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Fixed Line Telecoms Providers - UK - February 2011

The UK residential fixed-line telephony market faces a difficult outlook, with an increasing number of customers disengaging with the service. The past few years have seen an increase in customers ‘cutting the cord’, with mobile-only homes now accounting for about one in ten UK households. Landline owners are also using their home phones far less than in the past, leaving providers much more reliant on basic line rental revenues.

  • Over eight in ten Virgin digital TV subscribers also has a Virgin landline. This is significantly higher than Sky, where 24% of Sky TV customers also have a Sky landline.
  • TalkTalk customers are more likely than landline users overall to view ‘moving to a bundled supplier’ a key factor when looking for a new provider. This may reflect the appeal of TalkTalk’s current dual-play (broadband and landline) offer.
  • BT remain the most popular landline provider, with over one in three (37%) internet users signed up to BT’s landline service.
  • VoIP has yet to really penetrate as a mainstream communication tool, and hence its negative impact on the fixed-line market should be seen as minimal relative to mobile phones. Only one in ten landline users use the service every day while at home, while the majority (57%) have either never used it or can’t remember the last time they used it.
  • Landline customers are more likely to use their mobile phone to make calls, even while in the home. Nearly half (46%) of landline customers make mobile calls at home on a daily basis, compared to 39% for landlines.
  • About one in three landline customers agree that they only have a landline because it is required to as part of their broadband package.

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Table of contents

  1. Issues in the Market

      • Key issues in the market
        • Definition
          • Abbreviations
          • Future Opportunities

            • Meeting the needs of a more individualistic society
              • Skype, thanks but no thanks?
              • Market in Brief

                • BT still on top, but faces declining customer share
                  • Landlines losing ground to mobile
                    • TalkTalk customers value bundled services, but is it time for TalkTalk TV?
                      • Waiting for YouView
                        • Virgin Media outperforms Sky in cross-selling TV subscribers
                          • Local Loop unbundling shifts market dynamic
                            • Customers largely focused on cheaper line rental
                              • Mobiles most popular for voice calls, even in the home
                                • VoIP not really seen as an ‘every day’ communication tool
                                • Internal Market Environment

                                  • Key points
                                    • Rise in mobile-only homes drives fixed-line downturn
                                      • Figure 1: Percentage of uk homes with no landline, 2005-10
                                    • Fixed-line providers more reliant on line-rental
                                      • Figure 2: Average monthly voice call revenue per user, line rental and voice calls, 2004-09
                                    • BT losing share of voice call volumes….
                                      • Figure 3: BT share of retail fixed-voice call volumes , by type, 2004-09
                                    • LLU – good or bad for BT?
                                    • Broader Market Environment

                                      • Key points
                                        • Ageing population to curb fixed-line decline
                                          • Figure 4: Trends in the age structure of the UK population, by gender, 2005-15
                                        • One-person households to further negatively impact market
                                          • Figure 5: UK household resident numbers, 2005-10
                                        • Expansion of broadband helps providers offset landline decline
                                          • Figure 6: Broadband penetration, by demographics, 2004-10
                                      • Competitive Context

                                        • Key points
                                          • Fixed line subscriptions decline…
                                            • Figure 7: Mobile and fixed-line phone telecoms connections, 2004-09
                                          • …while fixed-line broadband plateaus
                                            • Figure 8: Percentage of population using mobile broadband and fixed broadband, Q1 2009-Q1 2010
                                          • Mobile calling grows at the expense of fixed-line…
                                            • Figure 9: Mobile and fixed-line total voice volumes, 2004-09
                                          • … and is cannibalising revenues
                                            • Figure 10: Mobile and fixed-line voice call revenue, 2004-09
                                        • Who’s Innovating?

                                          • Key points
                                            • VoIP providers, if you can’t beat them, buy them?
                                              • Virgin Media pioneers free landline-to-mobile calls
                                              • Market Size and Forecast

                                                • Key points
                                                  • Market size
                                                    • Figure 11: total fixed-line telecoms market, voice calls and line rental, 2005-10
                                                  • Market forecast
                                                    • Figure 12: fixed-line telecoms provider, voice calls and line rental, market forecast, 2005-15
                                                • Strengths and Weaknesses in the Market

                                                    • Strengths
                                                      • Weaknesses
                                                      • Brand Elements

                                                        • Brand map
                                                            • Figure 13: Attitudes towards and usage of fixed line telecommunication brands, December 2010
                                                          • Brand attitudes
                                                            • Figure 14: Attitudes by fixed line telecommunication brand, December 2010
                                                          • Brand personality
                                                            • Figure 15: Fixed line telecommunication brand personality – macro image, December 2010
                                                            • Figure 16: Fixed line telecommunication brand personality – micro image, December 2010
                                                          • Correspondence analysis
                                                            • Brand experience
                                                              • Figure 17: Fixed line telecommunication brand usage, December 2010
                                                              • Figure 18: Satisfaction with various fixed line telecommunication brands, February 2010
                                                              • Figure 19: Consideration of fixed line telecommunication brands, December 2010
                                                              • Figure 20: Consumer perceptions of current fixed line telecommunication brand performance, December 2010
                                                              • Figure 21: Fixed line telecommunication brand recommendation – Net Promoter Score, December 2010
                                                            • Brand index
                                                              • Figure 22: Fixed line telecommunication brand index, December 2010
                                                              • Figure 23: Fixed line telecommunication brand index vs. recommendation, December 2010
                                                            • Target group analysis
                                                              • Figure 24: Target groups, December 2010
                                                              • Figure 25: Fixed line telecommunication brand usage, by target groups, December 2010
                                                            • Group One – The Conformists
                                                              • Group Two – Simply the Best
                                                                • Group Three – Shelf Stalkers
                                                                  • Group Four – Habitual Shoppers
                                                                    • Group Five – The Individualists
                                                                    • Companies and Products

                                                                        • BT
                                                                            • Figure 26: Financial performance of BT Group Plc, 2009-10
                                                                            • Figure 27: Segment performance of BT Group Plc, 2009-10
                                                                          • Sky Talk
                                                                              • Figure 28: First quarter financial performance of British Sky Broadcasting Group Plc, 2009-10
                                                                              • Figure 29: Financial performance of British Sky Broadcasting Group Plc, 2009-10
                                                                              • Figure 30: British Sky Broadcasting Group Plc subscriber statistics, 2009-10
                                                                            • TalkTalk
                                                                                • Figure 31: Six months financial performance of Talktalk Telecom Group Plc, 2009-10
                                                                                • Figure 32: Financial performance of Talktalk Telecom Group Plc, 2009-10
                                                                              • Virgin Media
                                                                                  • Figure 33: Financial performance of Virgin Media, 2008-09
                                                                                  • Figure 34: Virgin Media, consumer segment revenue, by customer type, 2008-09
                                                                                  • Figure 35: Virgin Media subscriber statistics, third quarter, 2009-10
                                                                              • What Are the Most Popular Fixed-line Brands?

                                                                                • Key points
                                                                                  • BT still the most popular provider, but for how long?
                                                                                    • Figure 36: Type of landline telephone provider, December 2010
                                                                                  • Virgin Media outperforms Sky in terms of attracting TV customers
                                                                                    • Figure 37: Virgin Media landline subscribers, by mobile phone network provider and TV reception, December 2010
                                                                                • What Do Customers Look For in a New Provider?

                                                                                  • Key points
                                                                                    • Customers largely focused on low-cost line rental
                                                                                      • Figure 38: Most important factors in determining choice of new provider, December 2010
                                                                                    • TalkTalk customers most value bundled services
                                                                                      • Figure 39: Type of landline telephone provider, by most popular factors in determining choice of new provider, December 2010
                                                                                    • BT scores highly with brand equity customers
                                                                                      • Figure 40: Type of landline telephone provider by next most popular factors in determining choice of new provider, December 2010
                                                                                  • How Does Landline Compare with Other Voice Tools?

                                                                                    • Key points
                                                                                      • Mobiles usurp landlines in every day usage
                                                                                        • Figure 41: Consumer home contact methods, December 2010
                                                                                      • VoIP fails to make inroads among over-35s
                                                                                        • Figure 42: Use of internet telephone services (eg Skype), by demographics, December 2010
                                                                                      • It’s good to TalkTalk?
                                                                                        • Figure 43: Consumer contact methods by landline telephone provider, December 2010
                                                                                    • Attitudes Towards Fixed-line Services

                                                                                      • Key points
                                                                                        • Customers value call clarity
                                                                                          • Figure 44: Attitudes towards fixed line providers, December 2010
                                                                                        • Sky Talk customers most likely to be reluctant landline users
                                                                                          • Figure 45: Agreement with the statement “I only have a landline because my broadband provider requires it”, by landline telephone provider, December 2010
                                                                                        • TalkTalk capitalises on value brand image
                                                                                          • Figure 46: Agreement with the statement “Using my landline allows me to save money on calls”, by landline telephone provider, December 2010
                                                                                      • Appendix – What Are the Most Popular Fixed-line Brands?

                                                                                          • Figure 47: Type of landline telephone provider, by demographics, December 2010
                                                                                      • Appendix – What Do Customers Look For In A New Provider?

                                                                                          • Figure 48: Most popular factors in determining choice of new provider, by demographics, December 2010
                                                                                          • Figure 49: Next most popular factors in determining choice of new provider, by demographics, December 2010
                                                                                          • Figure 50: Type of landline telephone provider, by most popular factors in determining choice of new provider, December 2010
                                                                                          • Figure 51: Type of landline telephone provider, by next most popular factors in determining choice of new provider, December 2010
                                                                                      • Appendix – How Does Landline Compare with Other Voice Tools?

                                                                                          • Figure 52: Consumer contact methods - ‘landline‘, by demographics, December 2010
                                                                                          • Figure 53: Consumer contact methods - ‘mobile phone’, by demographics, December 2010
                                                                                          • Figure 54: Consumer contact methods - ‘internet telephone services (eg Skype)’, by demographics, December 2010
                                                                                          • Figure 55: Consumer contact methods, by type of landline telephone provider, December 2010
                                                                                          • Figure 56: Consumer contact methods, by most popular factors in determining choice of new provider, December 2010
                                                                                          • Figure 57: Consumer contact methods, by next most popular factors in determining choice of new provider, December 2010
                                                                                      • Appendix – Attitudes Towards Fixed-line Services

                                                                                          • Figure 58: Attitudes towards fixed line providers, December 2010
                                                                                          • Figure 59: Agreement with the statement “I only have a landline because my broadband provider requires it”, by demographics, December 2010
                                                                                          • Figure 60: Agreement with the statement “My landline is the most important tool I have for keeping in touch with people”, by demographics, December 2010
                                                                                          • Figure 61: Agreement with the statement “The call clarity you get with a landline is important to me”, by demographics, December 2010
                                                                                          • Figure 62: Agreement with the statement “I prefer the simplicity of using a landline compared to mobiles/internet telephone services (eg Skype)”, by demographics, December 2010
                                                                                          • Figure 63: Agreement with the statement “Using my landline allows me to save money on calls”, by demographics, December 2010
                                                                                          • Figure 64: Agreement with the statement “Having a fixed telephone line is not necessary in this day and age”, by demographics, December 2010
                                                                                          • Figure 65: Agreement with the statement “I’d prefer not to have to sit in front of a computer when making a phone call”, by demographics, December 2010
                                                                                          • Figure 66: Agreement with the statement “The internet is just as good as landlines for making calls”, by demographics, December 2010
                                                                                          • Figure 67: Attitudes towards fixed line providers, by type of landline telephone provider, December 2010

                                                                                      Companies Covered

                                                                                      • Aldi Stores Ltd (UK & Ireland)
                                                                                      • America Online UK (AOL UK)
                                                                                      • Apple Computer UK Ltd
                                                                                      • Asda Group Ltd
                                                                                      • BAE SYSTEMS plc
                                                                                      • Bank of England
                                                                                      • Binatone telecom
                                                                                      • British Broadcasting Corporation (BBC)
                                                                                      • British Sky Broadcasting Group plc (BSkyB)
                                                                                      • BT Group plc
                                                                                      • Channel 4
                                                                                      • Co-operative Group
                                                                                      • Comic Relief UK
                                                                                      • Facebook, Inc.
                                                                                      • Fédération Internationale de Football Association
                                                                                      • Freeview
                                                                                      • Government Actuary's Department (GAD)
                                                                                      • J. Sainsbury
                                                                                      • Kantar Media
                                                                                      • Kingston Communications plc
                                                                                      • Lidl (UK)
                                                                                      • London Stock Exchange plc
                                                                                      • Marks & Spencer
                                                                                      • mmO2 plc
                                                                                      • Netto Foodstores Ltd
                                                                                      • News Corporation (The)
                                                                                      • Nokia Corporation (UK)
                                                                                      • Ofcom
                                                                                      • Orange plc (UK)
                                                                                      • Pipex Internet Ltd.
                                                                                      • PlusNet Technologies Limited
                                                                                      • Post Office Limited
                                                                                      • Primus Telecommincations Ltd
                                                                                      • Research in Motion Uk Ltd.
                                                                                      • Setanta Sports
                                                                                      • Skype Technologies S.A.
                                                                                      • T-Mobile (UK) Ltd
                                                                                      • TalkTalk Telecom Ltd.
                                                                                      • Tesco Plc
                                                                                      • The Carphone Warehouse Ltd
                                                                                      • Tiscali UK
                                                                                      • TreeHouse Foods, Inc.
                                                                                      • Virgin Media Ltd
                                                                                      • Virgin Mobile
                                                                                      • Vodafone Group Plc (UK)
                                                                                      • Waitrose Ltd
                                                                                      • Wm Morrison Supermarkets
                                                                                      • YouView TV Ltd

                                                                                      Fixed Line Telecoms Providers - UK - February 2011

                                                                                      £1,750.00 (Excl.Tax)