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Executive Summary

1.1 Underlying Ofcom’s work is the aim of improving the experience of consumers in the communications market and specifically the products and services within it. This aim is supported in our principal duty, as set out in the Communications Act, to further the interests of citizens in relation to communications matters and to further the interests of consumers in relevant markets, where appropriate by promoting competition.

1.2 To help assess the experience of consumers in communications markets we are publishing two reports: a detailed research report and an evaluation of our policy.

1.3 This policy evaluation report considers the key findings and trends emerging from the research and uses these to assess the impact of our policy work and activities. Evaluating our policy enables us to assess whether our work is effective and focused on the correct issues. It also helps us identify issues which we may have to consider in the future and what work we should prioritise.

1.4 As in previous years, we are examining four aspects of consumer experience of the communications market: choice and value; availability and take-up; empowerment; and concerns and protection.

Consumer choice and value

1.5 Convergence is changing the consumer experience of communications services. It has already affected the range of services available to consumers, how consumers use communication services, where they use services and the choice of platforms over which to use particular services.

1.6 A wide range of suppliers now offer services to consumers in the communications market. Significant growth in the availability of local loop unbundling (LLU) over the past three years has driven the availability of bundles combining different services into packages. Competition between suppliers and their marketing efforts are increasing consumer awareness of different providers, although this is most marked among younger and more affluent consumers.

1.7 The percentage of consumers who are satisfied with communications services lies between 83% and 94%, varying by service, but a significant number of consumers remain dissatisfied with communications services.

1.8 While charges for fixed calls have remained broadly stable, mobile call charges have continued to fall. This is a result of mobile contract users taking advantage of more inclusive minutes, and more ‘bonus’ minutes becoming available on pre-pay plans. Charges for broadband services have also fallen, driven by the increased availability of bundling, including ‘free’ broadband offers, and the availability of low price packages.

1.9 We are working to improve further the generally positive outcome for consumer choice and value of communications services revealed by the research. Our reviews of competition in the pay TV and mobile markets and work on next generation access infrastructure are important elements of this. At the same time our work around consumer empowerment will aim to improve consumer awareness of their choices, particularly among older consumers, to enable them to benefit from competition. We also aim to improve our understanding about what groups of consumers are dissatisfied with their services and what factors may be influencing this.

Availability and take-up

1.10 Our research shows high levels of availability of different communications services. At least 9 out of 10 consumers have fixed telephone, mobile, internet and broadcasting service available to them. However, ‘not-spots’ remain an issue particularly for mobile and broadband. We will work to improve our understanding of current gaps in coverage and will consider what actions may be taken to address these.

1.11 While take-up of a broad range of communications services was generally rising between 2005 and 2007, the past year has seen a number of changes. The take-up of fixed line fell. The take-up of mobile, internet access (broadband and dial-up together) and bundles has stabilised. At the same time, take-up of broadband and digital television has continued to increase.

1.12 As overall internet take-up has plateaued, the take-up of internet services by vulnerable consumers remains significantly lower than that of other groups.

1.13 For broadband and for bundles of services, older consumers and those with low household incomes are less likely to have taken up services than consumers in other groups. As bundles can offer consumers better value than buying single services, this means that the most vulnerable consumers may not be benefiting sufficiently from competing offers.

1.14 The take-up of digital television has continued to rise significantly for all groups. At the same time older consumers remain the most likely only to have analogue television.

1.15 These issues underline the importance of our access and inclusion strategy. In early 2009, we plan to publish a consultation on access and inclusion issues, identifying the most important barriers to take up and use by different consumer groups, and what steps Ofcom can take to help address them. We will engage with stakeholders to help improve outcomes for citizens and consumers. We aim to also shape the debate on the future regulatory framework in this area, both within the UK and in Europe.

Consumer empowerment

1.16 Effective competition in a market depends on the active engagement and participation of consumers. That means consumers knowing what services, providers and technologies are available; consumers comparing services in terms of price and quality; and consumers actively seeking out new services and technologies.

1.17 To obtain the full benefits of competition, consumers should be able to compare and change providers and products easily. Our report shows that the level of consumer engagement with the market has continued to increase over the past year.

1.18 While the overall take-up of bundles has remained stable, an increasing proportion of consumers are switching from smaller to larger bundles, encompassing an increasing number of services. Our research suggests that the more services are bundled together, the more value consumers place on this bundle. However, the research also shows that consumers are less inclined to switch larger bundles and perceive the switching process as complex, particularly if they have to unbundle services to switch. Both the information and switching mechanisms provided to consumers need to remain relevant and effective as the communications market evolves still further.

1.19 Our research this year showed that a higher proportion of consumers trusted information from websites than supplier or personal sources. But the lower levels of internet take-up among vulnerable consumer groups means these consumers may be missing out on information that would help them make decisions and switch suppliers more effectively. While we are working on improving the information available to consumers to compare suppliers and services, the research findings indicate the importance of identifying the best channels, other than the internet, for communicating with consumers. As part of our accreditation scheme for price comparison sites, we indicated that we would accredit only those online services who also offer consumers the ability to get advice and switch services offline, i.e. over the phone. We will follow this approach in other areas of our work, where relevant.

Consumer concerns and protection

1.20 Protecting consumers from scams and unfair practices is a priority for us. This year has seen a particular focus on broadband migrations, on mis-selling, in fixed and mobile, and on silent calls.

1.21 On broadband migrations, complaints have fluctuated over the past year but since January 2008 there has been a steady fall in numbers. We will continue to monitor issues around broadband migrations to ensure that the arrangements for resolving problems continue to work effectively and reduce the instances of difficulties encountered by consumers.

1.22 On fixed-line mis-selling, we have continued our programme enforcing rules introduced in 2005. Industry data suggests a reduction in the amount of unauthorised transfers (‘slamming’) but complaint levels to Ofcom have increased. We recognise significant issues remain and we will be continuing our enforcement programme and consulting shortly on new measures to combat fixed-line mis-selling.

1.23 On mobile, we have worked with industry to examine the causes of problems around unpaid cashback deals and general mis-selling and to understand the actions operators are taking to address problems. Complaints to Ofcom about unpaid cashbacks have fallen significantly through the year. However, the levels of complaints about general mis-selling have remained broadly unchanged. We have also proposed formal regulation of providers’ sales and marketing practices, aimed at tackling the remaining problems.

1.24 Silent calls continue to be source of anxiety and annoyance to consumers. We have revised our guidelines to provide greater clarity on the rules that call centres must follow. We have investigated and taken action against a number of organisations. Our research shows that silent/nuisance calls has risen to become the highest ‘spontaneous’ concern about fixed-line services and complaint numbers have increased during the year. This will continue to be an area of focus for us.

1.25 Overall, there has been a continued fall this year in the levels of spontaneous consumer concerns across all communications services, perhaps most notably around the use of the internet.

• The Consumer Experience 2008 - Policy Evaluation [pdf]
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