What you need to know
The market value has continued to decline from 2018 as subscriber numbers plateau and average monthly spend per subscriber continues to fall. We see a continuation of consumers moving to SIM-only deals and putting off upgrading to the latest edition of smartphones.
The continual rollout of 4G services is being continued. The UK government announced in-principle support for the MNOs’ proposed Shared Rural Network (SRN) agreement which aims to deliver mobile coverage to under-served rural areas. Meanwhile, EE, O2 and Vodafone launched 5G mobile services in 2019. The trio are offering 5G in some form in more than 40 UK cities and towns.
Ofcom has announced a number of interventions to help increase competitiveness within the sector and drive down what it sees as unfair practices. A focus on transparency, challenges to MNOs to reduce their bills and enforcement of mandatory alerts when a customer’s contract is up are but a few.
Data allowances are still a priority for consumers with over half (54%) of all consumers on a contract saying they value data allowance over calls and text allowance.
The advent of 5G will also play a part in returning the market to growth longer term, as providers evolve and use this as a platform to promote associated and diverse services. Moving away from the mobile phones and looking at other connected wearables such as watches and headsets can present other opportunities.
Products covered in this Report
This Report covers the state of play of the UK mobile network providers market, including the ‘Big Four’ and the MVNOs (mobile virtual network operators). The Big Four refers to EE, O2, Vodafone and Three whilst the likes of Giffgaff, Sky Mobile and Tesco Mobile are classed as MVNOs as they run off the network provided by the Big Four.
Payments for mobile phones can be made in three ways. The pay as you go (PAYG) system involves the user continuously topping up their call minutes, SMS (short message service) and data allowance, without any long-term agreement with the provider. However, consumers need to pay the full price for the phone upfront.
The second option is by paying off the phone in instalments with a contract over a certain period of months – the most common being 24 months. In this Report, these agreements will be referred to as ‘contract with a phone’, ‘regular contract’ or ‘standard contract’ as they have been the most common choice for smartphones in recent years.
There could still be an upfront cost for the handset in the standard contract model, but it will be significantly cheaper than the outright cost of buying it would be. The amount paid each month dictates the price of the phone upfront; the more the customer pays per month, the less they pay upfront. Once the customer has agreed the contract, however, they cannot get a new phone from the provider unless they buy out the rest of their deal. However, some providers do offer a way for consumers to easily end their contract and get a new phone (see Launch Activity and Innovation section).
The third option is a SIM-only plan, where the customer receives a SIM card from a network provider as part of a monthly call, text and data plan, but can use the SIM in any unlocked phone, not necessarily bought from that provider. This can be a rolling agreement, where again the user can easily cancel and change the plan or provider.
In this Report, mobile data allowance is what enables customers to access the internet out of home, so does not include a Wi-fi connection.
