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Bundled Communications Services - UK - January 2014

“The other method of decreasing churn is to convince consumers to take up as many products as possible from a single firm. The “stickier” consumers become, the harder they find it to extricate themselves from the company. Mintel’s research shows that quad-play customers tend to pay less per month than triple-play customers – this lower cost may be a useful way of attracting customers, with the small losses involved in the lowered monthly payment covered by the customer’s higher probability of staying with the company for longer.”

– Samuel Gee, Senior Technology Analyst

Some questions answered in this report include:

  • How viable are traditional strategies of reducing churn?
  • Will superfast take-up improve?
  • How important is a modular offering?
  • What is the future of line rental fees?

The UK market for telecommunications products and services tends to be perceived as a slow moving one, with little churn between the largest competitors. However, small ripples of change have appeared in 2013 with the unexpected success of TalkTalk’s TV proposition and the manoeuvring of Sky and Virgin to accommodate the growing popularity of inexpensive over the top (OTT) streamed TV offerings. The continuing growth of internet TV, smart television sets, fibre-optic broadband and mobile device ownership represent a raft of opportunities to be seized and challenges to be met over 2014.

This report looks at the size of the bundled telecommunications market, forecasting sales over the next five years, as well as documenting the types of bundles owned by consumers, the type of internet in consumer bundles and how much is typically paid for bundles by consumers, the most desired telecoms service in consumer bundles and consumer attitudes towards bundled communication products.

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Table of contents

  1. Introduction

      • Definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Forecast value of bundled communication sales, 2008-18
              • Figure 2: Forecast volume of bundled communication sales, 2008-18
            • Market factors
              • Superfast coverage is good; take-up has been steady but will slow
                • Increasing mobile usage will further reduce fixed line attractiveness
                  • Smart and streaming services need to be addressed
                    • Companies, brands and innovation
                      • Figure 3: Triple-play customer market share, 2008-13
                    • The consumer
                      • Bundle ownership
                        • Figure 4: Consumer bundle ownership, November 2013
                      • Internet type in consumers’ bundles, and amount paid
                        • Figure 5: Type of internet included with consumer bundles, November 2013
                        • Figure 6: Total monthly spend on consumer bundles, November 2013
                      • Most desired telecoms service
                        • Figure 7: Bundled service consumers would improve if free of charge to do so, November 2013
                      • Attitudes towards bundled communications
                        • Figure 8: Consumer attitudes towards bundled communications, November 2013
                      • What we think
                      • Issues in the Market

                          • How viable are traditional strategies of reducing churn?
                            • Will superfast take-up improve?
                              • How important is a modular offering?
                                • What is the future of line rental fees?
                                • Trend Application

                                    • Trend: Make it Mine
                                      • Trend: FSTR HYPR
                                        • Mintel Futures: Access Anything Anywhere
                                        • Market Drivers

                                          • Key points
                                            • Superfast internet take-up steady, if slow
                                              • Figure 9: Number of exchanges that are enabled with BT’s fibre-to-the-cabinet service, June 2011-June 2013
                                              • Figure 10: Take-up of superfast broadband services, Q4 2010-Q1 2013
                                              • Figure 11: Changing composition of Virgin Media’s broadband customer base, Q1 2009-Q1 2013
                                            • Smart and streaming services need to be addressed
                                              • Figure 12: Share of television volume sales, by smart technology, 2011-13
                                              • Figure 13: Tablet ownership, January 2012 - September 2013
                                            • TalkTalk aims to provide value offering in premium market
                                              • Figure 14: Number of fibre connections for TalkTalk, Q2 2012-Q1 2014
                                            • Increasing mobile usage will further reduce fixed line attractiveness
                                              • Figure 15: Proportion of total fixed and mobile outgoing call minutes (millions), by minutes type, 2007-12
                                              • Figure 16: Volume of data used by BillMonitor site visitors, by percentile, Feb 2012-Jan 2013
                                            • Operators look for reduction in BT wholesale rate
                                            • Who’s Innovating?

                                              • Key points
                                                • TalkTalk introduces TV Boosts
                                                  • BT initiative brings affordable broadband to homes in Glasgow
                                                    • Consortium of telecoms companies driving 5G development
                                                      • BBC unveils plan for next-generation iPlayer
                                                      • Market Size and Forecast

                                                        • Key points
                                                          • Strong market will continue to grow into 2018
                                                            • Figure 17: Value of bundled communication sales, 2008-18
                                                            • Figure 18: Volume of bundled communication sales, 2008-18
                                                          • Forecasts
                                                              • Figure 19: Forecast value of bundled communication sales, 2008-18
                                                              • Figure 20: Forecast volume of bundled communication sales, 2008-18
                                                          • Market Segmentation and Share

                                                            • Key points
                                                              • Sky has greatest increase in internet connections
                                                                • Figure 21: Internet connections (including traditional fixed line broadband, cable and fibre-optic based services), by market share, 2007-12
                                                              • Sky remains most popular pay TV provider
                                                                • Figure 22: Share of pay TV subscriptions, October 2013
                                                                • Figure 23: Volume of multichannel TV households, by provider, 2011-13
                                                              • Virgin Media losing share of triple-play customers
                                                                • Figure 24: Triple-play customer market share, 2008-13
                                                            • Companies and Products

                                                                • British Sky Broadcasting Group
                                                                  • Background
                                                                    • Financial performance
                                                                      • Figure 25: Financial performance of British Sky Broadcasting Group plc, 2012 and 2013
                                                                      • Figure 26: Financial performance of British Sky Broadcasting Group plc, Q1 2013-Q1 2014
                                                                    • BT Group plc
                                                                      • Background
                                                                        • Financial performance
                                                                          • Figure 27: Financial performance of BT Group plc, 2012-13
                                                                          • Figure 28: Financial performance of BT Group plc, Q2 2013-Q2 2014
                                                                        • Virgin Media Inc
                                                                          • Background
                                                                            • Financial performance
                                                                              • Figure 29: Financial performance of Virgin Media Inc, 2011 and 2012
                                                                              • Figure 30: Financial performance of Virgin Media, Q3 2012-Q3 2013
                                                                            • TalkTalk Telecom Group plc
                                                                              • Background
                                                                                • Financial performance
                                                                                  • Figure 31: Financial performance of TalkTalk Telecom Group plc, 2012 and 2013
                                                                                  • Figure 32: Financial performance of TalkTalk Telecom Group plc, Q1 2013-Q1 2014
                                                                              • Brand Research

                                                                                • Brand map
                                                                                    • Figure 33: Attitudes towards and usage of brands in the bundled communications sector, November 2013
                                                                                  • Correspondence analysis
                                                                                    • Brand attitudes
                                                                                      • Figure 34: Attitudes, by bundled communications brand, November 2013
                                                                                    • Brand personality
                                                                                      • Figure 35: Bundled communications brand personality – macro image, November 2013
                                                                                      • Figure 36: Bundled communications brand personality – micro image, November 2013
                                                                                    • Brand experience
                                                                                      • Figure 37: Bundled communications brand usage, November 2013
                                                                                      • Figure 38: Satisfaction with various bundled communications brands, November 2013
                                                                                      • Figure 39: Consideration of bundled communications brands, November 2013
                                                                                      • Figure 40: Consumer perceptions of current bundled communications brand performance, November 2013
                                                                                    • Brand index
                                                                                      • Figure 41: Bundled communications brand index, November 2013
                                                                                    • Target group analysis
                                                                                      • Figure 42: Target groups, November 2013
                                                                                    • Group One – Conformists
                                                                                      • Group Two – Simply the Best
                                                                                        • Group Three – Shelf Stalkers
                                                                                          • Group Four – Habitual Shoppers
                                                                                            • Group Five – Individualists
                                                                                            • Brand Communication and Promotion

                                                                                              • Key points
                                                                                                • Only Sky’s adspend decreasing
                                                                                                  • Figure 43: Adspend on double or triple-play bundles in the UK, 2010-13
                                                                                                  • Figure 44: Proportion of broadband-related bundle adspend accounted for by double and triple-play bundles*, 2010 to 2012
                                                                                              • The Consumer – Bundle Ownership

                                                                                                • Key points
                                                                                                  • Four in ten consumers waiting to be upgraded to triple-play
                                                                                                    • Figure 45: Consumer bundle ownership, November 2013
                                                                                                  • Half of all older consumers have no TV package
                                                                                                    • Households with children more likely to pick triple- and quad-play bundles
                                                                                                      • Demographic charts
                                                                                                        • Figure 46: Consumer bundle ownership, by age, November 2013
                                                                                                        • Figure 47: Consumer bundle ownership, by region, November 2013
                                                                                                        • Figure 48: Consumer bundle ownership, by gross annual household income, November 2013
                                                                                                        • Figure 49: Consumer bundle ownership, by presence of children in the household, November 2013
                                                                                                    • The Consumer – Internet Type in Consumers’ Packages, and Amount Paid

                                                                                                      • Key points
                                                                                                        • Regular internet still the most commonly owned
                                                                                                          • Figure 50: Type of internet included with consumer bundles, November 2013
                                                                                                          • Figure 51: Type of internet included with consumer bundles, by consumer bundle ownership, November 2013
                                                                                                        • Superfast customers: Male, urban and wealthy
                                                                                                            • Figure 52: Take-up of superfast broadband by gender, urban or suburban area, and gross annual household income, November 2013
                                                                                                          • A quarter pay about £26 a month
                                                                                                            • Figure 53: Total monthly spend on consumer bundles, November 2013
                                                                                                            • Figure 54: Amount consumers pay each month for their bundle, by type of bundle owned, November 2013
                                                                                                          • TV providers could partner with living room technology producers
                                                                                                            • Figure 55: Consumers who pay between £31 and £40 per month for their bundle, by living room technology in the home, November 2013
                                                                                                        • The Consumer – Most Desired Telecoms Service

                                                                                                          • Key points
                                                                                                            • Faster internet preferred by consumers
                                                                                                              • Figure 56: Bundled service that consumers would improve if free of charge to do so, November 2013
                                                                                                            • Fixed line and mobile as popular as each other
                                                                                                                • Figure 57: Bundled service consumers would improve if free of charge to do so, by current bundle taken, November 2013
                                                                                                              • Virgin Media customers would improve TV package
                                                                                                                • Figure 58: Bundled service consumers would improve if free of charge to do so, by bundle provider, September 2013
                                                                                                              • Fibre customers may respond to better phone deals
                                                                                                                • Figure 59: Type of internet in consumer bundles, by interest in improving landline package as part of a bundle if it was free to do so, November 2013
                                                                                                            • The Consumer – Attitudes towards Bundled Communications

                                                                                                              • Key points
                                                                                                                • Consumers still resent paying for line rental
                                                                                                                  • Figure 60: Consumer attitudes towards bundled communications, November 2013
                                                                                                                • Mass market movement swiftly eliminates differentiation
                                                                                                                  • Video on demand services could save pay TV
                                                                                                                    • Younger consumers are data and access hungry
                                                                                                                      • Customisation desired by big-spenders
                                                                                                                      • Appendix – Market Size and Forecast

                                                                                                                          • Figure 61: Bundled communications value sales, best and worst case forecasts 2013-18
                                                                                                                          • Figure 62: Bundled communications volume sales, best and worst case forecasts, 2013-18
                                                                                                                      • Appendix – The Consumer – Bundle Ownership

                                                                                                                          • Figure 63: Consumer bundle ownership, November 2013
                                                                                                                          • Figure 64: Consumer bundle ownership, by demographics, November 2013
                                                                                                                      • Appendix – The Consumer – Internet Type in Consumers’ Packages, and Amount Paid

                                                                                                                          • Figure 65: Type of internet included with consumer bundles, November 2013
                                                                                                                          • Figure 66: Type of internet included with consumer bundles, by consumer bundle ownership, November 2013
                                                                                                                          • Figure 67: Consumer bundle ownership, by type of internet included with consumer bundles, November 2013
                                                                                                                          • Figure 68: Type of internet included with consumer bundles, by demographics, November 2013
                                                                                                                          • Figure 69: Amount consumers spend on bundles each month, November 2013
                                                                                                                          • Figure 70: Amount consumers spend on bundles each month, by consumer bundle ownership, November 2013
                                                                                                                          • Figure 71: Consumer bundle ownership, by amount consumers spend on bundles each month, November 2013
                                                                                                                          • Figure 72: Amount consumers spend on bundles each month, by type of internet included with consumer bundles, November 2013
                                                                                                                          • Figure 73: Type of internet included with consumer bundles, by amount consumers spend on bundles each month, November 2013
                                                                                                                          • Figure 74: Amount consumers spend on bundles each month, by demographics, November 2013
                                                                                                                      • Appendix – The Consumer – Most Desired Telecoms Service

                                                                                                                          • Figure 75: Bundled service that consumers would improve if free of charge to do so, November 2013
                                                                                                                          • Figure 76: Consumer bundle ownership, by bundled service that consumers would improve if free of charge to do so, November 2013
                                                                                                                          • Figure 77: Type of internet included with consumer bundles, by bundled service that consumers would improve if free of charge to do so, November 2013
                                                                                                                          • Figure 78: Amount consumers spend on bundles each month, by bundled service that consumers would improve if free of charge to do so, November 2013
                                                                                                                          • Figure 79: Consumers’ bundle provider, by bundled service that consumers would improve if free of charge to do so, November 2013
                                                                                                                          • Figure 80: Bundled service that consumers would improve if free of charge to do so, by demographics, November 2013
                                                                                                                      • Appendix – The Consumer – Attitudes towards Bundled Communications

                                                                                                                          • Figure 81: Consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 82: Consumer bundle ownership, by most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 83: Consumer bundle ownership, by next most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 84: Type of internet included with consumer bundles, by most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 85: Type of internet included with consumer bundles, by next most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 86: Amount consumers spend on bundles each month, by most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 87: Amount consumers spend on bundles each month, by next most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 88: Consumers’ bundle provider, by most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 89: Consumers’ bundle provider, by next most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 90: Bundled service that consumers would improve if free of charge to do so, by most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 91: Bundled service that consumers would improve if free of charge to do so, by next most popular consumer attitudes towards bundled communication products, November 2013
                                                                                                                          • Figure 92: Bundled service that consumers would improve if free of charge to do so, by consumer bundle ownership, November 2013
                                                                                                                          • Figure 93: Bundled service that consumers would improve if free of charge to do so, by consumers’ bundle provider, November 2013
                                                                                                                          • Figure 94: Most popular consumer attitudes towards bundled communication products, by demographics, November 2013
                                                                                                                          • Figure 95: Next most popular consumer attitudes towards bundled communication products, by demographics, November 2013

                                                                                                                      Companies Covered

                                                                                                                      To learn more about the companies covered in this report please contact us.

                                                                                                                      Bundled Communications Services - UK - January 2014

                                                                                                                      US $2,583.33 (Excl.Tax)