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Mobile Network Providers - UK - March 2013

“Breaking down customer contracts into a modular structure will allow consumers to build their own packages, optimised for their own particular needs. This will also allow operators to add a wider variety of add-ons, such as video streaming bandwidth, chatting services, large file messaging or application download allowances. Operators that focus on having a suite of cross-platform products that allow consumers to make calls and texts from any connected device will present themselves as a more attractive proposition in an ecosystem becoming dominated by consumers with a number of different devices.”

– Samuel Gee, technology analyst

Some questions answered in this report include:

  • How should operators approach the fall in voice call volumes?
  • How important are smartphones to operator offerings?
  • What are the prospects for 4G take-up?
  • What can be done to address a market more dependent on data services?

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Table of contents

  1. Introduction

      • Definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Forecast value of mobile network connections, 2007-17
            • Market factors
              • SMS and data use increasing, mobile call volume and revenue falling
                • Inclusive data to become more important than minutes
                  • Handset exclusivity continues to play a role in marketing
                    • Companies, brands and innovation
                      • Figure 2: Mobile network market share, 2012
                    • The consumer
                      • Consumer contract types and length
                        • Figure 3: Consumer mobile phone connection types, November 2012
                        • Figure 4: When consumers last changed their mobile network provider, November 2012
                      • Factors that prompted consumers to change provider
                        • Figure 5: Reasons for consumers’ last change of mobile network provider, November 2012
                      • What would make consumers change provider in future?
                        • Figure 6: Factors that would make consumers change mobile network provider, November 2012
                      • Attitudes towards the 4G network
                        • Figure 7: Consumer attitudes towards 4G networks, November 2012
                      • What we think
                      • Issues in the Market

                          • How should operators approach the fall in voice call volumes?
                            • How important are smartphones to operator offerings?
                              • What are the prospects for 4G take-up?
                                • What can be done to address a market more dependent on data services?
                                • Trend Application

                                    • Trend: Let’s Make a Deal
                                      • Trend: Extend my Brand
                                        • Mintel Futures: Being Human
                                        • Market Drivers

                                          • Key points
                                            • 4G network up and running, with Q1 auction finalising market players
                                              • EE enjoys debatable success during its period of market exclusivity
                                                • Voice revenues continue to drop
                                                  • Figure 8: Mobile network retail revenue, by service type, 2006-11
                                                  • Figure 9: Total call minutes made from UK mobiles, 2006-11
                                                  • Figure 10: Use of communication methods other than voice telephony by consumers, 2010 and 2012
                                                  • Figure 11: Access of the internet, email or instant messaging through mobile devices, 2010-12
                                                  • Figure 12: Mobile monthly ARPU, by voice, messaging and data, 2006-11
                                                • Data allowances increase to match demand
                                                  • Figure 13: Inclusion of any internet allowance with consumers’ mobile phone contracts, by fixed and unlimited allowances, 2011 and 2012
                                                  • Figure 14: Inclusion of any free call minutes with consumers’ mobile phone contracts, by fixed and unlimited allowances, 2011 and 2012
                                                  • Figure 15: Forecast global mobile data traffic in terabytes*, by data type, 2012-17
                                                  • Figure 16: Proportion of forecast global mobile data traffic taken by data types, 2012-17
                                                • Handsets become integral part of offering
                                                  • Retailer initiatives draw in operators to boost usage
                                                    • Contract length continues to increase
                                                      • Figure 17: Length of time consumers have been with their current mobile phone network, 2008-12
                                                  • Who’s Innovating?

                                                    • Key points
                                                      • Vodafone Booster Brolly is both practical and imaginative
                                                        • O2 marketing campaign creates imaginary Facebook future
                                                          • WWF launches its own mobile network
                                                            • Telefónica experimenting with the internet of things
                                                            • Market Size and Forecast

                                                              • Key points
                                                                • Market on the cost of cyclical move back to positive growth
                                                                  • Figure 18: Value of mobile network connections, 2007-17
                                                                  • Figure 19: Volume of mobile network connections, 2007-17
                                                                • Forecasts
                                                                    • Figure 20: Forecast value of mobile network connections, 2007-17
                                                                    • Figure 21: Forecast volume of mobile network connections, 2007-17
                                                                • Market Segmentation and Share

                                                                  • Key points
                                                                    • Post-pay taking a narrow market majority
                                                                      • Figure 22: Proportion of mobile handsets on pre-pay and post-pay connections, 2006-12
                                                                      • Figure 23: Post-pay and pre-pay mobile call minutes, 2006-11
                                                                    • Fall in post-pay ARPU accelerates, whilst pre-pay declines
                                                                      • Figure 24: Monthly ARPU for pre-pay and post-pay mobile users, 2006-11
                                                                    • Mobile revenue from data usage increasing
                                                                      • Figure 25: Proportion of total revenue from UK mobile telephony, by segment, 2010-12
                                                                    • T-Mobile and Orange merger gives EE a majority market share
                                                                      • Figure 26: Share of mobile market subscribers, by operator, 2008-12
                                                                  • Brand Research

                                                                    • Brand map
                                                                        • Figure 27: Attitudes towards and usage of brands in the mobile network provider sector, December 2012
                                                                      • Correspondence analysis
                                                                        • Brand attitudes
                                                                          • Figure 28: Attitudes, by mobile network provider brand, December 2012
                                                                        • Brand personality
                                                                          • Figure 29: Mobile network provider brand personality – macro image, December 2012
                                                                          • Figure 30: Mobile network provider brand personality – micro image, December 2012
                                                                        • Brand experience
                                                                          • Figure 31: Mobile network provider brand usage, December 2012
                                                                          • Figure 32: Satisfaction with various mobile network provider brands, December 2012
                                                                          • Figure 33: Consideration of mobile network provider brands, December 2012
                                                                          • Figure 34: Consumer perceptions of current mobile network provider brand performance, December 2012
                                                                          • Figure 35: Mobile network provider brand recommendation – Net Promoter Score, December 2012
                                                                        • Brand index
                                                                          • Figure 36: Mobile network provider brand index, December 2012
                                                                          • Figure 37: Mobile network provider brand index vs. recommendation, December 2012
                                                                        • Target group analysis
                                                                          • Figure 38: Target groups, December 2012
                                                                          • Figure 39: Mobile network provider brand usage, by target groups, December 2012
                                                                        • Group One – Conformists
                                                                          • Group Two – Simply the Best
                                                                            • Group Three – Shelf Stalkers
                                                                              • Group Four – Habitual Shoppers
                                                                                • Group Five – Individualists
                                                                                • Companies and Products

                                                                                    • Telefónica UK Limited (O2)
                                                                                      • Company history
                                                                                        • Product range
                                                                                          • Financial performance
                                                                                            • Figure 40: Key financial data for Telefónica UK, 2011 and 2012
                                                                                          • Future strategy and objectives
                                                                                            • Vodafone Group Plc
                                                                                              • Company history
                                                                                                • Product range
                                                                                                  • Financial performance
                                                                                                    • Figure 41: Key financial data for Vodafone UK, 2011 and 2012
                                                                                                  • Future strategy and objectives
                                                                                                    • Everything Everywhere Limited
                                                                                                      • Company history
                                                                                                        • Product range
                                                                                                          • Financial performance
                                                                                                            • Figure 42: Key financial data for EE, 2011 and 2012
                                                                                                          • Future strategy and objectives
                                                                                                            • Hutchison 3G UK Limited (Three)
                                                                                                              • Company history
                                                                                                                • Product range
                                                                                                                  • Financial performance
                                                                                                                    • Figure 43: Key financial data for Hutchison 3G UK Limited, H1 2011 and H1 2012
                                                                                                                    • Figure 44: Key financial information for Hutchison 3G UK Limited, 2010 and 2011
                                                                                                                  • Future strategy and objectives
                                                                                                                    • Virgin Mobile UK
                                                                                                                      • Company history
                                                                                                                        • Product range
                                                                                                                          • Financial performance
                                                                                                                            • Figure 45: Key financial data for Virgin Media, 2011 and 2012
                                                                                                                          • Future strategy and objectives
                                                                                                                          • Consumer Contract Types and Length

                                                                                                                            • Key points
                                                                                                                              • Over half of consumers on contracts
                                                                                                                                • Figure 46: Mobile phone connection types, November 2012
                                                                                                                              • Signal coverage may be impacting customer inertia
                                                                                                                                • Figure 47: When consumers last changed their mobile network provider, November 2012
                                                                                                                              • High level of consumer inertia on pre-pay connections
                                                                                                                                • Figure 48: Pay-as-you-go and contract consumers, by time since consumers last changed their mobile network provider, November 2012
                                                                                                                                • Figure 49: Charge list for orange pre-pay Racoon plan, February 2013
                                                                                                                            • Factors that Prompted Consumers to Change Network

                                                                                                                              • Key points
                                                                                                                                • Value still the primary motivator for change
                                                                                                                                  • Figure 50: Reasons for consumers’ last change of mobile network provider, November 2012
                                                                                                                                • Different motivations for contract and pay-as-you-go customers
                                                                                                                                  • Figure 51: Reasons for changing mobile network provider, by contract and pay-as-you-go consumers, November 2012
                                                                                                                                • Central Londoners significantly more focused on free allowances
                                                                                                                                  • Figure 52: Regional location of consumers who have changed mobile network provider, by importance of free minutes and free data allowances to their decision, November 2012
                                                                                                                                • Data significantly more valuable to pay-as-you-go users
                                                                                                                                    • Figure 53: Proportion of consumers who switched network for a free data or minutes allowance that also listed getting a better deal as a factor in their move, by pay-as-you-go and contract, November 2012
                                                                                                                                • What Would Make Consumers Change Provider?

                                                                                                                                  • Key points
                                                                                                                                    • Data allowances an unexpected casting vote
                                                                                                                                      • Figure 54: Factors that will prompt consumers to change mobile network provider, November 2012
                                                                                                                                    • One in ten would switch with a bundle
                                                                                                                                      • Better phones and signal coverage go hand in hand
                                                                                                                                        • Figure 55: Factors that consumers who want better signal coverage also desire when moving networks, November 2012
                                                                                                                                      • Phones more important than free minutes
                                                                                                                                        • Figure 56: Ranking of factors that will prompt consumers to change provider, November 2012
                                                                                                                                    • Attitudes towards the 4G Network

                                                                                                                                      • Key points
                                                                                                                                        • Lack of downloads mean four in ten don’t need 4G
                                                                                                                                          • Figure 57: Attitudes towards 4G networks, November 2012
                                                                                                                                          • Figure 58: Consumers who do not download enough content to their mobile phones to need a 4G connection, by presence and age of children in the household, November 2012
                                                                                                                                        • Device evolution may provide motivation to enter market
                                                                                                                                          • Figure 59: Consumers who do not want to engage with the 4G network as the handsets are currently too expensive, by age, November 2012
                                                                                                                                        • Greater understanding will benefit consumers of all ages
                                                                                                                                          • Unlimited data required for a fifth of contract owners
                                                                                                                                            • Figure 60: People who would only be interested in a 4G connection if it came with unlimited data, by contract and pay-as-you-go users, November 2012
                                                                                                                                        • Appendix – Market Size and Forecast

                                                                                                                                            • Figure 61: Best- and worst-case forecast of the value of mobile network connections, 2012-17
                                                                                                                                            • Figure 62: Best- and worst-case forecast of the volume of mobile network connections, 2012-17
                                                                                                                                        • Appendix – Brand Research

                                                                                                                                            • Figure 63: Brand usage, December 2012
                                                                                                                                            • Figure 64: Brand commitment, December 2012
                                                                                                                                            • Figure 65: Brand momentum
                                                                                                                                            • Figure 66: Brand diversity, December 2012
                                                                                                                                            • Figure 67: Brand satisfaction, December 2012
                                                                                                                                            • Figure 68: Brand recommendation, December 20120
                                                                                                                                            • Figure 69: Brand attitude, December 2012
                                                                                                                                            • Figure 70: Brand image – macro image, December 2012
                                                                                                                                            • Figure 71: Brand image – micro image, December 2012
                                                                                                                                            • Figure 72: Profile of target groups, by demographics, December 2012
                                                                                                                                            • Figure 73: Psychographic segmentation by target groups, December 2012
                                                                                                                                            • Figure 74: Brand usage, by target groups, December 2012
                                                                                                                                          • Brand index
                                                                                                                                            • Figure 75: Brand index, December 2012
                                                                                                                                        • Appendix – Consumer Contract Types And Length

                                                                                                                                            • Figure 76: Mobile phone connection type, November 2012
                                                                                                                                            • Figure 77: Mobile phone connections, by demographics, November 2012
                                                                                                                                            • Figure 78: When consumers last changed their mobile network provider, November 2012
                                                                                                                                            • Figure 79: When consumers last changed their mobile network provider, by phone contract type, November 2012
                                                                                                                                            • Figure 80: When consumers last changed their mobile network provider, by demographics, November 2012
                                                                                                                                        • Appendix – Factors that Prompted Consumers to Change Network

                                                                                                                                            • Figure 81: Reason for consumers’ last change of mobile network provider, November 2012
                                                                                                                                            • Figure 82: When consumers last changed their mobile network provider, by most popular reason for consumers’ last change of mobile network provider, November 2012
                                                                                                                                            • Figure 83: When consumers last changed their mobile network provider, by next most popular reason for consumers’ last change of mobile network provider, November 2012
                                                                                                                                            • Figure 84: Reason for consumers’ last change of mobile network provider, by when consumers last changed their mobile network provider, November 2012
                                                                                                                                            • Figure 85: Reason for consumers’ last change of mobile network provider, by most popular reason for consumers’ last change of mobile network provider, November 2012
                                                                                                                                            • Figure 86: Reason for consumers’ last change of mobile network provider, by next most popular reason for consumers’ last change of mobile network provider, November 2012
                                                                                                                                            • Figure 87: Most popular reason for consumers’ last change of mobile network provider, by demographics, November 2012
                                                                                                                                            • Figure 88: Next most popular reason for consumers’ last change of mobile network provider, by demographics, November 2012
                                                                                                                                        • Appendix – What Would Prompt Consumers To Change Provider?

                                                                                                                                            • Figure 89: Factors that will prompt consumers to change network provider, November 2012
                                                                                                                                            • Figure 90: When consumers last changed their mobile network provider, by most popular factors that will prompt consumers to change network provider, November 2012
                                                                                                                                            • Figure 91: When consumers last changed their mobile network provider, by next most popular factors that will prompt consumers to change network provider, November 2012
                                                                                                                                            • Figure 92: Factors that will prompt consumers to change network provider, by when consumers last changed their mobile network provider, November 2012
                                                                                                                                            • Figure 93: Factors that will prompt consumers to change network provider, by most popular factors that will prompt consumers to change network provider, November 2012
                                                                                                                                            • Figure 94: Factors that will prompt consumers to change network provider, by next most popular factors that will prompt consumers to change network provider, November 2012
                                                                                                                                            • Figure 95: Most popular factors that will prompt consumers to change network provider, by demographics, November 2012
                                                                                                                                            • Figure 96: Next most popular factors that will prompt consumers to change network provider, by demographics, November 2012
                                                                                                                                            • Figure 97: Ranking of factors that would lead all consumers to change network, November 2012
                                                                                                                                            • Figure 98: Importance of factors that would lead consumers who chose that factor to change network, November 2012
                                                                                                                                            • Figure 99: When consumers last changed their mobile network provider, by factors that would lead consumers to change network, November 2012
                                                                                                                                            • Figure 100: Important factors that would lead consumers to change network, by when consumers last changed their mobile network provider, November 2012
                                                                                                                                            • Figure 101: Important factors that would lead consumers to change network, by important factors that would lead consumers to change network, November 2012
                                                                                                                                            • Figure 102: Importance of a phone or handset that is available on a cheaper plan than with other networks as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 103: Importance of better signal coverage as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 104: Importance of more free minutes as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 105: Importance of more free texts as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 106: Importance of more free data as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 107: Importance of the ability to opt out of a contract early as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 108: Importance of small discounts for long-term prepaid customers as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 109: Importance of the recommendation of friends or family as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 110: Importance of the mobile connection coming as part of a bundle with other services that consumers were interested in as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 111: Importance of factors that would lead consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 112: Importance of factors that would lead consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 113: Importance of a phone or handset that was available on a cheaper plan than with other networks as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 114: Importance of better signal coverage as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 115: Importance of more free minutes as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 116: Importance of more free texts as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 117: Importance of more free data as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 118: Importance of the ability to opt out of a contract early as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 119: Importance of small discounts for long-term prepaid customers as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 120: Importance of the recommendation of friends or family as a factor that will prompt consumers to change network, by demographics, November 2012
                                                                                                                                            • Figure 121: Importance of the phone contract coming as part of a bundle with other services that the consumer was interested in, by demographics, November 2012
                                                                                                                                        • Appendix – Attitudes towards 4G

                                                                                                                                            • Figure 122: Attitudes towards 4G networks, November 2012
                                                                                                                                            • Figure 123: Attitudes towards 4G networks, by most popular attitudes towards 4G networks, November 2012
                                                                                                                                            • Figure 124: Attitudes towards 4G networks, by next most popular attitudes towards 4G networks, November 2012
                                                                                                                                            • Figure 125: Attitudes towards 4G networks, by least popular attitudes towards 4G networks, November 2012
                                                                                                                                            • Figure 126: Phone contract type, by most popular attitudes towards 4G networks, November 2012
                                                                                                                                            • Figure 127: Phone contract type, by next most popular attitudes towards 4G networks, November 2012
                                                                                                                                            • Figure 128: Attitudes towards 4G networks, by phone contract type, November 2012
                                                                                                                                            • Figure 129: Factors that will prompt consumers to change network provider, by most popular attitudes towards 4G networks, November 2012
                                                                                                                                            • Figure 130: Factors that will prompt consumers to change network provider, by next most popular attitudes towards 4G networks, November 2012
                                                                                                                                            • Figure 131: Factors that will prompt consumers to change network provider, by least popular attitudes towards 4G networks, November 2012
                                                                                                                                            • Figure 132: Attitudes towards 4G networks, by most popular factors that will prompt consumers to change network provider, November 2012
                                                                                                                                            • Figure 133: Attitudes towards 4G networks, by next most popular factors that will prompt consumers to change network provider, November 2012
                                                                                                                                            • Figure 134: Most popular attitudes towards 4G networks, by demographics, November 2012
                                                                                                                                            • Figure 135: Next most popular attitudes towards 4G networks, by demographics, November 2012

                                                                                                                                        Companies Covered

                                                                                                                                        • BT Group plc
                                                                                                                                        • Deutsche Telekom AG
                                                                                                                                        • House of Fraser Plc
                                                                                                                                        • Hutchison 3G UK Limited
                                                                                                                                        • Mitchells & Butlers Plc
                                                                                                                                        • O2 / Telefonica UK (Retail)
                                                                                                                                        • Office of Fair Trading
                                                                                                                                        • Orange plc (UK)
                                                                                                                                        • Phones 4U Ltd
                                                                                                                                        • Spotify AB
                                                                                                                                        • T-Mobile (UK) Ltd
                                                                                                                                        • Telefónica UK Ltd.
                                                                                                                                        • Virgin Media Ltd
                                                                                                                                        • Virgin Mobile
                                                                                                                                        • Vodafone Group Plc (UK)

                                                                                                                                        Mobile Network Providers - UK - March 2013

                                                                                                                                        £1,995.00 (Excl.Tax)