Fixed Line Providers - UK - January 2008

Table of Contents

• Issues in the Market
• Key issues:
• Definition
• Abbreviations
• Market in Brief
• Market liberalisation opens up the fixed-line sector
• Lower revenues
• Newcomers denting the dominance of BT
• The encroachment from mobiles
• Impact of the digital switchover
• Losing voice against the mobile operators
• Usage patterns between fixed line and mobiles determined by age
• Fixed lines still offer distinct advantages over mobiles
• New communications order creates further pressure for landlines
• Internal Market Environment
• Key points
• Changing regulation creates market free-for-all
• Easier for new market entrants
• Wholesale line rental
• How does BT compete?
• Bundling
• Low prices inspire more to switch
• Broader Market Environment
• Key points:
• Personal disposable income up
  • Figure 1: Trends in personal disposable income and consumer expenditure, 2002-12
• Household formation delivers further opportunity
  • Figure 2: Total number of UK households and one-person households, 1991-2012
• Bigger market opportunities from population increase
  • Figure 3: Size of UK population, by age group, 2003-12
• Competitive Context
• Key points:
• Mobile subscriber numbers continue to rise
  • Figure 4: Mobile phone subscribers, 2002-07
• Mobile an increasingly attractive option
• Fixed line no longer a gateway to the home
• The Web spawns new forms of communications
• Strengths and Weaknesses in the Market
• Market Size and Forecast
• Key points:
• Numbers down across the board
  • Figure 5: Key metrics in the fixed-line sector, 2002-07
• Price deflation a fact of life...
  • Figure 6: Average real monthly cost of residential telecoms, 2002-07
• ...but price of access remains constant
• Call charge analysis
• A continued path of decline
  • Figure 7: Fixed-line voice and access revenue, 2002-12
  • Figure 8: Breakdown of forecast of fixed call revenue, 2002-12
• Factors used in the forecast
• Segment and Brand Performance
• Key points:
• Fixed-line analysis
  • Figure 9: Numbers of lines taking BT and non-BT voice services, 2002-06
• Full LLU services are now emerging
• Cable remains constant
• Call minutage
  • Figure 10: Share of voice communication, by type of provider, 2002-06
• User shares by fixed-line provider
  • Figure 11: Penetration levels of fixed-line providers, October 2007
• Among the online sample, about one in two adults have a landline with BT
• Virgin is locked in a battle for the living room with Sky.
• TalkTalk has an 8% share, making it the third-biggest provider in the market
• Companies and Brands
• Key points:
• Major players
• British Sky Broadcasting
• BT Retail
• Losing share
• New services follow suit
• Complacent about broadband speeds
• Moving into entertainment
• No dual-play packages, yet
• VoIP
• BT Wholesale
• Regulatory pressures
• Carphone Warehouse/TalkTalk
• Mobile business
• Fixed-line services
• Broadband offers
• Kingston Communications
• Tiscali
• Increasing UK reach
• Available packages
• Virgin Media
• Returning to profit
• Packages galore
• Other providers
• Brand Communication and Promotion
• Key points:
• About £1 per head of population
  • Figure 12: Fixed-line media expenditure, total expenditure and total BT, 2002/03-2006/07
• BT is the biggest spender
• Expenditure by media channel
  • Figure 13: Fixed line media expenditure, by channel, 2003-07
• Tendency for directness
• TV in decline
• Press succumbs to online
• Major advertising campaigns 2006/07
  • Figure 14: Fixed line media expenditure, by main campaign, Sept 2006 -- August 2007
• The old guard dominates...
• ...with newer players snapping at the heels
• The Consumer -- Major Brands and Profiles
• Key points:
• Deregulation opens up the market
  • Figure 15: Penetration levels of fixed-line providers, October 2007
• Profiles of fixed-line providers
  • Figure 16: Penetration of fixed-line providers, by gender, age and socio-economic group, October 2007
• Additional lifestyle and behavioural profiling of fixed-line providers
• BT
• Virgin Media
• TalkTalk
• The Consumer -- Usage of Fixed Lines and Mobiles in the Home
• Key points:
• Loyalty begins at home
  • Figure 17: Attitudes towards fixed lines and mobile phones, October 2007
• An increasingly lost market
• Landline is the back-up for increasing numbers
• Selectively using the landline
• Poor mobile reception
• Appendix
  • Figure 29: Profiles of fixed-line providers, by demographic analysis, October 2007
  • Figure 30: Penetration of fixed-line usage modes, by demographic analysis, October 2007
  • Figure 31: ' My landline always offers a clearer connection than my mobile' , by demographic analysis, October 2007
  • Figure 32: ' It' s cheaper to call from my landline' , by demographic analysis, October 2007
  • Figure 33: ' It' s cheaper to call from my mobile' , by demographic analysis, October 2007
  • Figure 34: ' My landline is easier and more comfortable to use than my mobile' , by demographic analysis, October 2007
  • Figure 35: ' I feel safer knowing I have a fixed line to the outside world' , by demographic analysis, October 2007
  • Figure 36: ' It' s easier to call from my mobile, because it' s where I have my address book' , by demographic analysis, October 2007
  • Figure 37: ' I only have a landline because my broadband provider required it' , by demographic analysis, October 2007
  • Figure 38: ' I resent having to pay line rental for my landline' , by demographic analysis, October 2007