line market in the rural and urban location.

Switching supplier is only one of the measures of participation in the market. The extent to which consumers are negotiating with their suppliers with respect to packages is also an important criterion to measure participation of consumers in the market. Over the last few years the level of negotiation with a current provider has remained unchanged. In 2011 2% of fixed-line consumers said that their suppliers had successfully agreed to the deal they wanted.

Over the last few years, the proportion of consumers in the mobile market switching their providers has stabilised. 9% of mobile customers said that they had switched supplier between one and two years ago. Older consumers continue to be reluctant to switch providers. Among the young there is a gradual decrease in switching and is likely to be linked to the high demand for smartphones. The levels of switching among pre-pay and contract mobile customers has become 7% and 10% respectively. Almost 97% of pre-pay mobile customers have never negotiated with their supplier. Only 5% of mobile customers have successfully negotiated with their mobile suppliers. The proportion of fixed broadband customers who have negotiated with their providers stands at 4% while the customers of the same service who have never negotiated with their suppliers stood at 92%.

Switching in multi-channel TV market is entirely different from switching in the other communications market. In the multi-channel TV market, consumers are usually not tied to a provider. For example customers are allowed to buy equipment for a one off payment by Freeview services, without any supplier relationship. Customers can decide to use any supplier for their TV services or use an alternative platform. Without cancelling their existing service, customers are allowed to do these things. Switching main provider in the multi-channel TV market has come down to 9% in 2011.

In the pay-TV market, majority of customers have never negotiated with their current supplier. Only 6% of customers have negotiated for a deal in the pay-TV market.

Switching discounted bundled services during the last 12 months has decreased to 10% compared to 24% in 2008. Socio-economic groups C2 and DE are less likely to switch any element of their bundle during the last 12 months than their counterparts in socio-economic groups AB and C1. Customers in the rural region more often switch providers for services within their bundle during the last 12 months than customers in the urban areas. Speaking of negotiation for bundled services, 11% of bundled-service purchasers negotiate with their present supplier with 7% successful in their deal.