Consumer Communications - US

This report provides a comparative examination of non-PC-based consumer communications, including landlines, cellular telephones, and television service. Triple-play offers (telephone, internet and cable service all on one bill) are examined within this context. Mintel finds that these offers herald increasing commoditization in the market, as communications providers consolidate on a corporate and technological level. As a result, strategies that focus on avoiding commoditization are a central theme of the report.

This report provides a thorough summary of industry happenings as well as insights necessary to make strategic decisions in the communications market. The report also provides the data necessary to identify and target receptive demographics, offer new products and services that take advantages of growth trends, and reach underserved groups more quickly and effectively.

Mintel addresses a number of issues and developments that will change the shape of the communications industry in the next few years:

• The rise of triple-play offers and how consumers are responding
• Growth areas that remain for cellular service
• Prevalent trends in communications advertising, and how to differentiate marketing
• Consumer interest in “pull” advertising, which entices consumers to view advertising voluntarily on cell phones, online or via DVR
• Building brand loyalty among younger communications consumers
• Knowing which consumers use which media, and why

Consumer communications is defined to include television, telephone, and instant messaging services for home, personal, business and entertainment purposes.

Scope and Themes

What you need to know

Definition

Data for this report

Mintel’s sales and subscription forecasts

Abbreviations and terms

Abbreviations

Terms

Executive Summary

Highlights

Overlapping communications networks create a commoditized market

Subscriptions and spend

Room for growth remains in cell phone voice service

Satellite television continues to make strides

Two leaders emerge in VoIP

IM still primarily used for text chats

POTs sales and subscriptions in decline

Survey respondents online open to new marketing techniques

Rise of the triple play

Advertising the triple play

Minority groups more receptive to communication services

Commoditization, Differentiation, and Consolidation

Overlapping communications systems lead to commoditization

Content partnerships may prevent commoditization

Continuing consolidation of communications providers

The Consumer: Subscriptions and Spend

Figure 1: Communications subscriptions and spend, February 2007

Figure 2: Average expenditure on consumer communications, by gender, February 2007

Figure 3: Average expenditure on consumer communications, by age, February 2007

Figure 4: Average expenditure on consumer communications, by income, February 2007

Figure 5: Average expenditure on consumer communications, by marital status, February 2007

Cellular Telephony: Trends

Introduction

Trends in voice plans

Unlimited voice plans at low prices

Wi-Fi phones

Voice plans retain room for growth

The cell phone as an emergency product

Growth in prepaid service

Watch ads, get minutes (or free voice plans)

Phone equipment in cars: voice-operated, stereo-output docks

Dual mode Wi-Fi/cell phones

Data trends: 3G here, 4G around the corner

Rise of all-purpose smart phones

Data services to overtake voice subscriptions

Mobile broadband

.mobi

Cross-platform communication: IMS

A/V entertainment

Audio content

Video content

Video-IPTV cellular phones

MVNOs leverage content to create differentiation

Beyond voice, data, and A/V entertainment

Growth of GPS services

Cell phone as credit card

Role of kids, teens and 18-24s in adopting new functionalities

The third screen: ad-based cell-phone services

Cellular Telephony: The Market

Cell phone subscriptions and sales

Figure 6: U.S. Cell phone subscriptions, 2001-11

Figure 7: Sales of cellular services, at current and constant prices, 2001-11

Companies and brands

Figure 8: Market share, by volume of subscriptions, 2004 and 2006

Figure 9: Revenues for leading cellular service providers in the U.S., 2004 and 2006

Figure 10: Revenues for leading cellular service revenues in the U.S., 2004 and 2006

Cingular/AT&T Wireless

Verizon

Sprint Nextel

T-Mobile

Alltel

Research in Motion

Cellular Telephony: The Consumer

Cellular phone penetration by demographic

Figure 11: Penetration, by age and income, January-October 2006

Figure 12: Cellular provider, by region, January-October 2006

Figure 13: Prepaid cellular service prevalence, by income and age, January-October 2006

Cell phone functionality

Figure 14: Handset functionality, by age, January-October 2006 and January-September 2005

Figure 15: Handset functionality, by age, January-October 2006

Figure 16: Use of available cell phone functions and services, by age, January-October 2006

Attitudes and behavior toward cell phones

Figure 17: Cellular feature usage, by gender, February 2007

Figure 18: Cellular feature usage, by age, February 2007

Adoption rates for video and GPS services

Figure 19: Video and GPS adoption, by gender, February 2007

Figure 20: Video and GPS adoption, by household income, February 2007

Figure 21: Video and GPS adoption, February 2007

Cable and Satellite Television: Trends

Cable losing subscriptions to satellite

Figure 22: Cable and satellite television household penetration, 2001-06

DVR both a boon and a disruptive force

Potential solutions en route to market

Competition from Internet video

Quality of content increasing penetration for premium subscriptions

Piracy

Long-term prognosis poor

Cable and Satellite Television: The Market

Subscriptions and sales

Figure 23: Cable and satellite television subscribers, 2001-11

Figure 24: Cable and satellite television service sales to consumers*, at current and constant prices, 2001-11

Cable subscriptions and sales

Figure 25: Cable television subscribers, 2001-06

Figure 26: Sales of cable services, at current and constant prices, 2001-06

Satellite television subscriptions

Figure 27: Satellite television subscribers, 2001-06

Figure 28: Sales of satellite services, at current and constant prices, 2001-06

Company subscriptions and sales

Figure 29: Satellite and cable subscribers in the U.S., by company, 2004 and 2007

Figure 30: Satellite and cable service revenues in the U.S., 2004 and 2006

DirecTV

Dish Network

Comcast

Time Warner

Cox Communications

Charter Communications

VoIP and IM: Trends

Closed and open VoIP

Open VoIP the likely eventual solution for home telephony

PC to PC calling

PC to Phone calling

Phone to Phone calling

Emergency service a barrier to VoIP sales

Voice messaging over IP

Video messaging over IP

Handsets for free VoIP services allow users to roam the house while chatting

Video-PC phones

VoWi-Fi: Proliferation of free Wi-Fi spots

VOIP and IM: The Market

VoIP players

Vonage

Skype

IM (Instant Messaging) players

AOL (AIM/Google/OSCAR)

Microsoft (MSN/.NET)/Yahoo!

POTs: Trends

Decline of POTS subscribers

Competition from cell phones

Competition from P2P (open) VoIP

Competition from “closed” VoIP service

Landline as emergency back up phone

The fax line

Figure 31: Fax ownership, by age, January-October 2006

Figure 32: Fax ownership, by race/ethnicity, January-October 2006

POTS: The Market

Landline subscriptions and sales

Figure 33: Landline subscribers, 2001-11

Figure 34: Sales of landline services, at current and constant prices, 2001-11

POTs providers

Figure 35: Local telephone service, January-October 2006

Figure 36: Long distance telephone service, all adults, January-October 2006

AT&T

Verizon

Qwest

Sprint

POTs, VoIP, and IM: The Consumer

Home telephony

Figure 37: Local telephone use and expenditure, by age, January-October 2006

Figure 38: Long distance telephone use and expenditure, by age, January-October 2006

Attitudes to POTS

Figure 39: Landline attitudes, by age, February 2007

Figure 40: Landline attitudes, by income, February 2007

Subscription to voicemail, closed VoIP, and cable telephony

Figure 41: Voicemail and non-copper wire telephony, by age, February 2007

IM

Figure 42: Instant messaging penetration, by age, January-October 2006

Figure 43: Use of instant messaging features, February 2007

Figure 44: Use of instant messaging features, by age, February 2007

Figure 45: Use of instant messaging features, by race/ethnicity, February 2007

Consumer Attitudes to Marketing in New Media

Advertising in new platforms

Figure 46: Attitudes towards advertising and retailing in new media, February 2007

Figure 47: Attitudes towards new media advertising and retail, by age, February 2007

Figure 48: Attitudes towards advertising and retail, by household income, February 2007

The Triple Play

One bill for television, Internet and voice

Consolidation of billing

Figure 49: Multiple-bill dissatisfaction, February 2007

Concern over security

Figure 50: Concerns over security, February 2007

The quadruple play

And more: x-play, or 5-play and beyond

Triple play and x-play hardware devices: flat-panel TV and smart phones

Advertising the triple play

Figure 51: Media expenditures by leading consumer communications providers, 2005

AT&T

Figure 52: AT&T X-play advertisement #1

Figure 53: AT&T X-play advertisement #2

Time Warner Cable

Figure 54: Time Warner triple-play advertisement #1

Figure 55: Time Warner triple-play advertisement #2

Comcast

Figure 56: Comcast triple-play advertisement #1

Figure 57: Comcast triple-play advertisement #2

Cablevision/Optimum

Figure 58: Cablevision triple-play advertisement #1

Figure 59: Cablevision triple-play advertisement #2

Verizon

Figure 60: Verizon triple-play advertisement #1

IDT

Figure 61: IDT triple-play advertisement #1

The Consumer: Differences by Race/Ethnicity

Figure 62: Average expenditure on consumer communications, by race/ethnicity, February 2007

Figure 63: Cellular feature usage, by race/ethnicity, February 2007

Figure 64: Video and GPS adoption, by race/ethnicity, February 2007

Figure 65: Cable television penetration, by age and race/ethnicity, January-October 2006

Figure 66: Satellite television, by race/ethnicity, January-October 2006

Figure 67: Landline attitudes, by race/ethnicity, February 2007

Figure 68: Selected communications services, by race/ethnicity, February 2007

Figure 69: Consumer attitudes towards advertising and retail, by race/ethnicity, February 2007

Appendix: Trade Associations