CONNECTED CONSUMER SURVEY 2017: FIXED BROADBAND RETENTION AND SATISFACTION IN EUROPE AND THE USA

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1 analysysmason.com RESEARCH SURVEY REPORT CONNECTED CONSUMER SURVEY 2017: FIXED BROADBAND RETENTION AND SATISFACTION IN EUROPE AND THE USA ARIS XYLOURIS and INIGO BARKER

2 About this report This report focuses on aspects of Analysys Mason s Connected Consumer Survey that relate to the behaviour, preferences and plans of consumers in Europe and the USA. In particular, it focuses on the behaviour, preferences and future plans of fixed broadband users. This part of the survey was conducted in association with Survey Sampling International (SSI). The research was conducted in July and August The survey groups were chosen to be demographically representative of the broader online consumer population. We set quotas on age, gender and employment status to that effect. There were a minimum of 1000 respondents per country. The total sample size was 7090 respondents. KEY QUESTIONS ANSWERED IN THIS REPORT What are the most significant drivers of fixed broadband churn and how can operators most effectively approach customer retention? What are the key factors that affect the net promoter score (NPS), which operators are particularly effective at scoring highly and why? How can operators most effectively approach bundling, and in particular fixed mobile bundling, in order to control customer churn? Which value-added services have a measurable effect on customer satisfaction? GEOGRAPHICAL COVERAGE Poland Germany UK France USA Spain Turkey WHO SHOULD READ THIS REPORT Product managers and strategy teams working for fixed operators that are launching new broadband products aimed at the retail market, or operators designing their response to those of their competitors. Marketing executives and product managers for operators that are making decisions about the service design and its impact on customer retention of broadband bundles. Strategy teams for operators that are considering the integration of their fixed and mobile services, and are assessing the potential impact of converged bundles in their markets, especially in terms of customer satisfaction. 2

3 Intention to churn has declined in every market since 2015 despite a general upward trend in previous years Intention to churn has fallen as network infrastructure has improved and bundling take-up has increased. Figure 4: Intention to churn fixed broadband provider in the next 6 months, , by country 1 Fixed broadband customers intention to churn fell across all markets between 2015 and 2017, bucking historical trends. How many of those intending to churn actually follow through with their plans is of course difficult to say, but reported evidence does not appear to contradict this trend. We attribute this shift to the wide availability and take-up of higher bandwidths (primarily to satisfy demand for video content), and to a lesser degree, the growing penetration of triple- and quadruple-play bundles that help to improve customer retention. Germany and the USA have shown the greatest recent improvements, with intention to churn for these markets falling by 5 and 3 percentage points, respectively, since In Germany, the recent network upgrades from copper to VDSL and conservative price policies have increased the overall satisfaction in broadband services and have decreased the intention to churn. In the USA, renewed competition has spurred considerable investment in networks and bundling; good service reliability and strong OTT video propositions appear to have outweighed high prices, even if the NPS remains quite low. 1 Question: Do you intend to make a change to your home broadband service within the next 6 months? ; n =

4 A direct relationship has emerged between intention to churn and broadband speed Figure 6: Intention to churn fixed broadband provider in the next 6 months, by speed tariff, 2014 and Question for 2017: Do you intend to make a change to your home broadband service within the next 6 months? ; n = Question for 2014: Do you plan to make any changes to your fixed broadband service in the next 6 months (for example, changing package, service provider, or giving up on fixed broadband altogether)? ; n = Decreasing the premiums for higher speeds led to a decrease in the intention to churn for these speed tiers. Our 2017 results show, for the first time, an inverse relationship between intention to churn and broadband speed: the higher the speed of a bundle, the lower the intention to churn. Churn for customers with very high-speed access dropped significantly due partly to falling price premiums for very high speeds in markets such as Poland and Germany, and to some extent in the UK. More importantly, it seemed that the higher price tiers were delivering more in terms of service; price satisfaction increased the higher the tier, with reliability satisfaction following a similar pattern. It was also the case that those on higher speeds were more likely to subscribe to specific value added services (such as cloud storage) and were marginally less likely to hold standalone fixed broadband subscriptions. A number of bundlefocused operators such as Orange Spain reserve some of their fastest available speeds for bundled customers to help encourage upgrades. Intention to churn increased for the 1 50Mbps tiers. The improved reception of the higher speed tiers probably created at least some degree of pull towards more expensive offerings: 54% of respondents intending to churn on 1 50Mbps said that they were doing so because of insufficient speeds. 12

5 CONTENTS EXECUTIVE SUMMARY CHURN DRIVERS SATISFACTION DRIVERS IMPACT OF VAS ON CUSTOMER SATISFACTION METHODOLOGY AND PANEL INFORMATION ABOUT THE AUTHORS AND ANALYSYS MASON 26

6 About the authors Aris Xylouris (Senior Analyst) is the lead analyst of the Fixed Broadband Services programme and a key contributor to Analysys Mason's primary research for the Consumer Services research practice. His areas of specialisation include fixed broadband strategy, the bundling and pricing of multi-play and convergence services, customer satisfaction and consumer-facing marketing strategy. He also specialises in statistics, surveys and the analysis of primary research, and manages Analysys Mason's Connected Consumer Survey and Consumer smartphone analytics series of research. Inigo Barker (Research Analyst) is a member of the Consumer Services research term in London, working on the Video Strategies research programme. He previously worked in trade publishing and editing. He holds a first-class BA (Hons.) degree in Classics from the University of Cambridge. 27

7 Analysys Mason s consulting and research are uniquely positioned Analysys Mason s consulting services and research portfolio CONSULTING We deliver tangible benefits to clients across the telecoms industry: communications and digital service providers, vendors, financial and strategic investors, private equity and infrastructure funds, governments, regulators, broadcasters, and service and content providers. Our sector specialists understand the distinct local challenges facing clients, in addition to the wider effects of global forces. We are future-focused and help clients understand the challenges and opportunities that new technology brings. RESEARCH Our dedicated team of analysts track and forecast the different services accessed by consumers and enterprises. We offer detailed insight into the software, infrastructure and technology delivering those services. Clients benefit from regular and timely intelligence, and direct access to analysts. 28

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