Fixed Line Telecoms Providers - UK - February 2011

ISSUES IN THE MARKET
Key issues in the market
Definition
Abbreviations
FUTURE OPPORTUNITIES
Meeting the needs of a more individualistic society
Skype, thanks but no thanks?
MARKET IN BRIEF
BT still on top, but faces declining customer share
Landlines losing ground to mobile
TalkTalk customers value bundled services, but is it time for TalkTalk TV?
Waiting for YouView
Virgin Media outperforms Sky in cross-selling TV subscribers
Local Loop unbundling shifts market dynamic
Customers largely focused on cheaper line rental
Mobiles most popular for voice calls, even in the home
VoIP not really seen as an ‘every day’ communication tool
INTERNAL MARKET ENVIRONMENT
Key points
Rise in mobile-only homes drives fixed-line downturn
Figure 1: Percentage of uk homes with no landline, 2005-10
Fixed-line providers more reliant on line-rental
Figure 2: Average monthly voice call revenue per user, line rental and voice calls, 2004-09
BT losing share of voice call volumes….
Figure 3: BT share of retail fixed-voice call volumes , by type, 2004-09
LLU – good or bad for BT?
BROADER MARKET ENVIRONMENT
Key points
Ageing population to curb fixed-line decline
Figure 4: Trends in the age structure of the UK population, by gender, 2005-15
One-person households to further negatively impact market
Figure 5: UK household resident numbers, 2005-10
Expansion of broadband helps providers offset landline decline
Figure 6: Broadband penetration, by demographics, 2004-10
COMPETITIVE CONTEXT
Key points
Fixed line subscriptions decline…
Figure 7: Mobile and fixed-line phone telecoms connections, 2004-09
…while fixed-line broadband plateaus
Figure 8: Percentage of population using mobile broadband and fixed broadband, Q1 2009-Q1 2010
Mobile calling grows at the expense of fixed-line…
Figure 9: Mobile and fixed-line total voice volumes, 2004-09
… and is cannibalising revenues
Figure 10: Mobile and fixed-line voice call revenue, 2004-09
WHO’S INNOVATING?
Key points
VoIP providers, if you can’t beat them, buy them?
Virgin Media pioneers free landline-to-mobile calls
MARKET SIZE AND FORECAST
Key points
Market size
Figure 11: total fixed-line telecoms market, voice calls and line rental, 2005-10
Market forecast
Figure 12: fixed-line telecoms provider, voice calls and line rental, market forecast, 2005-15
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
BRAND ELEMENTS
Brand map
Figure 13: Attitudes towards and usage of fixed line telecommunication brands, December 2010
Brand attitudes
Figure 14: Attitudes by fixed line telecommunication brand, December 2010
Brand personality
Figure 15: Fixed line telecommunication brand personality – macro image, December 2010
Figure 16: Fixed line telecommunication brand personality – micro image, December 2010
Correspondence analysis
Brand experience
Figure 17: Fixed line telecommunication brand usage, December 2010
Figure 18: Satisfaction with various fixed line telecommunication brands, February 2010
Figure 19: Consideration of fixed line telecommunication brands, December 2010
Figure 20: Consumer perceptions of current fixed line telecommunication brand performance, December 2010
Figure 21: Fixed line telecommunication brand recommendation – Net Promoter Score, December 2010
Brand index
Figure 22: Fixed line telecommunication brand index, December 2010
Figure 23: Fixed line telecommunication brand index vs. recommendation, December 2010
Target group analysis
Figure 24: Target groups, December 2010
Figure 25: Fixed line telecommunication brand usage, by target groups, December 2010
Group One – The Conformists
Group Two – Simply the Best
Group Three – Shelf Stalkers
Group Four – Habitual Shoppers
Group Five – The Individualists
COMPANIES AND PRODUCTS
BT
Figure 26: Financial performance of BT Group Plc, 2009-10
Figure 27: Segment performance of BT Group Plc, 2009-10
Sky Talk
Figure 28: First quarter financial performance of British Sky Broadcasting Group Plc, 2009-10
Figure 29: Financial performance of British Sky Broadcasting Group Plc, 2009-10
Figure 30: British Sky Broadcasting Group Plc subscriber statistics, 2009-10
TalkTalk
Figure 31: Six months financial performance of Talktalk Telecom Group Plc, 2009-10
Figure 32: Financial performance of Talktalk Telecom Group Plc, 2009-10
Virgin Media
Figure 33: Financial performance of Virgin Media, 2008-09
Figure 34: Virgin Media, consumer segment revenue, by customer type, 2008-09
Figure 35: Virgin Media subscriber statistics, third quarter, 2009-10
WHAT ARE THE MOST POPULAR FIXED-LINE BRANDS?
Key points
BT still the most popular provider, but for how long?
Figure 36: Type of landline telephone provider, December 2010
Virgin Media outperforms Sky in terms of attracting TV customers
Figure 37: Virgin Media landline subscribers, by mobile phone network provider and TV reception, December 2010
WHAT DO CUSTOMERS LOOK FOR IN A NEW PROVIDER?
Key points
Customers largely focused on low-cost line rental
Figure 38: Most important factors in determining choice of new provider, December 2010
TalkTalk customers most value bundled services
Figure 39: Type of landline telephone provider, by most popular factors in determining choice of new provider, December 2010
BT scores highly with brand equity customers
Figure 40: Type of landline telephone provider by next most popular factors in determining choice of new provider, December 2010
HOW DOES LANDLINE COMPARE WITH OTHER VOICE TOOLS?
Key points
Mobiles usurp landlines in every day usage
Figure 41: Consumer home contact methods, December 2010
VoIP fails to make inroads among over-35s
Figure 42: Use of internet telephone services (eg Skype), by demographics, December 2010
It’s good to TalkTalk?
Figure 43: Consumer contact methods by landline telephone provider, December 2010
ATTITUDES TOWARDS FIXED-LINE SERVICES
Key points
Customers value call clarity
Figure 44: Attitudes towards fixed line providers, December 2010
Sky Talk customers most likely to be reluctant landline users
Figure 45: Agreement with the statement “I only have a landline because my broadband provider requires it”, by landline telephone provider, December 2010
TalkTalk capitalises on value brand image
Figure 46: Agreement with the statement “Using my landline allows me to save money on calls”, by landline telephone provider, December 2010
APPENDIX – WHAT ARE THE MOST POPULAR FIXED-LINE BRANDS?
Figure 47: Type of landline telephone provider, by demographics, December 2010
APPENDIX – WHAT DO CUSTOMERS LOOK FOR IN A NEW PROVIDER?
Figure 48: Most popular factors in determining choice of new provider, by demographics, December 2010
Figure 49: Next most popular factors in determining choice of new provider, by demographics, December 2010
Figure 50: Type of landline telephone provider, by most popular factors in determining choice of new provider, December 2010
Figure 51: Type of landline telephone provider, by next most popular factors in determining choice of new provider, December 2010
APPENDIX – HOW DOES LANDLINE COMPARE WITH OTHER VOICE TOOLS?
Figure 52: Consumer contact methods - ‘landline‘, by demographics, December 2010
Figure 53: Consumer contact methods - ‘mobile phone’, by demographics, December 2010
Figure 54: Consumer contact methods - ‘internet telephone services (eg Skype)’, by demographics, December 2010
Figure 55: Consumer contact methods, by type of landline telephone provider, December 2010
Figure 56: Consumer contact methods, by most popular factors in determining choice of new provider, December 2010
Figure 57: Consumer contact methods, by next most popular factors in determining choice of new provider, December 2010
APPENDIX – ATTITUDES TOWARDS FIXED-LINE SERVICES
Figure 58: Attitudes towards fixed line providers, December 2010
Figure 59: Agreement with the statement “I only have a landline because my broadband provider requires it”, by demographics, December 2010
Figure 60: Agreement with the statement “My landline is the most important tool I have for keeping in touch with people”, by demographics, December 2010
Figure 61: Agreement with the statement “The call clarity you get with a landline is important to me”, by demographics, December 2010
Figure 62: Agreement with the statement “I prefer the simplicity of using a landline compared to mobiles/internet telephone services (eg Skype)”, by demographics, December 2010
Figure 63: Agreement with the statement “Using my landline allows me to save money on calls”, by demographics, December 2010
Figure 64: Agreement with the statement “Having a fixed telephone line is not necessary in this day and age”, by demographics, December 2010
Figure 65: Agreement with the statement “I’d prefer not to have to sit in front of a computer when making a phone call”, by demographics, December 2010
Figure 66: Agreement with the statement “The internet is just as good as landlines for making calls”, by demographics, December 2010
Figure 67: Attitudes towards fixed line providers, by type of landline telephone provider, December 2010