© MORI 2004. Not to be used, reproduced or shown to any third party without the prior written permission of MORI End User Churn in the UK Broadband Market.

© MORI 2004. Not to be used, reproduced or shown to any third party without the prior written permission of MORI

End User Churn in the UK Broadband Market

May 2004Prepared for:

End User Churn in the UK Broadband Market

May 2004Prepared for:

David Lowrie Market Research &

AnalysisBT Wholesale

Markets

Omnibus Broadband Data

Who & Where?Penetration Profiles &

Demographics

Broadband steady increase since January 2003, dial up access remained relatively constant

0%

10%

20%

30%

40%

50%

60%

Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04

Broadband Dial up All home internet access

Source: MORI Tech Tracker (represents GB adults age 15+)

Broadband now at just over 4 million households in UK, all home internet access around 12 million

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04

Broadband Dial up All home internet access

Source: MORI Tech Tracker (represents GB adults age 15+)

Profile broadband users UKAll population All home internet

usersUse broadband

at home

% % %

Base: 4060 1983 718

Gender

Male 49 54 56

Female 51 46 44

Age

15-24 15 18 21

25-34 19 21 22

35-44 18 23 27

45-54 16 20 20

55-64 13 11 8

65+ 19 6 3

Source: MORI general public omnibus April 2004

Broadband – more likely to be in “family” homes

All population All home internet users

Use broadband at home

% % %

Base: 4060 1983 718

Have children in household

Yes 36 45 53

No 64 55 47


Strongest in London, SE. and West Midlands

All population All home internet users

Use broadband at home

% % %

Base: 4060 1983 718

Government Office Region

Scotland 9 7 6

North East 4 5 6

Merseyside 2 2 2

North West 10 9 9

Yorks & Humberside 9 8 7

East Midlands 7 7 5

West Midlands 5 10 11

Wales 5 4 4

South West 9 8 5

Eastern 9 11 11

London 12 11 15

South East 14 17 18


Suppliers Used

Base: All respondents (998)

Cable modem users more likely to have just considered one supplier for broadband

20%

2%

42%

36%

Q Which of the following statements best describes how you decided what broadband supplier to use?

Don’t know

I only considered one supplier

By region:•Telewest 45%•NTL 43%•Other 35%

I considered two or three providers of

broadband

I considered several providers and chose the

one with the cheapest price

More than half use the broadband service of an existing supplierQ Which of the following applies to your current broadband

provider?


20%

2%

56%22%

I subscribe to the broadband service of my existing telephone or cable supplierI subscribe to the

broadband service of my existing ISP

Don’t knowI am using a different provider for broadband

than my telephone/cable provider or previous ISP

Most have migrated from dial up, although a significant number for moved straight to broadbandQ What type of internet connection did your household use before

you adopted broadband


7%2%2%

79%10%

Ordinary phone line – dial up internet access

ISDN phone line

Don’t know/Not sureNot previously

connected

Other

On average end users have been using broadband at home for 12 months – a youthful marketQ How long have you been using broadband at home ?


15%

1%

46%

24%

5%9%

4 – 6 monthsMore than one year

Don’t know/Not sureOne month or less

2 to 3 months

7 – 12 months

92%

89%

89%

87%

86%

95%

These are the ‘hygiene’ factors when selecting suppliersQ How important are the following factors to you, when deciding

which suppliers of broadband services to use?

Speed of connection available

Supplier has good/trustworthy reputation

Reliable connection

Cheap usage costs

Quality of customer helpdesk

Cheap installation costs

% very/fairly important


71%

64%

51%

50%

46%

36%

79%

These factors are of lesser importanceQ How important are the following factors to you, when deciding

which suppliers of broadband services to use? (Continued)

Cost of phoning helpdesk

Length of contract

Availability of free modem

Content provided by broadband supplierBetter deal on telephone/digital TV packageBilled on my ordinary phone or cable bill

% very/fairly important

Easy to sign up


Suppliers Seen

0

25

50

75

100

0 25 50 75 100

% Total awareness

% Spontaneous awareness

BT leading provider in levels of awareness for broadband


ALL BT

NTL

AOL

Tiscali

Freeserve

Telewest

Virgin Net

Yahoo

Pipex

Demon

Bulldog

0

10

20

30

0 25 50 75 100

% Current usage

% Total Awareness

NTL performs well in terms of usage compared to its level of awareness


ALL BT

AOL

NTL

Freeserve

Telewest

Virgin NetYahoo

Pipex

Bulldog Demon

Tiscali

0

10

20

30

0 25 50 75 100

% Current usage

% Seen advertising

NTL above average in converting ad spend to usage, BT and Blueyonder also above average


ALL BT

AOL

NTL

Tiscali

Freeserve

Telewest

Virgin NetYahoo

Pipex

Bulldog

Demon

Loyalty


6% of users have ever switched broadband supplier

1% 6%

93%

Yes

No

Don’t know

Q Have you ever changed the supplier of your broadband connection?

Q How likely are you to switch broadband provider in the next 12 months?

Expect to discontinue use of broadband

completely = less than 1%

7%

11%

24%

18%

35%

4%

Neither likely nor unlikely

Very likely

Fairly likely

Fairly unlikely

Don’t know

Very unlikely

7% are very likely to switch supplier in the next 12 months


14%

9%

13%

7%

22%

11%

13%

9%

Disloyals – younger, more sophisticated users:

25 – 34 years old

Access the internet at home via broadband through:

ADSL

Base: All respondents who have switched supplier in the past or who are very likely to switch (126)

Subscribe to broadband services of:

A cable modem

Existing telephone or cable supplier

Existing ISPDifferent provider than telephone/ cable provider or previous ISP

Survey average %

33%

49%

46%

79%

10%

56%

22%

Connection type before broadband:Ordinary phone line

ISDN phone line

20%

- Survey average + Survey average

What drives disloyalty ?

52%

22%

20%

10%

8%

6%

6%

6%

73%

Among likely switchers, value for money is the main driver influencing change: comprising a cheaper deal/faster connection

Cheaper deal from other provider

Base: All respondents who are likely to switch broadband provider (181)

Reasons likely to influence the decision to change supplier over the next 12 months

Fast connection from other provider

Moving house

Combining phone/ digital TV and internet provider

High cost/ too expensive

Poor customer service/ support/ helpdesk

Poor connection/ unreliable

Poor quality service

Advertising by other providers

31%

31%

16%

44%

Among users who have switched supplier though, a cheaper deal from another provider influenced the decision to change, moving is house is also a catalyst for change for around a third

Cheaper deal from other provider

Base: All respondents who have switched provider (64)

Q Which of the following influenced your decision to change supplier

Fast connection from other provider

Moving house

Combining phone/ digital TV and internet provider

18%

15%

10%

4%

3%

2%

17%

8%

53%

Around half of users who are likely to change supplier say that cheaper deals from their provider would stop them from changing

Better customer service/ support/ helpdesk

Better reliability/ connection

Speed

Cheaper/lower price/ deals

Availability

Q What could your current supplier do, if anything, to avoid you changing to another provider?

Better service

Upgrades/ free upgrades available

Other

Nothing

Base: All respondents who are likely to switch broadband provider and gave an answer (144)

24%

18%

12%

10%

9%

7%

7%

6%

25%

35%

Overall among those who say they are likely to switch, just over a third say they would consider changing to BT

BT (any brand)

Base: All respondents who are likely to switch broadband provider (181)

Q Which supplier of broadband services do you consider you may change to over the next 12 months

Tiscali

Freeserve

AOL

Virgin Net

Telewest

Bulldog

NTL

Pipex

Don’t know

What makes the disloyals different ?

61%

52%

42%

26%

25%

22%

The top three most important factors to consider when deciding which broadband supplier to use are reliability of connection, cost and speed – a commodity market...

Q Three most important factors when deciding which suppliers of broadband services to use

Speed of connection available

Supplier has good/trustworthy reputation

Reliable connection

Cheap usage costs

Quality of customer service

Cheap installation costs


17%

17%

13%

9%

6%

6%

5%

There appears to an opportunity to differentiate on quality of customer service and bundled packages

Q Three most important factors when deciding which suppliers of broadband services to use

Cost of phoning helpdesk

Length of contract

Content provided by broadband supplier

Better deal on telephone/digital TV package

Billed on my ordinary phone or cable bill

Easy to sign up

Availability of a free modem


What can suppliers improve on ?

20%

19%

12%

10%

6%

4%

4%

17%

20%

8%

7%

7%

3%

5%

18%

42%

Having a reliable service is what users like most about the service. Among switchers, responses are not as positive

Q What aspects of your current service do you most like?

Good/cheap price/deal

Speed

Reliability/no problems

Good/helpful customer service/ support/ helpdesk

Easy to use

Part of a package/package includes TV and phone

Good quality service

Base: All respondents who gave an answer (732)

Nothing

Survey Average Disloyals (all have switched or very likely to)

13%

13%

7%

7%

4%

27%

9%

25%

10%

5%

3%

16%

19%23%

Switchers are more likely to perceive poor customer service is an issue

Q What aspects of your current service provider do you least like?

Poor connection/ unreliable

Poor customer service/ support/ helpdesk

High cost/ too expensive

Speed

Difficult to access helpdesk / slow phone response

Cost of calling helpdesk

Nothing



21%

14%

12%

5%

5%

1%

35%

15%

23%

15%

3%

6%

4%

41%

For all broadband users price and speed of connection are important, customer support is potentially an area that suppliers can differentiate on

Q What aspects of service can broadband providers improve on?

Speed

Customer service/ support/helpdesk

Price

Reliability/ connection

Reduction of spam/ pop ups/ advertising

Virus protection

Everything



Conclusions

Conclusions

Heaviest users are 35-44 year old family homes, in W Midlands, London & SE

To date, churn rates in the broadband market are relatively low. Just 6% of broadband customers have ever changed supplier ( 250,000 lines).

However, as users become more confident with broadband, this churn rate is likely to increase. 7% of households are “very likely” to change supplier over the next 12 months.

To date, users have been largely conservative in their selection of supplier. Nearly 80% are using an incumbent supplier for telephone, cable or ISP services.

Conclusions

Consistently the factors end users rate as important to them are:

– Reliability of connection– Speed of connection– Supplier with good trustworthy reputation– Cheap usage costs

Those more likely to consider switching tend to be younger, more sophisticated end users.

Price is an important driver to change. Cheaper deals from other providers is by far the main driver influencing the decision to change supplier among likely switchers

Switchers are more likely to perceive poor customer service is an issue. There appears to be an opportunity to differentiate on quality of customer service and bundled packages.

Thank You – Any Questions?

© MORI 2004. Not to be used, reproduced or shown to any third party without the prior written permission of MORI End User Churn in the UK Broadband Market.

Documents

broadband base

broadband supplier

providers of broadband

broadband qwhich

uk broadband market

omnibus broadband data

current broadband provider

profile broadband users