Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Market fluctuates slightly as pressure on prices continues to rise
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- Figure 1: Forecast value of retail mobile network connections in the UK, 2011-21
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- Figure 2: Forecast value of retail mobile network connections in the UK, 2011-21
- Declining post-pay revenues threaten margins…
- …but data-only connections and sponsored data offer opportunities
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- Figure 3: Average monthly revenue per subscription, by contract type, 2010-15
- Data-only connections help sustain market volumes
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- Figure 4: Forecast volume of mobile network connections in the UK, 2011-21
- Figure 5: Forecast volume of mobile network connections in the UK, 2011-21
- The market should be well insulated from any Brexit-related fallout…
- …but it could have a huge regulatory effect
- Companies and brands
- EE is the biggest operator in the market
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- Figure 6: Retail mobile subscription shares, by provider, Q4 2015
- The consumer
- The Big Four control majority share of the market
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- Figure 7: Consumers’ mobile network provider, October 2016
- Inertia drives customer retention
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- Figure 8: Time with current provider on phone used the most, October 2016
- Contracts with a phone still the most popular option
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- Figure 9: Connection type, October 2016
- Contract costs are stable while PAYG spend increases
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- Figure 10: Monthly spend, by connection type, October 2016
- Consumers are increasingly data-hungry
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- Figure 11: Factors that would encourage consumers to switch provider, October 2016
- Operators dominate distribution
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- Figure 12: Place of purchase of SIM card from the Big Four, October 2016
- What we think
Issues and Insights
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- From “free” add-ons to mobile data flexibility
- The facts
- The implications
- Are contracts with a phone at risk?
- The facts
- The implications
- Will e-SIMs put an end to customers’ inertia?
- The facts
- The implications
- Can family plans help quad-play operators to build a customer base?
- The facts
- The implications
The Market – What You Need to Know
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- Revenue is stable, but pressure on prices continues to rise
- Declining post-pay revenues threaten margins
- Data-only connections help sustain market volumes
- The potential impact of Brexit
- Smartphone ownership approaches the 80% mark
Market Size, Segmentation and Forecast
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- Market fluctuates slightly as pressure on prices continues to rise
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- Figure 13: Forecast value of retail mobile network connections in the UK, 2011-21
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- Figure 14: Forecast value of retail mobile network connections in the UK, 2011-21
- Ofcom data reflects better consumer understanding of their data needs
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- Figure 15: Mobile retail revenue, by service (£ billions), 2010-15
- Declining post-pay revenues threaten margins
- Data-only connections bolstering overall revenues
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- Figure 16: Average monthly revenue per subscription, by contract type, 2010-15
- Data-only connections help sustain market volumes
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- Figure 17: Forecast volume of mobile network connections in the UK, 2011-21
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- Figure 18: Forecast volume of mobile network connections in the UK, 2011-21
- The potential impact of Brexit
- Introduction
- The market performed well during the 2008 recession
- Smartphones have become a modern-day essential…
- …but a slowdown could undermine subscription revenues
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- Figure 19: Alternative market scenarios for the post-Brexit mobile network providers market, at current prices, 2016-21
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- Figure 20: Detailed post-Brexit scenarios for the mobile network providers market, at current prices, 2016-21
- Forecast methodology
Market Drivers
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- Smartphone ownership approaches the 80% mark
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- Figure 21: Personal ownership of smartphones, January 2013-December 2016
- Ownership of other smart devices drives data-only connections
- The connected home also offers scope for growth
- 5G could threaten fixed broadband
- Short and live videos to accelerate growth of mobile viewing
- Phone usage shifting from fixed line to mobile
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- Figure 22: Outgoing fixed and mobile voice call volumes, 2010-15
Companies and Brands – What You Need to Know
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- EE is the biggest operator in the market
- Rising adspend reflects market competition
- Quad-play offering grows more competitive
- Operator billing gaining traction
- Google’s Project Fi explores nationwide roaming
- The disruptive potential of virtual operators
Market Share
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- EE is the biggest operator in the market
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- Figure 23: Retail mobile subscription shares, by provider, Q4 2015
Advertising and Promotion
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- Rising adspend reflects market competition
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- Figure 24: Total above-the-line, online display and direct mail advertising expenditure on mobile network services, by advertiser, December 2014-November 2015 and December 2015-November 2016
- Media mix reflects efforts to maintain brand awareness
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- Figure 25: Total above-the-line, online display and direct mail advertising expenditure on mobile network services, by media type, December 2015-November 2016
- Nielsen Ad Intel coverage
Launch Activity and Innovation
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- Quad-play offering grows more competitive
- Virgin Media and BT are also making their pitch for quad-play customers
- Operator billing gaining traction
- Ofcom hopes Android users will help crowdsource coverage data
- Google’s Project Fi explores nationwide roaming
Brand Research
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- Brand map
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- Figure 26: Attitudes towards and usage of selected brands, December 2016
- Key brand metrics
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- Figure 27: Key metrics for selected brands, December 2016
- Brand attitudes: Mobile network providers struggle to instil loyalty
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- Figure 28: Attitudes, by brand, December 2016
- Brand personality: Virgin Media challenges the Big Four with upbeat image
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- Figure 29: Brand personality – Macro image, December 2016
- Three and Vodafone struggle to keep up
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- Figure 30: Brand personality – Micro image, December 2016
- Brand analysis
- O2’s traditional image might be holding it back
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- Figure 31: User profile of O2, December 2016
- Virgin Media’s cutting-edge image lets it compete with the Big Four
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- Figure 32: User profile of Virgin Media, December 2016
- Three’s value-for-money offering fails to combine with other positive attributes
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- Figure 33: User profile of Three, December 2016
- EE has cool and exclusive image but struggles to build strong identity
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- Figure 34: User profile of EE, December 2016
- Vodafone’s outdated brand image divides generations
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- Figure 35: User profile of Vodafone, December 2016
The Consumer – What You Need to Know
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- The Big Four control majority share of the market
- Inertia drives customer retention
- Contracts with a phone still the most popular option
- Contract costs are stable while PAYG spend increases
- Consumers are increasingly data-hungry
- Operators dominate distribution
Network Operator
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- The Big Four dominate the market
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- Figure 36: Consumers’ mobile network provider, October 2016
- Multiple SIMs help consumers get the best of both worlds
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- Figure 37: Consumers’ mobile network providers (nets), by repertoire of consumers’ mobile network providers, October 2016
Time with Current Provider
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- The majority have been with their current provider for three or more years
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- Figure 38: Time with current provider on phone used the most, October 2016
- Inertia drives customer retention…
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- Figure 39: Frequency with which consumers have looked into switching options since they are with their current provider, October 2016
- …but contract users are more likely to switch
Type of Connection and Contract Length
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- Contracts with a phone still the most popular option
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- Figure 40: Connection type, October 2016
- Family plans have potential to build tomorrow’s customer base
- Almost half of contract customers are locked for two years
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- Figure 41: Contract length, October 2016
- Contracts will help mitigate post-EU vote price rises…
- …but rival payment options could chip away at the market
Connection Cost
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- Contract costs are stable while PAYG spend increases
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- Figure 42: Monthly spend, by connection type, October 2016
- Converting PAYG customers to contracts: family deals…
- …flexibility…
- …and value-added services
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- Figure 43: Factors that would encourage consumers to switch provider, by monthly pay-as-you-go and contract spend, October 2016
- Enticing premium contract customers
- Customer service pays at the upper end of the market
- Upgrade programmes also appeal to high-value customers
Incentives to Switch Provider
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- Mobile users more inclined to switch provider
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- Figure 44: Repertoire of factors that would encourage consumers to switch provider, December 2015 and October 2016
- Consumers are increasingly data-hungry
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- Figure 45: Factors that would encourage consumers to switch provider, October 2016
- Incentivising data allowances
- Building retention through mobile data flexibility
- Zero-rating to advance contextual marketing
- The issue of net neutrality
- The influence of hardware on the choice of service provider
Channels of Acquisition
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- Operators dominate distribution
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- Figure 46: Place of purchase of SIM card from the Big Four, October 2016
- Mobile users prefer face-to-face interactions
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- Figure 47: Channel of purchase of current SIM, October 2016
- Bricks-and-mortar locations key to compete in mobile market
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- Market size and forecast
- Fan chart forecast
- Value
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- Figure 48: Best- and worst-case forecast for the value of the UK’s mobile network providers market, 2016-21
- Volume
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- Figure 49: Best- and worst-case forecast for the volume of UK’s mobile network providers market, 2016-21
- Brand research
- Brand map
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