The introduction of pre-paid mobile phone packages has had an enormous impact on the market. Over the past year, 2.5 million new subscribers have been added, taking the total number of subscribers to 10.5 million – one in four of the UK population. And of that 2.5 million extra mobile phone users, nearly 1.5 million signed up to pre-paid packages.
The development of pre-payment has reinvigorated a market that many observers thought was saturated, according to a new study published by Continental Research. Continental now believes that penetration of mobile phones will double over the next five years to close to 20.6 million, with another 4.5 million added over the next two years.
Personal users now outnumber business users, although they have yet to outspend them. The latter are running up bills of about 46 a month, while the former are spending less than half that, 22. While both types of user are important, the launch of the pre-paid phone has accelerated and broadened take-up for personal use.
In particular, it has increased penetration among young adults and even teenagers. Many observers have assumed this is because pre-paid packages attract the under-18s, who were previously barred from signing up to mobile phone services because they were not eligible to sign leasing agreements under the Consumer Credit Act. Parents were also thought to be reluctant to give their children mobile phones because of financial liability for huge bills. Pre-paid phones would enable them to cap the bills.
But Continental’s research suggests that pre-paid phone users are not that dissimilar to the general run of mobile owners.
One in five non-users aged under 25 now say they are likely to buy a mobile phone within the next six months, compared with only one in 12 non-users in the population as a whole. The new mobile phone market is becoming a young, fashionconscious sector where innovation is the key.
In 1996, analogue phones still held 50 per cent of the market, but by October 1998, penetration had fallen to 13 per cent and is still going down.
Among the operators, both Orange and One-2-One have grown fast since 1996, with Orange doubling and One-2-One almost tripling subscriber bases. Cellnet and Vodafone have also built on their subscriber bases very effectively. However, these are much larger and percentage growth has been lower: 26 per cent and 41 per cent respectively.
Cellnet has seen its market share fall from 39.4 per cent at the end of 1996 to 32.3 per cent by September 1998. In the same period, Vodafone saw share fall from 41.1 per cent to 37.7 per cent, while Orange built its share to 15.8 per cent from 11.5 per cent and One-2-One went up from eight per cent to 14.2 per cent.
One-2-One has added share significantly since dropping the Mercury name. The rebranding exercise and the high-profile advertising campaign worked particularly well with younger phone users.
Historically, there has been a marked difference between the ownership and usage of mobile phones, with the latter being far higher than the former. This was due primarily to the practice of businesses sharing a single handset among several employees. The pattern has changed over the past two years, however, 60 per cent of mobile phone users now have their own handset, compared with only 44 per cent in 1996.
At the same time, more men than women used mobiles. This is no longer true, with women outnumbering men as personal users.
While most mobile phones offer a wide range of additional services, it is clear that the majority of subscribers do not make use of them. Even now, only half of mobile phone subscribers are using voice-mail or voice-messaging facilities, while only 23 per cent are using call divert.
The use of text messaging has nearly doubled in the past year, rising from seven per cent to 13 per cent, but other forms of information transfer still remain relatively under-used. Five per cent now use information services and two per cent surf the Internet, compared with none for both services a year ago. But fewer people are now using mobile phones to send or receive data (four per cent against six per cent in 1997), while the number using them to send or receive faxes has remained static at four per cent.