Survey Reveals Opportunities for Telcos As the Recession Bites

The next six months will be tense for telcos as consumers continue to cut back on their communications and media spend. But new analysis by Booz & Company shows that shifting patterns caused by the recession mean that players in this sector will need to adapt to a new environment where customers are experienced in more innovative ways of consuming and paying for products.

The survey found that a quarter of consumers have already reduced their communication and media spend and a further 26% will cut back over the next six months.

For many consumers, mobile phones, broadband and subscription television services have become essential parts of their daily lives. However, many have still acted on low-effort money-saving opportunities. More than half (53%) said they are likely to switch to cheaper communications providers, in addition 45% of respondents said they would consider bundling telecoms and media services.

"Operators need to not only review their product and service offerings in the short term, but also think about their long-term strategy, as customers are becoming more savvy about the way they purchase and use services," said Michael Peterson, head of Booz & Company's UK CMT practice. "The operators that can recognise and adapt to these changes will emerge strongest from the recession."

The survey found that in the next six months, telecoms consumers will consider:

• bundling media services (45%)
• cancelling their broadband/TV subscription (23%)
• using more internet-based telephone services (44%)
• delaying buying a new mobile phone (45%)
• switching to a cheaper mobile contract (43%)
• stopping using their mobile phone altogether (25%)
• using their landline more often (43%)

With the recession changing consumer behaviour, telcos and media players must ensure that their offerings reflect the recessionary environment but they must also prepare for the post recessionary landscape, where some of these changes will become permanent. In the short term, successful players will focus on low cost offerings and emphasising discounted bundled services to reflect customers' price sensitivity and desire for value for money. In the long term, once consumers have gone to the effort of switching providers or bundling they are unlikely to revert back to their old ways. Bundling and reduced brand loyalty and more sophisticated buying behaviour will become the norm.

"This recession is revealing characteristics about consumers that operators can capitalise on," said John Ward, principal in Booz & Company's UK CMT practice. "The successful players of the future will prepare themselves for a customer shift towards more innovative ways of purchasing telecoms and media services."

Survey Methodology

Booz & Company surveyed 1,800 UK consumers in Feb 2009. The survey focused on their sentiment and perceptions regarding the UK economy; changes in spending that consumers have already made over the last six months; and additional changes they are considering making as the economy continues to falter. In total, 181 respondents identified telecommunications and media as one of their top three categories of concern.

Posted to the site on 12th May 2009