Mobile Network Providers - UK - January 2018

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Market struggling for growth as price pressure rises
Figure 1: Value of retail mobile networks connections in the UK, 2012-22
4G connections continue to surge with 5G on the horizon
Figure 2: Number of mobile connections with access to 4G services, 2013-16
Companies and brands
Big four networks continue to dominate three quarters of market
Figure 3: Network usage, October 2017
The consumer
Clear rise in popularity of SIM-only contracts
Figure 4: Network contract type, October 2016 and October 2017
Nearly a quarter of people pay £10 or less per month
Figure 5: Contract price, October 2017
Millennial data consumption driving up average contract payment
Figure 6: Contract price, by selected demographics, October 2017
Nearly a quarter of people have 6GB+ per month data allowance
Figure 7: Data allowance, October 2017
Two thirds of people have been with their network over two years
Figure 8: Time with network, October 2016 and October 2017
Vast majority are satisfied with their network provider
Figure 9: Network Satisfaction, October 2017
Data remains the leading reason for switching network
Figure 10: Network switching factors, October 2017
What we think
ISSUES AND INSIGHTS
Fight the threat of eSIMs by rewarding long-term customers
The facts
The implications
Personalised data allowances could boost loyalty
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Market struggling for growth as price pressure rises
Ofcom reports increasing shift to inclusive bundle services
Blended average monthly revenue rises after years of decline
Necessity of smartphones will drive connections forward
Growth in connected devices has driven network connections
4G connections continue to surge with 5G on the horizon
Continued reliance on mobile calls as fixed lines decline
MARKET SIZE AND FORECAST
Market struggling for growth as price pressure rises
Leading network providers report mixed results in 2017
Figure 11: Value of retail mobile networks connections in the UK, 2012-22
Figure 12: Value of retail mobile networks connections in the UK, 2012-22
Ofcom reports increasing shift to inclusive bundle services
Figure 13: Mobile retail revenue, by service (£ billions), 2011-16
Blended average monthly revenue rises after years of decline
Figure 14: Average monthly revenue per subscription, by contract type, 2011-16
Necessity of smartphones will drive connections forward
Figure 15: Volume of retail mobile network connections in the UK, 2012-22
Figure 16: Volume of retail mobile network connections in the UK, 2012-22
Forecast methodology
MARKET DRIVERS
Growth in connected devices has driven network connections
Figure 17: Ownership of smartphones, smartwatches and tablets, January 2013-June 2017
iPhone X drives monthly contract fees to a new high
Figure 18: Apple’s iPhone X
4G connections continue to surge, with 5G on the horizon
Figure 19: Number of mobile connections with access to 4G services, 2013-16
Removal of EU roaming charges aids usage abroad
Continued reliance on mobile calls as fixed lines decline
Figure 20: Outgoing fixed and mobile voice call volumes, 2010-16
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Big four networks continue to dominate three-quarters of market
EE remains the most popular network provider
O2 Oops offers inclusive screen repair
Apple Watch 3 introduces cellular service
Lack of market growth putting pressure on advertising budgets
O2 and Vodafone are more trusted but rarely deemed good value
MARKET SHARE
Big four networks continue to dominate three quarters of market
Figure 21: Network usage, October 2017
EE remains the most popular network provider
Figure 22: Network usage, October 2016 and October 2017
LAUNCH ACTIVITY AND INNOVATION
O2 Oops offers inclusive screen repair
Figure 23: O2’S Oops campaign
Ease of switching networks boosted by eSIMs
Apple Watch 3 introduces cellular service
Figure 24: Apple Watch 3 with cellular service
Vodafone Passes offer unlimited data for key apps
Three launches Go Binge service
ADVERTISING AND MARKETING ACTIVITY
Lack of market growth putting pressure on advertising budgets
Big four all retain strong TV advertising presence
Figure 25: Recorded above-the-line, online display and direct mail total advertising expenditure on mobile network services, by advertiser, 2015-17
Nielsen Ad Intel coverage
BRAND RESEARCH
Brand map
Figure 26: Attitudes towards and usage of selected brands, October 2017
Key brand metrics
Figure 27: Key metrics for selected brands, October 2017
Brand attitudes: O2 and Vodafone are more trusted but rarely deemed good value
Figure 28: Attitudes, by brand, October 2017
Brand personality: Vodafone perceived as a the least fun brand
Figure 29: Brand personality – Macro image, October 2017
Efficient, reliable service is boosting perceptions of EE and O2
Figure 30: Brand personality – Micro image, October 2017
Brand analysis
Giffgaff the most recommend brand by users
Figure 31: User profile of giffgaff, October 2017
EE‘s upbeat brand image weighted towards men and Millennials
Figure 32: User profile of EE, October 2017
O2 is a reliable brand that retains cutting-edge appeal
Figure 33: User profile of O2, October 2017
Three struggles to resonate as a brand
Figure 34: User profile of Three, October 2017
Vodafone the least recommended network by users
Figure 35: User profile of Vodafone, October 2017
THE CONSUMER – WHAT YOU NEED TO KNOW
Clear rise in popularity of SIM-only contracts
The majority of people sign up to 18 months or more
Nearly a quarter of people pay £10 or less per month
Nearly a quarter of people have 6GB+ per month data allowance
Younger age groups paying for bigger data allowances
Two thirds of people have been with their network over two years
Vast majority are satisfied with their network provider
Data remains the leading reason for switching network
NETWORK CONTRACTS
Clear rise in popularity of SIM-only contracts
Increase in payment methods means networks must offer flexibility
Figure 36: Network contract type, October 2016 and October 2017
Older Millennials most likely to have contracts with phone
Figure 37: Contract type, by generation, October 2017
The majority of people sign up to 18 months or more
Figure 38: Contract length, October 2017
Annual contracts rise to 24% from 20%
Figure 39: Contract length, October 2016 and October 2017
Older Millennials focused on long-term, consistent contracts
Figure 40: Contract length, by selected demographics, October 2017
PRICE OF CONTRACT
Nearly a quarter of people pay £10 or less per month
Figure 41: Contract price, October 2017
Increasing shift from mid-level to expensive contracts
Figure 42: Contract price, October 2016 and October 2017
Women more likely to pay higher contract prices
Millennial data consumption driving up average contract payment
Figure 43: Contract price, by selected demographics, October 2017
Rewarding long-term customers could boost higher price contracts
Figure 44: Contract length, by average contract price, October 2017
The majority of PAYG customers pay under £10 per month
Figure 45: PAYG spend, October 2017
DATA USAGE
Nearly a quarter of people have 6GB+ per month data allowance
Figure 46: Data allowance, October 2017
Younger age groups paying for bigger data allowances
Figure 47: Data allowance, by generation, October 2017
Over half of people do not use their entire data allowance
Figure 48: Data usage, October 2017
NETWORK SATISFACTION
Two thirds of people have been with their network over two years
Figure 49: Time with network, October 2016 and October 2017
Vast majority are satisfied with their network provider
Additional services and promotions can boost satisfaction
Figure 50: Network Satisfaction, October 2017
Phone calls are the preferred contact method…
…but Millennials are more focused on digital contact points
Figure 51: Network contact preferences, October 2017
Half of people focus on one contact method
Figure 52: Repertoire of network contract preferences, October 2017
NETWORK SWITCHING FACTORS
Data remains the leading reason for switching network
Millennials most likely to switch for additional data and streaming services
New smartphones still a major draw
Free screen repair is likely to grow in importance
Figure 53: Network switching factors, October 2017
Millennials finding more reasons to change network
Figure 54: Repertoire of network switching factors, October 2017
One third of people are likely to change contracts upon expiry
Men much more likely to change contracts
Networks must push family bundles to reduce switching
Figure 55: Likelihood of switching in-contract versus end of contract, October 2017
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
Market size and forecast
Fan chart forecast
Value
Figure 56: Best- and worst-case forecast for the value of the UK mobile network providers market, 2017-22
Volume
Figure 57: Best- and worst-case forecast for the volume of the UK mobile networks providers market, 2017-22
Brand research
Brand map