Consumers Prefer Communications over Celebrations in Recession

Around half of British consumers would sooner cut back on eating out, home improvements and holidays than give up communications services, according to new research from the UK's telecoms regulator, Ofcom.

When asked which items consumers were likely to cut back on in the ongoing recession, 47 per cent would choose to cut back on going out for dinner, 41 per cent on DIY and 41 per cent on holidays. This compares with only a fifth (19 per cent) who would cut back on mobile phone spend, 16 per cent on TV subscriptions and 10 per cent on their broadband services.

Consumers continue to use their communications services more but are paying less for them. In May this year consumers spent an average of 25 minutes a day online at home - up from 9 minutes in 2004. Average household spend on internet services fell in real terms from £11.37 in 2007 to £10.71 in 2008.

The report also shows that consumers are seeking opportunities to save money on communications services. In the first quarter of 2009, nearly half of consumers (46 per cent) are taking a bundle of services - two or more services such as telecoms, broadband and TV - from one operator, up from 39 per cent twelve months previously.

Consumers are also looking for good deals and securing value for money. Nearly one in two (47 per cent) said that they are more likely to take a bundle of services now than they were twelve months ago.

Around a quarter of consumers said they would be more prepared to shop around now for their mobile phone service and broadband provider than a year ago (29 and 19 per cent respectively).

Some 70 per cent of mobile phone users said they would retain rather than upgrade their mobile handsets to save money on their bills. Since September 2008, a fifth (20 per cent) of all mobile phone contracts were SIM-only, where mobile phone users get a SIM card that can be used in a handset they already have.

SIM-only contracts typically offer lower monthly fees and also give consumers greater flexibility to shop around for the best deal as they often only require a one-month contractual commitment - around a quarter of new mobile contracts in the first quarter of 2009 (24 per cent) were for one month only, up from 10 per cent on the year.

However, 24-month contracts are also becoming increasingly popular as consumers commit to longer periods in return for lower monthly fees and inclusive, or heavily discounted, handsets. In the first quarter of 2009, more than one in ten new mobile contracts (13 per cent) were for a 24-month period, compared to only 2 per cent a year previously.

Broadband Internet Services

Overall take up of broadband reached 68 per cent of households by the end of the first quarter of 2009. This is up from 58 per cent on the previous year, an increase of 17 per cent.

Many more consumers are taking up mobile broadband. In May of this year alone there were more than a quarter of a million new mobile broadband connections, up from 139,000 new connections in May 2008.

More than 1 in 10 households (12 per cent) has a mobile broadband connection and, of these, three-quarters (75 per cent) also had access to broadband through their landline. This suggests that many consumers are using mobile broadband to complement their landline connection rather than replace it. In addition to this some 8 million people in the UK had accessed the internet on their mobile phone in the first quarter of this year, an increase of more than 40 per cent on the previous year.

Younger people are both more likely to use mobile broadband and to have it as their only internet connection. Around one in six of 16-34 year olds live in a household with a mobile broadband connection, and one in three of these do not also have a landline broadband connection. Fewer than one in ten over-55s has a mobile broadband connection and only one in ten of these do not also have a landline broadband connection. In the over-65 group, less than one per cent surveyed relied solely on a mobile broadband connection.

Communications capitals

The report measures take up of services in a selection of towns and cities across the UK's nations and regions. Of the cities surveyed, highlights include:

• Mobile broadband - UK average 12 per cent: In England, Leeds has the highest take up of mobile broadband at 29 per cent. In Scotland, the Highlands and Islands lead the way with 22 per cent. In Wales, take up is highest in Swansea at 18 per cent and in Northern Ireland 8 per cent of households had mobile broadband. Overall take up was lowest in the Scottish Borders at 3 per cent.
• Mobile-only households - UK average 12 per cent: Cardiff is the mobile-only capital with 29 per cent of mobile-only households. In England, Leicester had the highest take up of mobile only households at 25 per cent. Some 27 per cent of Glaswegian households were mobile-only and in Belfast, 24 per cent of households are mobile only. Overall take up was lowest in London at 6 per cent.
• Bundles - UK average 46 per cent: In Scotland take up of bundles was highest in Dundee at 65 per cent of households, just ahead of Newport in Wales at 63 per cent. In England 59 per cent of households had a bundle of services and in Northern Ireland, take up of bundles was highest in Belfast at 51 per cent of households. Overall take up was lowest in Highlands and Islands at 15 per cent.

Peter Phillips, Ofcom Partner, Strategy & Market Developments said: "Despite the recession, people are spending more time watching TV, using their mobile phone or accessing the internet. They would rather do without meals out or holidays than give up their phone, broadband or pay TV package.

"Meanwhile, we are becoming more canny about the way we pay for these services. Almost half of us economise by taking a bundle of communications services from a single supplier, while one fifth opt for cheaper mobile contracts which don't include an expensive new phone.

"As well as getting better deals we are demanding more control. Over 25 per cent of households now use a digital TV recorder to watch programmes at a time that suits us, and 23 per cent use online catch up services like the BBC iPlayer. One in eight households has a mobile broadband connection allowing them to use the internet on the move."

Posted to the site on 6th August 2009