Abstract
As markets go, revolution has been the byword for the fixed-line sector as it has undergone major rescaping in the past few years. It finds itself competing for voice business in a deregulated yet declining market, where a deflationary spiral is driving call revenues downwards, and where mobile telephony is rapidly gaining ground and establishing itself as a default choice for increasing numbers of phone users.
Established players in the market have watched as an influx of new market entrants try to seize a slice of the declining fixed voice market with their bundled offerings. The telecoms customer is a winner in all this, as the cost of household voice and Internet services has dramatically reduced.
And as the majority of UK households now feature a broadband connection, the Internet is becoming the main communications gateway for the home. The household market has morphed from narrowband to broadband, and next-generation voice services are being developed over digital and wireless capability - the concept of the traditional residential fixed line is disappearing in a world of converging technologies.
The report defines fixed line as telecommunications lines that are not wire-free but connected to physical points.
Table of Contents
- Issues in the Market
- Key issues:
- Definition
- Abbreviations
- Market in Brief
- Market liberalisation opens up the fixed-line sector
- Lower revenues
- Newcomers denting the dominance of BT
- The encroachment from mobiles
- Impact of the digital switchover
- Losing voice against the mobile operators
- Usage patterns between fixed line and mobiles determined by age
- Fixed lines still offer distinct advantages over mobiles
- New communications order creates further pressure for landlines
- Internal Market Environment
- Key points
- Changing regulation creates market free-for-all
- Easier for new market entrants
- Wholesale line rental
- How does BT compete?
- Bundling
- Low prices inspire more to switch
- Broader Market Environment
- Key points:
- Personal disposable income up
- Figure 1: Trends in personal disposable income and consumer expenditure, 2002-12
- Household formation delivers further opportunity
- Figure 2: Total number of UK households and one-person households, 1991-2012
- Bigger market opportunities from population increase
- Figure 3: Size of UK population, by age group, 2003-12
- Competitive Context
- Key points:
- Mobile subscriber numbers continue to rise
- Figure 4: Mobile phone subscribers, 2002-07
- Mobile an increasingly attractive option
- Fixed line no longer a gateway to the home
- The Web spawns new forms of communications
- Strengths and Weaknesses in the Market
- Market Size and Forecast
- Key points:
- Numbers down across the board
- Figure 5: Key metrics in the fixed-line sector, 2002-07
- Price deflation a fact of life...
- Figure 6: Average real monthly cost of residential telecoms, 2002-07
- ...but price of access remains constant
- Call charge analysis
- A continued path of decline
- Figure 7: Fixed-line voice and access revenue, 2002-12
- Figure 8: Breakdown of forecast of fixed call revenue, 2002-12
- Factors used in the forecast
- Segment and Brand Performance
- Key points:
- Fixed-line analysis
- Figure 9: Numbers of lines taking BT and non-BT voice services, 2002-06
- Full LLU services are now emerging
- Cable remains constant
- Call minutage
- Figure 10: Share of voice communication, by type of provider, 2002-06
- User shares by fixed-line provider
- Figure 11: Penetration levels of fixed-line providers, October 2007
- Among the online sample, about one in two adults have a landline with BT
- Virgin is locked in a battle for the living room with Sky.
- TalkTalk has an 8% share, making it the third-biggest provider in the market
- Companies and Brands
- Key points:
- Major players
- British Sky Broadcasting
- BT Retail
- Losing share
- New services follow suit
- Complacent about broadband speeds
- Moving into entertainment
- No dual-play packages, yet
- VoIP
- BT Wholesale
- Regulatory pressures
- Carphone Warehouse/TalkTalk
- Mobile business
- Fixed-line services
- Broadband offers
- Kingston Communications
- Tiscali
- Increasing UK reach
- Available packages
- Virgin Media
- Returning to profit
- Packages galore
- Other providers
- Brand Communication and Promotion
- Key points:
- About £1 per head of population
- Figure 12: Fixed-line media expenditure, total expenditure and total BT, 2002/03-2006/07
- BT is the biggest spender
- Expenditure by media channel
- Figure 13: Fixed line media expenditure, by channel, 2003-07
- Tendency for directness
- TV in decline
- Press succumbs to online
- Major advertising campaigns 2006/07
- Figure 14: Fixed line media expenditure, by main campaign, Sept 2006 -- August 2007
- The old guard dominates...
- ...with newer players snapping at the heels
- The Consumer -- Major Brands and Profiles
- Key points:
- Deregulation opens up the market
- Figure 15: Penetration levels of fixed-line providers, October 2007
- Profiles of fixed-line providers
- Figure 16: Penetration of fixed-line providers, by gender, age and socio-economic group, October 2007
- Additional lifestyle and behavioural profiling of fixed-line providers
- BT
- Virgin Media
- TalkTalk
- The Consumer -- Usage of Fixed Lines and Mobiles in the Home
- Key points:
- Loyalty begins at home
- Figure 17: Attitudes towards fixed lines and mobile phones, October 2007
- An increasingly lost market
- Landline is the back-up for increasing numbers
- Selectively using the landline
- Poor mobile reception
- Appendix
- Figure 29: Profiles of fixed-line providers, by demographic analysis, October 2007
- Figure 30: Penetration of fixed-line usage modes, by demographic analysis, October 2007
- Figure 31: ' My landline always offers a clearer connection than my mobile' , by demographic analysis, October 2007
- Figure 32: ' It' s cheaper to call from my landline' , by demographic analysis, October 2007
- Figure 33: ' It' s cheaper to call from my mobile' , by demographic analysis, October 2007
- Figure 34: ' My landline is easier and more comfortable to use than my mobile' , by demographic analysis, October 2007
- Figure 35: ' I feel safer knowing I have a fixed line to the outside world' , by demographic analysis, October 2007
- Figure 36: ' It' s easier to call from my mobile, because it' s where I have my address book' , by demographic analysis, October 2007
- Figure 37: ' I only have a landline because my broadband provider required it' , by demographic analysis, October 2007
- Figure 38: ' I resent having to pay line rental for my landline' , by demographic analysis, October 2007
