1.3 To determine the most suitable competitive strategy for operating within the industry and forecasting a future structure of the sector. 2 INTRODUCTION In line with the revised EU Directives Framework agreed in March 2002, the Communications Act was implemented by Parliament on 25 July 2004. The act liberalised the market creating the opportunity for entrants to operate under “general conditions” of entitlement. On 23rd August 2003 BT’s 192 telephone directory enquiries was discontinued, the directory enquiries sector (DQ) was opened up to allow competition and has to date seen over 100 private sector service providers.
The market is estimated to be worth 1.2bn; however, concerns have been expressed regarding the service charges and the confusion amongst the market place. The new market system is experiencing chaos and as analysts, this report, commissioned by Ofcom, aims to assess the DQ sector of the telecommunications market, with inference to domestic and global economic issues that are changing the telecommunications market in the UK. Using Porter’s Five Forces, the report will suggest the future prospects of the DQ sector in the UK under the new regime and the strategic plans that need to be adopted in order to boost consumer confidence.
3 ANALYSIS 3.1 Market Factors leading to the Liberalisation of the Telecommunications market and thus the Directory Enquiries sector Telecommunications is one of the most dynamic sectors of the European Market. In the last two decades competition in the market was restricted and state owned utility companies operated telecommunications. In the UK the Post Office had control of the industry, until 1981 when a new public corporation was created, British Telecommunications (BT). In November 1984 the Telecommunications Act privatised BT, simultaneously, a new operator was licensed, ending BT’s monopoly, but creating a duopoly with Mercury communications.
In the face of demands for increased investment and the need for more managerial freedom so that incumbent telecommunications operators could compete with new entrants, governments decided to curtail state ownership and introduce private capital, which occurred in 1998 in the UK with the full privatisation of BT. In1991, the restrictions were removed allowing alternative operators access to the market via the acquisition of licences. The Office of Telecommunications (Oftel (which became Ofcom in 2002)) was created to regulate the telecommunications services and BT’s charges. (Littlechild, 1983). BT’s 192-directory enquiries number discontinued completely in August 2003. It was replaced with a series of new services that are operated by private sector companies, and prefixed with 118.
BT’s old service was renumbered 118-500, liberalisation created the opportunity for new market entrants who were attracted by potential revenue from a market estimated to be worth 1.2bn a year. The operators, along with different levels and scope of services, charge different prices. At least 26% of adults do not use the service due to experiences or perceptions of exorbitant prices or of poor service. Paper and internet directories have become increasingly important alternative sources for many consumers. Concern has been expressed at the level of these charges, poor quality of some services and at the confusion existing in the market place. Consumers regard the disorganization of the new market system as being chaotic.
3.2 Directory Enquiries Operators and Services Directory enquiry services are distinguished into 3 categories; printed, electronic and fixed line directories. There are now more than 100 DQ service providers existing in the UK with the prefix 118, which offer Residential and Business numbers and addresses as well as various other services including text back, film listings and train timetables. An Ofcom and ICSTIS report based on a study of 30 of the 100+ operators was published in May 2004. The report revealed the following information:
There are 5 companies in particular that are of interest to the aims of the report: 3.3 The Number UK Ltd (118 118), offers residential and business numbers and addresses, international listings, and Business services (118 811). Calls are charged at 49p per call, and 9p a minute with onward calling (connection to desired number) from a landline). Calls vary from 65p to 1 from mobile networks; however, the details are also sent via SMS text if calling from a mobile.
The service can find incomplete numbers or addresses of classified information as long as the caller has a rough idea of the area. It also gives any amount of numbers requested in one phone call and connects to the number as well as via SMS the details automatically to a mobile phone. Yell. Group, Yellow Pages (118 247) [formerly Talking Pages], offers a 24hours a day 7 days a week service, providing operator assisted classified information. Calls are charged at 31p and accuracy is 89%