End User Churn in the UK Broadband Market May 2004 Prepared for:

1
End User Churn in the UK Broadband MarketMay
2004Prepared for
David Lowrie Market Research Analysis BT
Wholesale Markets
2
Omnibus Broadband DataWho Where?Penetration
Profiles Demographics
3
Broadband steady increase since January 2003,
dial up access remained relatively constant
Source MORI Tech Tracker (represents GB adults
age 15)
4
Broadband now at just over 4 million households
in UK, all home internet access around 12 million
Source MORI Tech Tracker (represents GB adults
age 15)
5
Profile broadband users UK
Source MORI general public omnibus April 2004
6
Broadband more likely to be in family homes
Source MORI general public omnibus April 2004
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Strongest in London, SE. and West Midlands
Source MORI general public omnibus April 2004
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Suppliers Used
9
Cable modem users more likely to have just
considered one supplier for broadband
Q Which of the following statements best
describes how you decided what broadband supplier
to use?
I considered several providers and chose the one
with the cheapest price
I only considered one supplier

• By region
• Telewest 45
• NTL 43
• Other 35

I considered two or three providers of broadband
Base All respondents (998)
10
More than half use the broadband service of an
existing supplier
Q Which of the following applies to your current
broadband provider?
I am using a different provider for broadband
than my telephone/cable provider or previous ISP
I subscribe to the broadband service of my
existing telephone or cable supplier
I subscribe to the broadband service of my
existing ISP
Base All respondents (998)
11
Most have migrated from dial up, although a
significant number for moved straight to broadband
Q What type of internet connection did your
household use before you adopted broadband
Base All respondents (998)
12
On average end users have been using broadband at
home for 12 months a youthful market
Q How long have you been using broadband at home
?
Dont know/Not sure
One month or less
2 to 3 months
More than one year
4 6 months
7 12 months
Base All respondents (998)
13
These are the hygiene factors when selecting
suppliers
Q How important are the following factors to
you, when deciding which suppliers of broadband
services to use?
very/fairly important
Reliable connection
Speed of connection available
Supplier has good/trustworthy reputation
Cheap usage costs
Quality of customer helpdesk
Cheap installation costs
Base All respondents (998)
14
These factors are of lesser importance
Q How important are the following factors to
you, when deciding which suppliers of broadband
services to use? (Continued)
very/fairly important
Easy to sign up
Availability of free modem
Cost of phoning helpdesk
Length of contract
Content provided by broadband supplier
Better deal on telephone/digital TV package
Billed on my ordinary phone or cable bill
Base All respondents (998)
15
Suppliers Seen
16
BT leading provider in levels of awareness for
broadband
Total awareness
ALL BT
AOL
Freeserve
NTL
Tiscali
Telewest
Yahoo
Virgin Net
Demon
Pipex
Bulldog
Spontaneous awareness
Base All respondents (998)
17
NTL performs well in terms of usage compared to
its level of awareness
Current usage
NTL
Telewest
ALL BT
AOL
Freeserve
Tiscali
Pipex
Virgin Net
Yahoo
Bulldog
Demon
Total Awareness
Base All respondents (998)
18
NTL above average in converting ad spend to
usage, BT and Blueyonder also above average
Current usage
NTL
Telewest
ALL BT
AOL
Tiscali
Freeserve
Pipex
Virgin Net
Bulldog
Yahoo
Demon
Seen advertising
Base All respondents (998)
19
Loyalty
20
6 of users have ever switched broadband supplier
Q Have you ever changed the supplier of your
broadband connection?
Base All respondents (998)
21
7 are very likely to switch supplier in the next
12 months
Q How likely are you to switch broadband provider
in the next 12 months?
Expect to discontinue use of broadband completely
less than 1
Base All respondents (998)
22
Disloyals younger, more sophisticated users
- Survey average
Survey average
Survey average
33
25 34 years old
Access the internet at home via broadband through
49
ADSL
46
A cable modem
Connection type before broadband
79
Ordinary phone line
ISDN phone line
10
Subscribe to broadband services of
Existing telephone or cable supplier
56
22
Existing ISP
Different provider than telephone/ cable provider
or previous ISP
20
Base All respondents who have switched supplier
in the past or who are very likely to switch
(126)
23
What drives disloyalty ?
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Among likely switchers, value for money is the
main driver influencing change comprising a
cheaper deal/faster connection
Reasons likely to influence the decision to
change supplier over the next 12 months
Cheaper deal from other provider
Fast connection from other provider
Moving house
Combining phone/ digital TV and internet provider
High cost/ too expensive
Poor customer service/ support/ helpdesk
Poor connection/ unreliable
Poor quality service
Advertising by other providers
Base All respondents who are likely to switch
broadband provider (181)
25
Among users who have switched supplier though, a
cheaper deal from another provider influenced the
decision to change, moving is house is also a
catalyst for change for around a third
Q Which of the following influenced your decision
to change supplier
Cheaper deal from other provider
Moving house
Fast connection from other provider
Combining phone/ digital TV and internet provider
Base All respondents who have switched provider
(64)
26
Around half of users who are likely to change
supplier say that cheaper deals from their
provider would stop them from changing
Q What could your current supplier do, if
anything, to avoid you changing to another
provider?
Cheaper/lower price/ deals
Better customer service/ support/ helpdesk
Speed
Better reliability/ connection
Better service
Availability
Upgrades/ free upgrades available
Other
Nothing
Base All respondents who are likely to switch
broadband provider and gave an answer (144)
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Overall among those who say they are likely to
switch, just over a third say they would consider
changing to BT
Q Which supplier of broadband services do you
consider you may change to over the next 12 months
BT (any brand)
Tiscali
Telewest
Freeserve
AOL
Virgin Net
Bulldog
NTL
Pipex
Dont know
Base All respondents who are likely to switch
broadband provider (181)
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What makes the disloyals different ?
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The top three most important factors to consider
when deciding which broadband supplier to use are
reliability of connection, cost and speed a
commodity market...
Q Three most important factors when deciding
which suppliers of broadband services to use
Reliable connection
Cheap usage costs
Speed of connection available
Quality of customer service
Supplier has good/trustworthy reputation
Cheap installation costs
Base All respondents who have switched supplier
in the past or who are very likely to switch
(126)
30
There appears to an opportunity to differentiate
on quality of customer service and bundled
packages
Q Three most important factors when deciding
which suppliers of broadband services to use
Availability of a free modem
Better deal on telephone/digital TV package
Length of contract
Cost of phoning helpdesk
Easy to sign up
Billed on my ordinary phone or cable bill
Content provided by broadband supplier
Base All respondents who have switched supplier
in the past or who are very likely to switch
(126)
31
What can suppliers improve on ?
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Having a reliable service is what users like most
about the service. Among switchers, responses are
not as positive
Q What aspects of your current service do you
most like?
Reliability/no problems
Good/cheap price/deal
Speed
Good/helpful customer service/ support/ helpdesk
Easy to use
Part of a package/package includes TV and phone
Good quality service
Nothing
Base All respondents who gave an answer (732)
33
Switchers are more likely to perceive poor
customer service is an issue
Q What aspects of your current service provider
do you least like?
High cost/ too expensive
Poor connection/ unreliable
Poor customer service/ support/ helpdesk
Speed
Difficult to access helpdesk / slow phone response
Cost of calling helpdesk
Nothing
Base All respondents who gave an answer (649)
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For all broadband users price and speed of
connection are important, customer support is
potentially an area that suppliers can
differentiate on
Q What aspects of service can broadband
providers improve on?
Price
Speed
Customer service/ support/helpdesk
Reliability/ connection
Reduction of spam/ pop ups/ advertising
Virus protection
Everything
Base All respondents who gave an answer (617)
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Conclusions
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Conclusions

• Heaviest users are 35-44 year old family homes,
  in W Midlands, London SE
• To date, churn rates in the broadband market are
  relatively low. Just 6 of broadband customers
  have ever changed supplier ( 250,000 lines).
• However, as users become more confident with
  broadband, this churn rate is likely to increase.
  7 of households are very likely to change
  supplier over the next 12 months.
• To date, users have been largely conservative in
  their selection of supplier. Nearly 80 are using
  an incumbent supplier for telephone, cable or ISP
  services.

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Conclusions

• Consistently the factors end users rate as
  important to them are
• Reliability of connection
• Speed of connection
• Supplier with good trustworthy reputation
• Cheap usage costs
• Those more likely to consider switching tend to
  be younger, more sophisticated end users.
• Price is an important driver to change. Cheaper
  deals from other providers is by far the main
  driver influencing the decision to change
  supplier among likely switchers
• Switchers are more likely to perceive poor
  customer service is an issue. There appears to be
  an opportunity to differentiate on quality of
  customer service and bundled packages.

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Thank You Any Questions?