© 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
Source: MORI general public omnibus April 2004
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
Source: MORI general public omnibus April 2004
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?
Base: All respondents (998)
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
Base: All respondents (998)
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 ?
Base: All respondents (998)
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
Base: All respondents (998)
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
Base: All respondents (998)
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
Base: All respondents (998)
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
Base: All respondents (998)
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
Base: All respondents (998)
ALL BT
AOL
NTL
Tiscali
Freeserve
Telewest
Virgin NetYahoo
Pipex
Bulldog
Demon
Loyalty
Base: All respondents (998)
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
Base: All respondents (998)
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
Base: All respondents who have switched supplier in the past or who are very likely to switch (126)
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
Base: All respondents who have switched supplier in the past or who are very likely to switch (126)
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
Base: All respondents who gave an answer (649)
Survey Average Disloyals (all have switched or very likely to)
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
Base: All respondents who gave an answer (617)
Survey Average Disloyals (all have switched or very likely to)
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?