Ofcom and ICSTIS publish new research on
118 Directory Enquiries market
Friday 18 March 2005
Ofcom and the premium rate services regulator ICSTIS today published
the findings of their latest round of research into the performance of
the liberalised 118 directory enquiries market.
The latest research provides an update to a mystery shopping and consumer
attitudes study - using the same methodology - published by Ofcom and
ICSTIS in June 2004.
Ofcom's predecessor, Oftel, replaced the old 192 directory enquiries service
with new liberalised 118 services in 2003.
KEY LESSONS
Whilst both the previous survey in 2004 and the latest analysis indicate
that the market continues to stabilise and mature, the early months of
liberalisation following Oftel's introduction of the new 118 numbers were
characterised by a shortage of reliable and objective public information
about the choices available.
Although the actual directory enquiries liberalisation process itself
was handled well, there are lessons for Ofcom in future as to how to bring
the benefits of liberalisation to a new market. In particular, prior to
embarking on future liberalisations, Ofcom will seek to undertake more
research into the pre-liberalisation status quo. That data will then serve
as a benchmark against which the evolution of the
newly-competitive market can be measured more comprehensively.
CONSUMER ATTITUDES AND BEHAVIOURS
Firstly, around 67% of consumers surveyed who use directory enquiries
services less frequently said they now preferred to use a phone book to
find telephone numbers.
Secondly, the internet continues to grow in importance as a free and
effective source of access to telephone numbers, listings and business
services. 20% of consumers who use directory enquiries services less frequently
now use the internet to find telephone numbers instead. This proportion
may grow over time as always-on broadband connections
(currently present in more than 6 million households) increase.
Thirdly, consumers have mixed views on the benefits of directory enquiries
liberalisation. Whilst nine out of ten have selected a 118 provider and
four out of ten consumers see benefits in competition, more than six out
of ten only ever use one provider and therefore do not think there are
advantages in an increase in choice. Seven out of ten say they are confused
by the choices available and only one in ten of those surveyed believe
the 118 services available are better than the former 192 directory enquiries
regime.
Finally, 35% of consumers say they are using directory enquiries less
than before liberalisation (26% in April 2004). However, it is important
to note that these are self-reported figures and may not accurately reflect
actual call volumes to 118 providers. In future research, Ofcom and ICSTIS
will seek to analyse network traffic data to form a more precise view
of the size of the market.
MARKET PERFORMANCE
Seventeen months after its establishment, the 118 market is still evolving,
with a greater range of prices and services than were available both before
and shortly after liberalisation. In this respect the UK market is developing
in a similar manner to markets in other countries where directory enquiries
services have been liberalised successfully.
After some consolidation in the early months of liberalisation, the total
number of providers is now relatively constant. Whilst some providers
have left the market, Ofcom continues to receive requests for new 118
numbers from providers seeking to enter the market. In addition, a number
of new and innovative pricing models have emerged following liberalisation,
including charitable giving (in which a proportion of the fee is donated
to not-for-profit organisations) and free directory enquiries for customers
of some alternative telecoms providers.
Overall, average accuracy (the proportion of requests which yield a correct
answer) remains unchanged (86% versus 87% in April 2004). Weighted average
pricing remains unchanged in real terms (50p per average call versus 49p
in April 2004).
The mystery shopping research looked at the top 30 providers responsible
between them for more than 95% of the total market. The two most-used
services (BT 118 500 and The Number's 118 118) charge somewhat more than
the weighted market average of 50p, whilst many smaller providers typically
charge less - in some cases below 30p. Just under half of the providers
surveyed charge less than the old 192 rate of 40p; some of the cheapest
providers are also amongst the most accurate.
The research also analysed consumer usage of enhanced directory enquiry
services, such as call connect and text-back (text messaging the requested
number to a mobile phone). Almost half of the consumers surveyed were
aware of at least one enhanced service; amongst consumers who call directory
enquiries from their mobile phone, 73% were aware of text-back. The most
popular enhanced services were text-back (used by 12% of mobile phone
users) and call connect (used by 6% of all consumers).
However consumers do not have a good understanding of the costs involved;
for example, the large majority of directory enquiries users surveyed
(89%) were unaware that there is no additional charge for text-back.
NEXT STEPS
The research reveals trends in consumer understanding and pricing which
include areas meriting further study.
Ofcom and ICSTIS will therefore undertake further market monitoring and
consumer research - leading to publication of price and performance information
for the 30 largest 118 directory enquiries providers - in order to track
longer-term market trends and provide consumers with information to help
them choose the most appropriate service for their
needs.
The next round of research will take place over the course of 2005. Once
it has been completed and the findings published, Ofcom and ICSTIS will
consider the most appropriate action in response.
The full research report, including details of survey results for the
top 30 providers, can be found online at www.ofcom.org.uk
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