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TNS SOFRES - Telecoms practice

Alain IMBERT

16, rue Barbes - 92129 Montrouge cedex - France

: +33 (0)1 40 92 27 52

: [email protected]

Job reference: 460301018 AIT

3G Monitoring

European mobile users' behaviours and interest in UMTS

Syndicated research overview

January 2003

- 2 -

Contents

Context, objectives and methodology 3

- Questionnaire frame 7

Deliverables and examples of results 9

- Example of results 12

Subscription conditions 28

Appendix 30

- The TNS Group and its telecoms dedicated teams 31

- Terms of contract 34

- 3 -

Context, objectivesand methodology

- 4 -

Gaining key insights from the European markets

How successful 3G launch will be? How to prepare it? Who will be the early adopters? How much are they willing to pay to gain access to 3G services? What revenues to expect and which business model to build? How the market will segment? ...

Further to its successful 2001 UMTS Monitor survey, the TNS Group telecoms experts* propose to launch a syndicated research especially designed to mobile services industry practitioners, bank executives and consultants to:

- Measure 3G services appealing and understand their drivers

- Identify most attractive applications

- Determine market segments of the European consumer market

- Assess willingness to pay

The survey is aiming to provide key insights from access to benchmarks and learnings from countries across Europe.

* Taylor Nelson Sofres is world's N°4 in market and opinion research, with operating units in more than 50 countries and more than 300 dedicated telecoms experts world-wide.

- 5 -

A research covering 10 European countries

Ten European countries, representing more than 436 million consumers and counting for 89% of the European Union and its potential candidates population*, will be involved in this research:

- Belgium

- Czech Republic

- France

- Germany

- Italy

- Netherlands

- Poland

- Spain

- The UK

- Turkey

The TNS Group operating in more than 50 countries world-wide, we can optionally extend the coverage of this research to Asia-Pacific, Australian, North or Latin American and Scandinavian countries. Please ask your TNS local contacts for more information.

* Austria, Belgium, Czech Republic, Denmark, Eire, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden, The UK, Turkey

- 6 -

An omnibus based research process

To minimise interviewing costs and ensure the best representativeness of each local sample, we collected data through local TNS omnibus waves.

Each wave consisted in mobile users over 15 years old.

Interviews were carried out from September 18th to October 23rd 2002.

Czech Republic

569 interviews

Czech Republic

569 interviews

Germany

650 interviews

Germany

650 interviews

France

662 interviews

France

662 interviews

Italy

731 interviews

Italy

731 interviews

Ireland

700 interviews

Ireland

700 interviews

Netherlands

500 interviews

Netherlands

500 interviews

Poland

303 interviews

Poland

303 interviews

Spain

1 000 interv.

Spain

1 000 interv.

Turkey

542 interviews

Turkey

542 interviews

The UK

601 interviews

The UK

601 interviews

Belgium

701 interviews

Belgium

701 interviews

Those interviews were carried out on the behalf of specific clients but can be subscribed as an option.

- 7 -

A questionnaire to feed operators' needs

Through preliminary working sessions with major mobile operators or mobile manufacturers, we have designed a questionnaire frame that will explore:

• Equipment

- Q1 Mobile ownership or use

- Q2 Length of time since purchase of 1st mobile To help building market segmentation and 3G adoption scenarios

- Q3 Mobile handset brand

- Q4 Type of contract To help building future ARPU assessment

- Q5 Mobile network service provider

- Q6 Churn propensity To help building market segmentation and 3G adoption scenarios

• Mobile budget

- Q7 Average spending on mobile per month To build ARPU assessment

- Q8 Average number of SMS sent per month To help building future ARPU assessment

- Q9 Use of advanced services (roaming, text alert messaging, ring tones downloading, icons downloading, advanced games, WAP, GPRS)

To help building market segmentation and future ARPU assessment

- 8 -

Questionnaire frame (continuing)• Attitudinal questions

- Q10 Agreement towards 9 technology, consumption and life-style related statements To provide a market segmentation that goes further demographics

- Q11 Internet use To help building market segmentation

- Q12 To Internet users: frequency of use for 7 key applications To help building market segmentation and compare with 2001 "UMTS Monitor" results

• 3G attractiveness

- Q13 3G concept attractiveness

Reaction to a consumer-benefice oriented text To compare with 2001 result

- Q14 3G handset price sensitivity measurement To analyse price sensitivity and define optimum prices and thresholds by market segment

- Q15 Interest in using 8 key 3G services To compare with 2001 results

- Q16 Price they are ready to pay for 3G services they are interested in To help building future ARPU assessment

• Image

- Q17 Image of local mobile providers ability to market reliable 3G services on time To assess mobile operators image in the 3G perspective

• Demographics

- Technological equipment, sex, age, profession and city size, professional mobility

- 9 -

Deliverablesand examples of results

- 10 -

An exhaustive report

The survey report in English includes:

- An executive summary and considerations for the future

- A detailed analysis of results, on both European and local levels:

• Illustrated with tables and charts

• Highlighting each significant differences in terms of country, standard demographics, type of contract, mobile expenditures, service provider and handset brand

• Comparing results with UMTS Monitor 2001 survey when relevant

- A life-style based typology to go further demographics and expenditures analysis, and to make results more synthetic and actionable:

• Describing the profile of each type of consumers

• Stressing its own propensity to adhere to 3G services

- A price sensitivity measurement to 3G handset

Additionally, subscription includes an oral presentation. This will enable us to answer questions you may have concerning the results and their interpretation and should help you in turn, to communicate them clearly to others within the company.

Results can be also supplied as PDF tables or ASCII or Excel file (raw data). Please contact your local TNS office for more information.

- 11 -

Report table of contents

• Background, objectives and methodology of the survey p. 4

• Detailed results p.6

- Mobile phone equipment p.7

- Mobile phone usage p.16

- Internet access and usage p.27

- 3G attractiveness p.30

- Perceived prices for 3G services p.40

- 3G handset price expectations p.50

- Market segmentation p.63

• Conclusions p.83

• Appendix p.86

- 12 -

4,5

4

45,5

12

4

42

7,5

6,5

2,7

26,5

53,5

36,7

3,4

6,2

6,2

6

5,6

11,6

20

6,3

86%

85%

76%

75%

73%

73%

73%

73%

70%

67%

65%

62%

62%

60%

59%

58%

55%

30%

30%

28%

Finland

Norway

United Kingdom

Netherlands

Denmark

Italy

Portugal

Sweden

Ireland

Spain

Germany

France

Slovakia

Belgium

Greece

Czech Republic

Hungary

Poland

Turkey

Romania

Mobile penetration over Europe

Source: TNS local offices; September 2002; penetration of mobile phone among individuals over 15

Countries out of survey scope

Countries included in the survey

In millionsof users

260

3G Monitoring

example of results

- 13 -

Mobile network providers market shares

Q5. Who is your current network provider?

SpainMovistar XX%Vodafone XX%Auna group XX%

UKOrange XX%Vodafone XX% O2 XX%T-Mobile XX%Virgin XX%

FranceOrange XX%SFR XX%Bouygues T XX%

PolandEra GSM XX%Plus GSM XX%Idea Centertel XX%

Czech Rep.Eurotel XX%T-Mobile XX%Oskar XX%

TurkeyTurkcell XX%Telsim XX%Aria XX%Aycell XX%

ItalyTIM XX%Vodafone XX%Wind XX%Blu XX%

BelgiumProximus XX%Orange XX%Base XX%

NetherlandsKPN Mobile XX%Vodafone XX%O2 XX%Dutchtone XX%Ben XX%Tele2Mobiel XX%

GermanyT-Mobile XX%Vodafone XX%E-Plus XX%O2 XX%

Base: All

Overall market share*(Considering the 10 countries)Vodafone XX%Orange XX%T-Mobile XX%O2 XX%*including the companies where those providers have shareholding

3G Monitoring

example of results

- 14 -

Churn analysis

Q6. Which of the following statements apply to you? Base: All

Gender and age All Male Female Under 25 25 to 34 35 to 49 50 to 64 65 & +

% % % % % % % %

Total Same provider

Never changed provider nor contract

Several contracts with the same provider (internal churn)

Have used several providers

Profession and city size All Upper class Lower class UnemployedRural

(<2,000 inh.)

% % % % %

Total Same provider

Never changed provider nor contract

Several contracts with the same provider (internal churn)

Have used several providersZBC e

3G Monitoring

example of results

- 15 -

ALL % BELG. CZECH GERM. FRANCE ITALY NLD POLAND SPAIN TURKEY UK

% % % % % % % % % % %

Sub-total 3 leaders*

Nokia*

Siemens*

Motorola*

Alcatel

Sony + Ericsson

Ericsson

Sony/Sony-Ericsson

Philips

Panasonic

Sagem

Samsung

Trium/Mitsubishi

Bosch

Q3. What is the brand or make of your main current mobile phone handset?

Base: All

Handsets manufacturers market shares3G Monitoring

example of results

- 16 -

SMS penetration and frequency of use

Q8. On average, how many brief text messages (SMS) do you send from your mobile per month?

Base: All

ALL BELG. CZECH GERM. FRANCE ITALY NLD POLAND SPAIN TURKEY UK

0 SMS %

1 to 10 SMS %

11 to 20 SMS %

21 to 30 SMS %

31 to 50 SMS %

Over 50 SMS %

Don't know %

SMS / Month

Mean in SMS

Median in SMS

3G Monitoring

example of results

- 17 -

Mobile services penetration(downloading, roaming, WAP, GPRS, ...)

Q9. Which, if any, of the following services do you currently use with your mobile phone?

Base: All

Services used with mobile All Male Female Under 25 25 to 34 35 to 49 50 to 64 65 & +

Gender and age % % % % % % % %

At least one of those services

- Making international calls

- Receiving text information alerts

- Downloading ringtones

- Downloading icons / graphics

- Downloading advanced games

- Visiting WAP sites

- Using GPRS functions

3G Monitoring

example of results

- 18 -

Interest in 3G

Q13. To what extent would you be interested in accessing these applications using your phone? Please give an answer on a scale from 1 to 6

where 6 means "very interested" and 1 "not interested at all" Base: All

All

Turkey

Poland

Germany

Czech Rep.

Italy

France

Spain

Belgium

Netherlands

UK

1 Not interested at all 2 3 4 5 6 Very interested

3G Monitoring

example of results

- 19 -

Interest in 3G according to demographicsand other illustrative variables

Q13. To what extent would you be interested in accessing these applications using your phone? Please give an answer on a scale from 1 to 6

where 6 means "very interested" and 1 "not interested at all"Base: All

All Male FemaleUnder

25 25 to 34 35 to 49 50 to 64 65 &+ Big city

(> 100,000)

Interested %

6 "very interested" %

5 %

4 %

Not interested %

3 %

2 %

1 "Not interested at all" %

Mean

Median

Gender and city size

3G Monitoring

example of results

- 20 -

Providers ability to market 3G servicesin customers' eyes according to their market share

Provider's ability to market

reliable 3G (score from 1

to 10)

Provider's market share

3G Monitoring

example of results

- 21 -

Perceived value of 3G services

0 euro 1 to 3euros

4 to 6euros

7 to 10euros

11 to 15euros

16 to 30euros

More than30 euros

Mean: XX eurosMedian: XX euros

Base: Interested in service

Q16. How much would you be willing to pay each month, in addition to your current mobile expenses, in order to benefit from <service>?

3G Monitoring

example of results

- 22 -

Strategic positioning of 3G services

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

9 9,5 10 10,5 11 11,5 12 12,5 13 13,5 14

Additional price willing to pay for the service (Euros)

% of interest

Q16. How much would you be willing to pay each month, in addition to your current mobile expenses, in order to benefit from <service>? Q15. Which of the following future services would you be interested on a mobile, as a part of your daily life?

3G Monitoring

example of results

- 23 -

0%

20%

40%

60%

80%

100%

<1,0

0

1,0

0 €

2,0

0 €

3,0

0 €

4,0

0 €

5,0

0 €

6,0

0 €

7,0

0 €

8,0

0 €

9,0

0 €

10,

00 €

The price sensitivity measure allows definition of price-levels which suggest optimal price and studies the threshold effect.

The method consists of 4 measures:

• The price above which the interviewees consider the service/product is too expensive to be bought.

•The price below which the service/product is so cheap that the interviewees might perceive poor quality being likely.

•The price above which the interviewees think that the service is expensive.

•The price below which the interviewees find the service cheap.

The interviewee has to position each level of price on a price scale (too expensive, far too expensive, not expensive, not expensive at all). Thanks to the answers, which are aggregated, a zone of acceptable price can be determined. This zone is represented by the intersection of the 4 curves and corresponds to the zone of psychological acceptable price.

Price scales used:

•Price scales have been determined to be consistent with the real market price levels

• Price mentioned in this curves is for handset costs only

Not expensive at all Not expensive Too expensive Far too expensive

Optimal price

Optimal price range

Price sensitivity measure approachQ14. If you were to buy a "UMTS" or "3rd generation" mobile handset, which amount among the following proposals would you consider as...

Example

3G Monitoring

example of results

- 24 -

70%

52%

40%

25%

84%

55%

40%

25%

8%

16%

26%

34%

56%

34%

46%

15%

7%5%

14%

71%

5%

10%

46%

12%4% 7%

18%

26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Cumulated % NOT EXPENSIVE AT ALL

Cumulated % NOT EXPENSIVE

Cumulated % TOO EXPENSIVE

Cumulated % FAR TOO EXPENSIVE

Optimum price EUR XXX

Optimal range: EUR XXX

Optimal price for a 3G handset

Price in Euros

3G Monitoring

example of results

- 25 -

Market segmentation:types weights according to countries

3G enthusiasts FollowersDynamic

functionalsConservatives

Belgium

Czech Republic

France

Germany

Italy

Netherlands

Poland

Spain

Turkey

United Kingdom

Consumers' types are also described in terms of demographics, mobile usage or expenses and other relevant variables.

3G Monitoring

example of results

- 26 -

Mobile expenses x consumers' types

Mobile monthly expenses

All 3G enthusiasts FollowersDynamic

functionalsConservatives

1 to 10 euros / month

11 to 20 euros / month

21 to 30 euros / month

31 to 50 euros / month

51 to 100 + euros / month

Don't know

Mean

Median

Prepaid/Postpaid All 3G enthusiasts FollowersDynamic

functionalsConservatives

Prepaid

Postpaid

3G Monitoring

example of results

- 27 -

Interest in 3G services x consumers' types

Interest in 3G services

Mean and % of interest Mean % (6,5,4) Mean % (6,5,4) Mean % (6,5,4) Mean % (6,5,4) Mean % (6,5,4)

Emails

Video phone

Location services

MMS

High-speed Internet

Downloading music

Video clips

Advanced games

Conservatives3G enthusiastsDynamic

functionalsAll Followers

3G Monitoring

example of results

- 28 -

Subscription conditions

- 29 -

Subscription conditions

The subscription fee is of EUR 19,900 local VAT excluded, including results for all 10 countries and oral presentation. Report is available within 24 hours after receiving a purchase order.

Specific subscription:

- One country results only: EUR 6,000

- Two countries results only: EUR 9,500

- Three countries results only: EUR 13,000

- Four countries results only: EUR 16,500

- Timing: 4 to 5 working days depending on countries scheme

- 30 -

Appendix(The TNS Group and its telecoms activities; terms of contract)

- 31 -

TNS Group main facts and figures

The TNS Group is world's N°4 in market and opinion research

• N°1 in France, the Netherlands and the United Kingdom

Operating units in more than 50 countries

Turnover in 2001 over 945 million of euros

More than 9,000 permanent employees

The company is quoted on the London Stock Exchange

All TNS offices are already or about to be ISO 9001 accredited (or equivalent)

• TN Sofres France is ISO 9001 since August 1997 (first French institute to have earned this most demanding certification)

• TNS is the first market research company which has made such a commitment on a global scale

- 32 -

TNS Telecoms: a unique position in the market research industry

A skilled and knowledgeable sector of TNS relying on more than 300 market researchers world-wide, exclusively dedicated to the telecoms area

• Ability, availability, adaptability and long-term relationship in our customers' service

Beforehand or downstream market studies

• Domestic carriers or new comers, Internet service providers, equipment manufacturers, handset manufacturers, distributors, regulator or consulting firms

• Covering the fixed and mobile markets, prepaid cards or Internet

• Involving professionals and consumers

• On both domestic and international level

- 33 -

TNS Telecoms: a strong expertise of telecoms issues

Qualitative and quantitative surveys

• Focus groups, face to face interviews, observation, mystery shopping

• Offer or concept tests

• Design test as regards new mobile terminals

• Awareness, image, advertising pre and post tests

• Satisfaction, loyalty, brand equity, segmentation, scoring

• Market evaluation as part of licence bidding (UMTS or WLL)

Syndicated research program

• UMTS Monitor: 3G attractiveness among mobile and Internet users over 15 in 12 European countries and the US

• Mobile Panel: consumer mobile market tracking studies in several European countries, including churn analysis and long-term evolution of users' behaviours

• NTI (Nordic telecoms index): equipment, expenditures and behaviours of mobile phone users in Denmark, Finland, Norway and Sweden

• Global e-commerce: annual analysis of e-commerce behaviours in 36 countries world-wide

• ...

- 34 -

Terms of contract

Article 1 - General clause

The following general conditions are applicable to contracts that deal either with the undertaking of a study, or subscription to a panel (s).

Article 2 - Nature of contract

In keeping with the code of good practice (Code de Pratiques Loyales) established by both UDA and SYNTEC, between survey companies and their clients, the contract linking TN SOFRES to its clients is undertaken with all necessary care, diligence, and professionalism, regardless of study results.

Article 3 - Establishment of a contract

3.1 Contractual documents:

The documents that constitute a contract are:

the most recent TN SOFRES proposal that describes the service, budget, and terms of payment;

these same terms and conditions annexed to the proposal, which take precedence over those of the client.

3.2 Initiation of contract:

The initiation date is :

• The date of signature when the parties simultaneously sign the contractual documents,

• The date of reception of the first signature from the other party where the parties separately sign the contractual documents,

• The commencement date of work, in the case where there is no formal exchange of documents.

Article 4 - Obligations of the parties

4.1 Taylor nelson sofres obligations:

TN SOFRES will bring to bear all due care and diligence in the realisation of services that are subject to the contract.

TN SOFRES undertakes to maintain the confidentiality of the client at all times as well any confidential information provided by same client, in addition to the results of an exclusive ad-hoc study.

In the case of a syndicated multi-client study, TN SOFRES undertakes to clearly state in the proposal document the exact nature of the results, either exclusive or non exclusive. In non exclusive multiple client/syndicated studies, client identity (either participating or potential) shall be kept confidential.

If the client provides TN SOFRES at any time with documents or files necessary for the study, TN SOFRES undertakes not to use these for any other purpose and to destroy them at the end of the study (unless specified otherwise by the client).

4.2 Clients obligations:

From the initiation of the contract as defined in section 3.2 the client will make freely available to TN SOFRES all necessary documents, information and/or products in order to undertake the study.

The client undertakes to keep confidential and not divulge, in full or part, to any third party, costs, proposals, documents and / or information that TN SOFRES would have communicated, and of which the client would have knowledge, prior to during or after the execution of the contract.

In cases where the client would communicate/make public or available the results of the study in such a manner that doubt may be cast upon the professionalism of TN SOFRES , and or upon the quality of the study and or the interpretation of results, TN SOFRES would be authorised to communicate to relevant parties all information and /or documentation pertaining to the study without fear of civil or criminal proceedings: TN SOFRES will have the right to commence legal proceedings to protect its interest and seek damages.

Proceeding for breach of contract and damages

- 35 -

Terms of contract (continuing)

In cases where for contractual needs the client entrusts TN SOFRES with funds, products, material, the client:

• Undertakes to respect all existing laws regarding such a transaction,

• Provides TN SOFRES all relevant information necessary for the security of the material(s), transport, storage, and usage of same material(s),

• Assumes full financial responsibility for transport of material(s),

• Assumes full responsibility in case of third party claims against TN SOFRES of any nature that arise as a result of the survey, and undertakes to renounce any proceedings against TN SOFRES in this regard.

• Unless advised to the contrary any remaining products at the end of the study will be destroyed by TN SOFRES.

• Authorises TN SOFRES to use his trade mark name as reference.

Article 5 - Intellectual property

5.1 Ownership of Ad-Hoc survey results are transferred to the client upon full and final payment of fees / costs / study price.

5.2 Ownership of syndicated / multi client study data remains that of TN SOFRES, allowing free use of same data, conferring upon client (s) right of access only to results / data.

5.3 Results and other documentation made available by TN SOFRES are for the exclusive use of the client company / companies or their agents, to the exclusion of all other companies, and professional groups / body.

Any direct or indirect reproduction and or dispersal of whole or part of same results and/or documents, either freely or for a fee, at the client’s initiative, shall only be done with the full prior written consent of TN SOFRES.

5.4 Supporting documentation material (s) information remains TN SOFRES property. TN SOFRES reserves the right to destroy all material(s) two years after submission of results, unless agreed otherwise with client (5 years in case of panels).

5.5 The client will not have access to the identity of respondents.

Article 6 - Responsibility

The client is solely responsible for the usage that he makes of the study results.

In the case where TN SOFRES fails to meet one of his contractual obligations, the indemnification of the client shall not exceed the yet sum received by TN SOFRES regarding the contract.

In the case of product tests on behalf of a client, the client indemnifies TN SOFRES from any third party actions linked to the use of these products.

Article 7 - Prices-payment conditions and penalties

All prices are stated excluding all taxes. Value added tax (where applicable) is calculated based upon rates enforced by tax authorities. This shall be specified in the contract.

Unless mentioned in the proposal, studies are payable 50 % upon commissioning of TN SOFRES, the balance remaining due upon shipment of results.

Unless stated otherwise, all invoices are payable immediately.

Delay in payment, for any reason, shall render all further payments immediately due. Furthermore, a monthly interest rate of 1,5 % of sums due shall be levied by TN SOFRES in accordance with the French penal code and specifically the law 92.1442 of Dec. 31st December 1992.

Where fee recovery has to be undertaken by recourse to law, the client shall pay a minimum of 1,5 % of the outstanding amount as a fixed sum, independent of further requirements contained in article 700 of the French civil proceeding code.

Article 8 - Recourse to law

In case of failure to meet contractual obligations by one of the parties to the contract, the other party shall be entitled to cancel the contract and enter to obtain redress (damages plus interest) from the defaulting party.

Such appeal to law will take place 15 days after the dispatch by registered mail of relevant documentation, which remain unanswered.

Article 9 - Applicable law and claims

French law governs all contracts into which TN SOFRES enters.

All claims regarding the current sale, even in cases of breach of guarantee or multiple defendants would be under the jurisdiction of the commercial court of Nanterre.

Thank you for your attention

UMTS Monitor 2001 results can be downloaded for free from the TNS Corporate Web site at http://www.tnsofres.com/umts>