UK directory enquiries: worth fighting for?

Angel Dobardziev, Analyst

In a few days the 192 directory enquiries (DQ) number will fail to connect users to a DQ provider, marking the opening up of yet another market for competition. In fact, the UK DQ market was opened for competition in December 2002, when six digit numbers beginning with 118 were introduced. But the old 192 number (for national DQ) and the 153 (international DQ) continued in operation – until 24 August 2003. As surveys point that users continue using the legacy numbers, 24 August is the effective liberalisation date.

Much noise is being created over the way the switchover is handled - in other words, what happens when the users ring the old 192 number after 24 August. Several European regulators in this situation decided on playing a message that will inform the customers of the change and advise on a new number from a list of providers selected at random.

Oftel, the UK regulator, decided on an original route: customers ringing 192 will be given a freephone number, which in turn will give the caller a new DQ number selected at random from the list of providers. But why not give them a random DQ number immediately after dialling the 192 number? This certainly won’t please the customers that will have to ring three numbers to eventually get the information they require.

The UK market is worth £200 million, which is about 1% of the UK fixed voice market. Contrary to the belief of some new entrants, our view is that the UK directory enquiries market will not grow in both volume and revenue terms. In fact, the DQ market is set for a gradual decline. Why do we think so?

• Both the fixed and mobile markets are saturated in terms of subscribers. This means there are no new subscribers to generate incremental traffic growth

• Mobile phone address books replace the need for many DQ calls. Users store their important numbers on their mobiles. This will limit the scope for growth of DQ calls

• Email use is expanding. Email not only acts as a voice substitute for business users, but email signatures often carry contact details and this is substituting the need for DQ calls

• Internet use is expanding and users are getting increasingly skilled at finding important numbers online. This is particularly the case when searching for business numbers

• And of course, competition will mean tariff declines, which will further shrink the market.

But there are always new entrants eager to take a bite of the pie now enjoyed by the incumbent BT. In fact there are 40 new registered DQ providers in the UK. The ones with most aggressive marketing are “The Number” (118 118), Conduit (11 88 88) and Yell.com (118 247). What all this means is we are faced with a stagnating market where there are too many players. Consolidation in inevitable - there is no space in the market for more than four to five major players. Doesn’t all this sound too familiar?

Angel Dobardziev is an Analyst specialising in wireline services competition and strategy. He works as part of the CompetitiveCommunications@Ovum service team providing strategic advice to fixed telecoms operators and service providers.

He can be contacted directly on AVD@ovum.com