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Mobile Network Providers - UK - March 2014

“For the moment, until the data-driven services willingly choose to interact or are subject to legislative restrictions forcing them to become more open, network operators remain the most cohesive and simple way for consumers to talk to each other based on a single identifier; the phone number.”

– Samuel Gee, Senior Technology and Media Analyst

Some questions answered in this report include:

  • Are operators about to start losing control of staple text and voice services?
  • How are older and younger consumers polarising the market?

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Table of contents

  1. Introduction

      • Definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Forecast retail value of sales of mobile network connections, 2008-18
              • Figure 2: Forecast volume of mobile network connection sales, 2008-18
            • Market factors
              • Roaming legislation may heavily impact operator revenue
                • Consumers are using data-based communication services as voice and text volumes fall
                  • 4G should take off over 2014
                    • Companies, brands and innovation
                      • The consumer
                        • Network operator and type of contract
                          • Figure 3: Mobile network provider consumers use, December 2013
                          • Figure 4: Connection types consumers have, December 2013
                        • Contract length and monthly spend
                          • Figure 5: Length of consumer contracts, December 2013
                          • Figure 6: Monthly spend on consumer mobile contracts, December 2013
                        • Features consumers would upgrade if possible
                          • Figure 7: Feature consumers would upgrade in new phone contract for free, if available, December 2013
                        • Important network features when choosing a new provider
                          • Figure 8: Most important network features to consumers when picking a new network provider, December 2013
                        • What we think
                        • Issues and Insights

                            • Operators may be about to start losing control of staple text and voice services
                              • The facts
                                • The implications
                                  • Older and younger consumers behave differently, polarising the market
                                    • The facts
                                      • The implications
                                      • Trend Application

                                          • Trend: Return to the Experts
                                            • Trend: Make it Mine
                                              • Mintel futures: East Meets West
                                              • Market Drivers

                                                • Key points
                                                  • Roaming legislation may heavily impact operator revenue
                                                    • Increasing use of non-call communication channels
                                                      • Figure 9: Volume of outgoing mobile call minutes and % change, 2007-12
                                                      • Figure 10: Text messages and internet-connected messages sent in the UK, 2007-13
                                                      • Figure 11: Use of mobile data services, 2011-13
                                                    • Operators split handsets and contracts
                                                      • Figure 12: Sample breakdown of a traditional contract, February 2014
                                                      • Figure 13: Sample breakdown of an O2 Refresh contract, February 2014
                                                    • 4G should take off over 2014
                                                      • Figure 14: EE 4G subscribers, November 2012-January 2014 (projected)
                                                      • Figure 15: Operator 4G band spectrum allocations, by megahertz (MHz) ownership and % share
                                                  • Who’s Innovating?

                                                    • Key points
                                                      • Three’s pre-regulation abandonment of roaming rates will please consumers
                                                        • Vodafone considers partnering with Sky
                                                          • O2’s Refresh and EE’s Swap split out mobile and contract costs
                                                            • Weve’s partnership with MasterCard will slash mobile payment costs
                                                            • Market Size and Forecast

                                                              • Key points
                                                                • Market should continue to see slow but steady growth
                                                                  • Figure 16: Value of mobile network services retail sales, both pre-pay and post-pay, 2008-18
                                                                  • Figure 17: Volume of mobile network services sales, both pre-pay and post-pay, 2008-18
                                                                • Forecasts
                                                                    • Figure 18: Forecast retail value of sales of mobile network provider connections, 2008-18
                                                                    • Figure 19: Forecast volume of sales of retail mobile network provider connections, 2008-18
                                                                • Market Share and Segmentation

                                                                  • Key points
                                                                    • Post-pay takes greater share of market
                                                                      • Figure 20: Proportion of pre-pay and post-pay mobile network contracts, 2007-12
                                                                      • Figure 21: Volume and annual change in outgoing voice call minutes by pre and post-pay connections, 2007-12
                                                                      • Figure 22: Monthly line rental prices for new post-pay mobile connections, 2009 and 2012
                                                                    • Post-pay ARPU continues to decline 2012
                                                                      • Figure 23: ARPU, by pre-pay connections, post-pay connections and average, 2007-12
                                                                    • Data revenues continue to increase, though voice still dominates
                                                                      • Figure 24: Retail fixed and mobile telecoms operator revenue in £ billions, by service, 2010-12
                                                                  • Companies and Products

                                                                      • Everything Everywhere Limited
                                                                          • Figure 25: Key financial data for EE, 2012 and 2013
                                                                        • Hutchison 3G UK Limited (Three)
                                                                            • Figure 26: Key financial data for Hutchison 3G UK Limited, H1 2012 and H1 2013
                                                                          • Telefónica UK Limited (O2)
                                                                              • Figure 27: Key financial data for Telefónica UK, 2012 and 2013
                                                                            • Vodafone Group Plc
                                                                                • Figure 28: Key financial data for Vodafone UK, 2012 and 2013
                                                                            • Brand Advertising, Perceptions and Social Media

                                                                              • Brand advertising
                                                                                • 2013 decline in adspend of almost 10%
                                                                                  • Figure 29: Total mobile adspend by mobile network operators, 2009-13
                                                                                • Vodafone heaviest spending operator
                                                                                  • Figure 30: Total adspend by operator, 2009-13
                                                                                • Brand perceptions
                                                                                  • Key brand metrics
                                                                                    • Figure 31: Key brand metrics, November 2013
                                                                                  • Brand map
                                                                                      • Figure 32: Attitudes towards and usage of brands in the mobile network providers sector, December 2013
                                                                                    • Correspondence analysis
                                                                                      • Brand attitudes
                                                                                        • Figure 33: Attitudes, by mobile network provider brand, December 2013
                                                                                      • Brand personality
                                                                                        • Figure 34: Mobile network provider brand personality – macro image, December 2013
                                                                                        • Figure 35: Mobile network provider brand personality – micro image, December 2013
                                                                                      • Brand usage
                                                                                        • Figure 36: Brand usage, November 2013
                                                                                      • Brand experience
                                                                                        • Figure 37: Brand satisfaction, November 2013
                                                                                      • Social media and online buzz
                                                                                        • Social media metrics
                                                                                          • Figure 38: Social media metrics of selected mobile network provider brands, February 2014
                                                                                        • Twitter plays vital role in brand strategy
                                                                                          • Online mentions
                                                                                            • O2 consistently more talked about than the rest
                                                                                              • Figure 39: Online mentions of selected network provider brands, January-November 2013
                                                                                            • O2 still earns most mentions away from its venue business
                                                                                              • Figure 40: Selected mobile network provider brands share of voice, without O2 mentions around venues, January-November 2013
                                                                                              • Figure 41: Mentions of O2, excluding mentions about venues, January-November 2013
                                                                                              • Figure 42: Mentions of other selected network provider brands, January-November 2013
                                                                                            • Topics of discussion
                                                                                              • Figure 43: Topics of discussion around selected mobile network provider brands, January-November 2013
                                                                                            • 4G is most talked about topic
                                                                                              • Figure 44: Percentage of 4G conversations by brand, January-November 2013
                                                                                              • Figure 45: Mentions around 4G, by brand, January-November 2013
                                                                                            • Shift in where mentions around 4G occurred in second half of the year
                                                                                              • Figure 46: Conversations around 4G across time, by media, January-November 2013
                                                                                            • More choice means consumers consider their options
                                                                                              • Figure 47: Mentions around leaving, cancelling or switching provider, January-November 2013
                                                                                            • Three earns the peak in mentions around advertising
                                                                                              • O2 has the highest number of mentions across the period, but not as positive as Three
                                                                                                • The adverts lead to a spike lasting for around two weeks
                                                                                                  • Analysis by brand
                                                                                                    • O2
                                                                                                      • Figure 48: Topic cloud around mentions of O2, January-November 2013
                                                                                                    • Vodafone
                                                                                                      • Figure 49: Topic cloud around mentions of Vodafone, January-November 2013
                                                                                                      • Figure 50: Discussion around brands by media, January-November 2013
                                                                                                    • EE
                                                                                                      • Figure 51: Topic cloud around mentions of EE, January-November 2013
                                                                                                      • Figure 52: Changing perceptions of EE, 2012-13
                                                                                                    • Three
                                                                                                      • Figure 53: Topic cloud around mentions of Three, January-November 2013
                                                                                                  • The Consumer – Network Operator and Type of Contract

                                                                                                    • Key points
                                                                                                      • Many EE consumers still identify with subsidiary brands
                                                                                                        • Figure 54: Mobile network provider consumers use, December 2013
                                                                                                      • Demographic highlights of operator use
                                                                                                        • Demographic charts
                                                                                                          • Figure 55: Mobile network operator used by consumers, by age, December 2013
                                                                                                          • Figure 56: Mobile network operator used by consumers, by socio-economic status, December 2013
                                                                                                        • Almost six in ten on contract
                                                                                                          • Figure 57: Connection types consumers have, December 2013
                                                                                                          • Figure 58: Network operator by pay as you go and contract connection, December 2013
                                                                                                      • The Consumer – Contract Length and Monthly Spend

                                                                                                        • Key points
                                                                                                          • Over half of all consumers on two-year contracts
                                                                                                            • Figure 59: Length of consumer contracts, December 2013
                                                                                                          • Virgin takes high share of rolling customers
                                                                                                            • Figure 60: Mobile network providers that consumers have connections with, by length of current contract, December 2013
                                                                                                          • A quarter of consumers pay between £11 and £16
                                                                                                            • Figure 61: Monthly spend on consumer mobile contracts, December 2013
                                                                                                          • Age has clearest relationship to payment
                                                                                                            • Figure 62: Amount consumers spend on monthly contracts, by age, December 2013
                                                                                                          • High handset costs prompting long-term, expensive contacts
                                                                                                              • Figure 63: Length of consumer post-pay contracts, by monthly spend on consumer contracts, December 2013
                                                                                                          • The Consumer – Features Consumers Would Upgrade if Possible

                                                                                                            • Key points
                                                                                                              • Handset the most important feature to consumers
                                                                                                                • Figure 64: Feature consumers would upgrade in a new phone contract for free, if available, December 2013
                                                                                                                • Figure 65: Feature consumers would upgrade in a new phone contract for free, if available, by age, December 2013
                                                                                                              • Importance of handset contrasts to brand rankings
                                                                                                                  • Figure 66: Importance of brands and model when buying a new phone, November 2013
                                                                                                                • Parents of younger children more likely to want data
                                                                                                                  • Figure 67: Consumers who would increase the amount of data included in a new phone contract if free of charge to do so, by children in the household, December 2013
                                                                                                                • Pay-as-you-go-users still minutes-focused
                                                                                                                  • Figure 68: Feature consumers would upgrade in a new phone contract for free if available, by contract type, December 2013
                                                                                                              • The Consumer – Important Network Features When Choosing a New Provider

                                                                                                                • Key points
                                                                                                                  • Network coverage and call quality most important
                                                                                                                    • Figure 69: Most important network features to consumers when picking a new network provider, December 2013
                                                                                                                  • Friends and family grow in importance
                                                                                                                      • Figure 70: Most important network features to consumers when picking a new network provider, ranked by 1 – 5 in importance, with indicators showing change in position, December 2013
                                                                                                                    • Data the one feature with clear age bias
                                                                                                                      • Figure 71: Most important network features to consumers when picking a new provider, by age of respondent, ranked by percentage point difference between the results, December 2013
                                                                                                                    • Data-lovers losing interest in voice calls
                                                                                                                    • Appendix – Market Size and Forecast

                                                                                                                        • Figure 72: Value of retail sales of mobile network connections, best and worst case forecasts, 2013-18
                                                                                                                        • Figure 73: Value of retail sales of mobile network connections, best and worst case forecasts, 2013-18
                                                                                                                    • Appendix – Brand Advertising, Perceptions and Social Media

                                                                                                                        • Figure 74: Brand usage, December 2013
                                                                                                                        • Figure 75: Brand commitment, December 2013
                                                                                                                        • Figure 76: Brand diversity, December 2013
                                                                                                                        • Figure 77: Brand satisfaction, December 2013
                                                                                                                        • Figure 78: Brand recommendation, December 2013
                                                                                                                        • Figure 79: Brand attitude, December 2013
                                                                                                                        • Figure 80: Brand image – macro image, December 2013
                                                                                                                        • Figure 81: Brand image – micro image, December 2013
                                                                                                                        • Figure 82: Online mentions of selected network providers, January-November 2013
                                                                                                                        • Figure 83: Topics of discussion around selected network providers, January-November 2013
                                                                                                                    • Appendix – The Consumer – Network Operator and Type of Contract

                                                                                                                        • Figure 84: Mobile network provider consumers use, December 2013
                                                                                                                        • Figure 85: Most popular mobile network provider consumers use, by demographics, December 2013
                                                                                                                        • Figure 86: Next most popular mobile network provider consumers use, by demographics, December 2013
                                                                                                                        • Figure 87: Least popular mobile network provider consumers use, by demographics, December 2013
                                                                                                                        • Figure 88: Connection types consumers have, December 2013
                                                                                                                        • Figure 89: Mobile network provider consumers use, by type of mobile connection consumers have, December 2013
                                                                                                                        • Figure 90: Connection types consumers have, by most popular mobile network provider consumers use, December 2013
                                                                                                                        • Figure 91: Connection types consumers have, by next most popular mobile network provider consumers use, December 2013
                                                                                                                        • Figure 92: Connection types consumers have, by demographics, December 2013
                                                                                                                    • Appendix – The Consumer – Contract Length and Monthly Spend

                                                                                                                        • Figure 93: Length of consumer contracts, December 2013
                                                                                                                        • Figure 94: Connection types consumers have, by length of consumer contracts, December 2013
                                                                                                                        • Figure 95: Mobile network provider consumers use, by length of consumer contracts, December 2013
                                                                                                                        • Figure 96: Length of consumer contracts, by most popular mobile network provider consumers use, December 2013
                                                                                                                        • Figure 97: Length of consumer contracts, by next most popular mobile network provider consumers use, December 2013
                                                                                                                        • Figure 98: Length of consumer contracts, by demographics, December 2013
                                                                                                                        • Figure 99: Monthly spend on consumer contracts, December 2013
                                                                                                                        • Figure 100: Mobile network provider consumers use, by most popular monthly spend on consumer contracts, December 2013
                                                                                                                        • Figure 101: Mobile network provider consumers use, by next most popular monthly spend on consumer contracts, December 2013
                                                                                                                        • Figure 102: Length of consumer contracts, by most popular monthly spend on consumer contracts, December 2013
                                                                                                                        • Figure 103: Length of consumer contracts, by next most popular monthly spend on consumer contracts, December 2013
                                                                                                                        • Figure 104: Most popular monthly spend on consumer contracts, by demographics, December 2013
                                                                                                                        • Figure 105: Next most popular monthly spend on consumer contracts, by demographics, December 2013
                                                                                                                    • Appendix – The Consumer – Features Consumers Would Upgrade if Possible

                                                                                                                        • Figure 106: Feature consumers would upgrade in a new phone contract for free, if available, December 2013
                                                                                                                        • Figure 107: Mobile network provider consumers use, by feature consumers would upgrade in a new phone contract for free, if available, December 2013
                                                                                                                        • Figure 108: Feature consumers would upgrade in a new phone contract for free, if available, by most popular mobile network provider consumers use, December 2013
                                                                                                                        • Figure 109: Feature consumers would upgrade in new phone contract for free, if available, by next most popular Mobile network provider consumers use, December 2013
                                                                                                                        • Figure 110: Feature consumers would upgrade in a new phone contract for free, if available, by demographics, December 2013
                                                                                                                    • Appendix – The Consumer – Important Network Features When Choosing a New Provider

                                                                                                                        • Figure 111: Most important network features to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 112: Most important network features to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 113: Mobile network provider consumers use, by the importance of good network coverage to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 114: Mobile network provider consumers use, by The importance of good call quality to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 115: Mobile network provider consumers use, by the importance of amount of data usage included to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 116: Mobile network provider consumers use, by The importance of recommendation by friends and family to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 117: Mobile network provider consumers use, by the importance to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 118: Mobile network provider consumers use, by the importance of the selection of mobile phones exclusive to that network to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 119: Mobile network provider consumers use, by the importance of cost of the mobile insurance the network offers to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 120: Mobile network provider consumers use, by the importance of customer service reputation of the network to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 121: Connection types consumers have, by the importance of good network coverage to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 122: Connection types consumers have, by the importance of good call quality to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 123: Connection types consumers have, by the importance of amount of data usage included to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 124: Connection types consumers have, by the importance of recommendation of friends and family to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 125: Connection types consumers have, by the importance of the amount of free minutes given by the network to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 126: Connection types consumers have, by the importance of selection of mobile phones exclusive to that network to consumers when picking a new provider, December 2013
                                                                                                                        • Figure 127: Connection types consumers have, by the importance of the cost of the mobile insurance the network offers when picking a new provider, December 2013
                                                                                                                        • Figure 128: Connection types consumers have, by the importance of the customer service reputation of the network to consumers when picking a new provider, December 2013

                                                                                                                    Companies Covered

                                                                                                                    • Alcatel
                                                                                                                    • Asda Group Ltd
                                                                                                                    • AT&T Inc.
                                                                                                                    • BT Group plc
                                                                                                                    • Canon Inc.
                                                                                                                    • Expedia.co.uk
                                                                                                                    • Facebook, Inc.
                                                                                                                    • HTC
                                                                                                                    • Hutchison 3G UK Limited
                                                                                                                    • Hutchison Whampoa Limited
                                                                                                                    • Nokia Corporation (UK)
                                                                                                                    • Orange plc (UK)
                                                                                                                    • Phones 4U Ltd
                                                                                                                    • Skype Technologies S.A.
                                                                                                                    • Sony (UK) Ltd
                                                                                                                    • Spotify AB
                                                                                                                    • T-Mobile (UK) Ltd
                                                                                                                    • Telefónica UK Ltd.
                                                                                                                    • The Carphone Warehouse Ltd
                                                                                                                    • Verizon Communications Inc.
                                                                                                                    • Verizon Wireless (Cellco)
                                                                                                                    • Virgin Media Ltd
                                                                                                                    • Vodafone Group Plc (UK)

                                                                                                                    Mobile Network Providers - UK - March 2014

                                                                                                                    £1,995.00 (Excl.Tax)