The Consumer Experience of Telecoms

Ofcom has today published research which evaluates the experience of UK consumers in telecoms, broadcasting and internet markets.

Published alongside it is a policy evaluation document which uses the data to assess the impact of Ofcom’s regulation and the priorities it has set itself.

The research, entitled ‘The Consumer Experience’, highlights many benefits from increased competition and new technologies, such as falling prices, increased customer satisfaction and a greater range of services. However, it also reveals concerns over the growing potential for consumer harm as communications markets become more complex.

The cost of a ‘basket’ of residential communications services has fallen; from £113.40 in 2001 to £76.20 four years later. Overall customer satisfaction remains high, between 88% and 93%, and in line with banking and energy markets. Consumers also enjoy more choice than ever before, with:

• 122 fixed-line providers and five mobile networks;
• 700 internet service providers;
• 354 television channels, of which 40 are broadcast on digital terrestrial television; and
• 337 analogue radio stations, of which 166 are simulcast on digital radio with a further fifty exclusively broadcast via DAB.

However, Ofcom’s own complaints data suggests that increased competition has in certain cases also led to unfair selling practices. It points to scams run by dishonest providers. There is also clear evidence that switching processes do not always allow consumers to move freely between providers.

Many providers are now able to offer a bundle of different services to their customers. This has potential benefits but might also lead to increased complexity and confusion for consumers. It is essential that resulting processes – especially billing – are transparent and easy to understand.

As digital communications services become increasingly important in allowing people to participate in the social and economic life of the UK we must ensure that all citizens have access to, and are able to use, these services. For example, the research shows access to the internet is lowest among the elderly and low-income families and that disabled people have expressed difficulty in using some services.

The following is a summary of the research’s main findings and the policy implications for Ofcom.

Access

• Fixed-line, 2G mobile, digital television and broadband internet services are available to between 95%-100% of the UK population, and 89% of people are able to receive at least one digital radio multiplex through a DAB receiver;
• 70.2% of UK television households (17.7 million) are watching digital television on at least one set in the home.
• 26% of UK households have now bought digital terrestrial television receivers, more than twice as many as in any other country;
• there has been a 55% growth in internet users that have taken up broadband in the last 18 months;
• only 25% of low income earners have internet access at home, compared with 88% of high earners;
• many people (24%) have difficulty using mobile phones, especially the disabled (40%).

Consumer empowerment

• Between 84% and 95% of those who have switched communications provider said it had been easy to switch;
• Only 1 in 5 internet users have ever switched provider, though more than half have changed their tariff or package;
• A significant minority (between 18% and 34%) find it difficult to compare providers by cost or by quality of service;

Consumer protection

• Only 12% have had cause to complain. However, research suggests that consumers have a low level of awareness of complaint procedures and industry guidelines;
• Slamming – the practice of switching customers from one provider to another without their knowledge - drives most fixed-line telecoms complaints;
• More than half of all complaints received by Ofcom in Q2 2006 were related to “tag on line”, a problem encountered by an increasing amount of broadband subscribers.
• 61% of internet users are concerned about issues such as paedophiles online, internet security and offensive content.

The policy evaluation document highlights the main concerns identified in the research and explains recent regulatory initiatives it has already undertaken to respond to each. However, the document also unveils new policy initiatives to deal with some of the issues raised. These include:

• In light of limited 2G mobile coverage in some rural areas, Ofcom will explore possible ways of ensuring that as many mobile customers as possible are able to make 999/112 calls. It will also consider how to remedy the lack of mobile coverage in some rural areas more generally; and
• a new project on digital inclusion which will examine issues associated with ensuring that all citizens are able to benefit from new services, regardless of their geographic location or social and economic profile.

Ed Richards, Ofcom CEO, said “This research is a fascinating account of the consumer’s experience of telecoms, internet and broadcasting, revealing both the good and the bad.

“It is clear that competition has brought many benefits. However, increasingly competitive markets bring new challenges. While we have made considerable progress in dealing with these challenges, we need to reinforce our efforts to tackle consumer harm,” he concluded.

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