The Consumer Experience 2010

This is Ofcom's fifth annual report on the consumer experience of telecoms, the internet and digital broadcasting markets. It discusses the results of our research programme, which measured how well consumers have fared over the past year in their use of these services.

The research report is aimed at measuring how well consumers are faring in respect of:

- consumer access and take-up - the availability and take-up of communications services (including non-ownership, both voluntary and involuntary);

- consumer choices, value and range - trends in prices of communications services, consumers' awareness and use of suppliers, and their levels of satisfaction;

- consumer empowerment - the level of participation in communications markets in terms of switching and shopping around, and use of consumer information; and

- consumer protection and concerns - complaints, concerns and awareness of complaint procedures.

This report has been published alongside the Consumer Experience policy evaluation, which considers the key findings and trends emerging from the research and uses these to assess the impact of Ofcom's policy work and activities. While this report focuses on the experience of residential consumers, an analysis of business consumers' experience in the UK communications market is also available.

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Consumer research shows increases in take-up levels across all communications services, except fixed line:

- Take-up of fixed-line has continued its overall declining trend, falling to 84% of households, with this driven by those aged 25-34, and those households in lower income and socio-economic groups.

- Conversely, 91% of individuals personally use a mobile - representing a 10 percentage point increase over the past five years. While the proportion of those on a contract remains relatively stable (44%), among those aged 45+ there has been a shift towards contract from pre-pay.

- Consistent with the decline in fixed-line take-up, the proportion of mobile-only homes has almost doubled over the past five years, from 8% in 2005 to 15% in 2010. Younger age groups and the lower socio-economic groups are more likely to live in a mobile-only home.

- The growth in broadband take-up (fixed and mobile) continues - household penetration has more than doubled over the past five years from 35% to 73%. Take-up of digital services has significantly increased over the past year amongst older consumers and lower income households; broadband penetration amongst those aged 65-75 rose nine percentage points since 2009. However, younger age groups and higher-earning households still dominate broadband take-up.

- The proportion of consumers stating they do not intend to get the internet in the next 12 months has fallen from 20% in 2009 to 15% in 2010.

- Mobile internet use is similar to fixed internet use in that there are no activities that are solely the domain of specific device types/access methods. However, the frequency of certain activities does vary according to access method/device, with consumers who use their mobile phone or dongle out of the home spending more time on social networking sites than those using the internet in the home.

- About half of households buy two or more communications services from a single supplier in a bundle. Bundling is most popular in the fixed broadband market, around two-thirds of these consumers purchase this service as part of a bundle.

- Digital TV penetration has risen from 63% to 93% over the past five years, driven by the digital switchover programme that began in 2008.

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Consumer awareness of choice in communications services varies by market:

- Overall levels of satisfaction with communications services have remained consistently high, particularly in the mobile market. Satisfaction with fixed broadband services remains stable at 80%.

- Among broadband consumers, satisfaction was highest for those using fixed-line WiFi connections, but lower for those connecting out-of-home, especially via laptop/dongle.

- Consumers using a dongle/USB out of home are more likely to encounter problems than fixed-line users, particularly in relation to speed of connection (34% encountering speed problems compared to 18% for fixed line).

- Average household expenditure on telecoms services continues to fall, and has reduced from around £71 in 2005 to £62 per month for fixed-line, mobile, internet and broadband services.

- The prices of communications services available to UK consumers are relatively low. Mobile prices are lower in the UK than in five other comparator countries (France, Italy, Germany, Spain and the US) for all but the lowest-use connections, and fixed-line voice pricing is also lower than in all the other countries, except for low users. However, overall fixed-line voice prices in the UK increased slightly over the past year, while it fell in the other five countries, and that the fall in mobile prices in the UK was lower than in the other countries.

- The price of basic and premium pay-TV packages is more expensive in the UK than in most other countries.

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Switching levels have remained stable across most markets while levels of consumer engagement and participation are falling in all but the broadband and TV markets.

- Since 2007 there has been a downward trend in relation to yearly switching in the mobile market - falling from 13% in 2007 to 8% in 2010. The significant growth in the proportion of contract sales that are 24-month is likely to have had an impact on these switching levels.

- The broadband market continues to report some of the highest levels of participation with around three in ten consumers 'engaged' in the market (those who are most active in terms of past behaviour and current interest) and a further third 'interested'.

- Following this, levels of 'engagement' among purchasers of bundled services are the second highest at 24%, but this has declined from 41% in 2009. This finding is consistent with the view that consumers purchasing bundled services are less likely to switch in the future. However, it remains the market with the lowest proportion of 'inactive' consumers (23%).

- Our strategic review of consumer switching remains a priority to ensure consumers' find it easier to switch and are therefore encouraged to do so.

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Ofcom is seeing improvement in a number of areas of consumer complaints.

- Broadband migration complaints (relating to both Migration Authorisation Codes and tag-on-line issues) have fallen significantly since 2007, after Ofcom introduced new rules in this area. Complaints relating to mobile cashback schemes have also fallen by over 80% since September 2007.

While fixed-line mis-selling, silent calls and customer service continue to be the main complaint generators, there have been significant developments in these areas in 2010:

- In July we published consumer research comparing the quality of customer service received by consumers across the communications market. We intend to publish a second phase of this research alongside our own complaints data early next year.

- In the fixed-line market, mis-selling complaint levels have fluctuated over the past year, but slamming cases have fallen significantly, and appear to be driven largely by deficiencies in the switching process rather than deliberate mis-selling.

- While complaints about silent calls have increased this year, we have published a regulatory statement detailing a new policy to reduce consumer harm in this area and research suggests the incidence of silent calls is in decline.

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