Tuesday, March 30, 2004

Daiwa Eurotelcoblog No. 2: Instant messaging, OFTEL surveys (original email blast 12:26 PM, Friday, 1st August, 2003)

Instant messaging

Those who happened to read our Eurotelcorama piece last week on enhanced instant messaging and its potential to further shake up the voice market may wish to read this CNET review of the AOL 9.0 Optimized product, which gives a good rundown of the new features, including voice IM http://www.cnet.com/internet/0-3762-8-21358167-2.html?tag=arrow.

OFTEL surveys

A quick read of the OFTEL surveys of small and medium-sized business use of telephony and internet (to the end of May 2003) in the UK throws up the following bullet points:

88% of SMEs use BT for their fixed line services, down from 91% in February, and 93% in May 2002. Cable & Wireless has also seen a decline, to 12% in May from 16% in February.
Overall satisfaction levels remain steady at 92%.
24% of SMEs now connect to the internet via broadband connection (split 75% ADSL/25% cable modem). 29% claim to have switched access package (up from 21% in February), and 20% claimed to have switched to broadband from narrowband
BT is still the business ISP of choice, but market share (based on the survey sample) has fallen to 25% in May from 27% in February and 31% in May 2002.
Broadband users' general satisfaction level, at 92%, is ten percentage points higher than businesses on metered narrowband packages, but lower than unmetered narrowband (95%). Interestingly, broadband users report nearly the same levels of session interruption/disconnection on broadband (15% experience it weekly) as do total SME users (16%). Speed of connection and freedom from dialing-up seem to be greater determinants of satisfaction, rather than reliability.

OFTEL also revealed yesterday that it intends to begin tracking the large business segment, and in preparation, it has conducted interviews with 40 of the 500 largest companies in the UK on their views on the industry. The survey is qualitative, rather than quantitative, but the interesting points for us were:

More than 90% of companies surveyed use BT as partial or sole supplier of telecoms services. BT was identified in 75% of cases as main or strategic supplier of services.
Most respondents expressed reluctance to switch service providers, in some cases claiming that estimated switching costs of £350,000 serve as a serious disincentive.
Many respondents expressed dissatisfaction with regulatory constraints on BT offering discounts on bundled or multiple services. Many said they viewed OFTEL's stance as being detrimental to end users, and would like to be in a position to receive a 5 - 10% cross-product discount from BT. Others accused BT of "hiding behind OFTEL."

OFTEL says the first quantitative survey will be released "shortly" and every six months thereafter. We think it should shed a lot more light on the heretofore under-researched UK corporate space and BT's place within it.

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