The UK’s top providers

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Telephone directory enquiry market is growing and becoming steadily constant. There are currently over 129 entrants in the market. The top 30 providers are delivering consistently reliable information. Operators have begun to improve the accuracy of the information being provided to the consumers and competiton is beginnig to drive down prices. The UK’s top providers are also managing to cut the amount of time it takes to deliver information to consumers.

Although, there are other problems with hidden charges – A common complaint voiced by customers is that operators fail to specify that a premium rate applies for connecting calls. The Number, for example, charges an extra 9p per minute for a connected call.

Another cost which is not made clear to customers, is that operators can raise charges by having difficulty locating the requested person or business. Oftel has given no statement as to how such charges will be regulated.

Competition can bring benefits of increased choice, new features and lower prices. However, customers are only able to take full advantage of these services if they can make informed decisions based on easily accessible information. Competition will not work for consumers unless they can make an informed choice.

Competition between directory enquiries is potentially positive for consumers and will hopefully lead to a competitive and therefore cheaper service. However, in the short-term consumers are likely to be confused by choice and Oftel needs to work more fully with companies to advertise the information on tariffs for consumers.


In December 2002, the telecommunications regulator, Oftel, opened up the UK directory enquiries market to competition. BT’s original domestic 192 and international 153 services were withdrawn on August 24th 2003, removing BT’s long established directory enquiries monopoly. Oftel claims that breaking up the BT directory enquiries monopoly will bring down prices, improve services and increase customer choice.


As an analyst, I will analyse:

* The telephone directory enquiry services that are currently being provided in the UK;

* The external factors the led to the creation;

* Analyse the sector in terms of Porter’s 5 forces;

* Establish the trends in one of the companies and

* Draw conclusion about the future structure of the sector.

Major operators

Britain has the largest directory enquiries market in Europe, generating 700m fixed-network calls a year. The current market value is £300m, but it is set to grow and some analysts predict it could be worth £1.3bn within three years.

There are over 129 new entrants to the directory enquiries market, some owned by the same company. I will now establish some of the major directory enquiry services providers, along with the companies who own and operate these services.

* BT Dialling 118 500

BT is one of Europe’s leading providers of telecommunication services. Its prime activities include local, national and international telecommunication services, higher-value broadband and IT solutions. In the UK, it serves over 20 million businesses and residential customers with more than 29 million exchange lines, as well as providing network services to other operators1. BT’s key activities include local, national and international telecommunications services, broadband and Internet products and services, and IT solutions.

BT consists primarily of three lines of business: BT Retail, BT Wholesale and BT Global Services. BT Retail is the UK’s largest communications service provider by market share to the residential and business markets. Within BT Retail, the ‘BT Directories’ division is responsible, amongst other things, for all BT’s retail DQ services and also the Phonebook. Call connection is available as well as number text message to mobile. Calls cost 25p, the service connection charge plus 30p per minute, which is billed by the second.

* The Number UK Limited INFONXX 118118

The Number is a directory assistance service that helps to find the numbers and address of businesses, people and places, owned by INFONXX, which is the world’s premier provider of directory assistance and enhanced information services to leading communications companies, businesses and consumers. One does not have to know the full name or the address of the business2. The charges vary depending on whether one is calling from a mobile or a landline. Price from connection from most landlines is 49p per call and then from 9 per minute from the time you start speaking to the time you hang up. Mobile charges vary depending on the network provider.

* Kingston Communications 118288

Kingston Communications is a leading provider of communications. They offer a range of Directory Enquiry services, for consumers, business customers and wholesale service providers. One can have up to three searches per call saving them time and money. Their industry-leading Directory Enquiries service only costs 35p per call.

“In a survey of 30 new 118 national directory enquiry services, Kingston’s 118288 services came second overall for accuracy of the provision of business numbers, coming second only to a Welsh speaking service.

According to the Oftel and ICSTIS ‘Evaluation of Directory Enquiries services’ report, Kingston’s service is also the cheapest per enquiry – at 32p for three searches – while calls from a mobile to Kingston’s 118288 numbers are also 25% cheaper than average.”3 (See appendix article on Kingston)

* Conduit 118888

Conduit is an industry leader in providing call centre solutions and it is also one of the fastest growing information service providers in Europe. Over 1,500 Conduit employees are delivering innovative call centre solutions for clients, as well as operating Conduit’s own brand of Directory Enquiries from their call centres.4

Calls to 118888 will cost just half that of BT 1921, making Conduit the best value service to enter the market since the deregulation of the directory enquiries market last December.

Prior to launching 118888, Conduit is already the second largest provider of UK directory enquiries, handling over 100 million calls each month for mobile phone operators including Orange and Telewest.

The Number has published an independent research which shows that its 118118 service has achieved a market share between 36% in November 2003 to a high of 44% in April this year. During the same period, the research shows that BT’s market share has fallen to between 18% and 34%. “The results confirm that The Number has consistently maintained market leadership since the end of August 2003,” the DQ operator said.6

But BT has evened the score, claiming that research – which was based on the quizzing of 28,000 consumers about their use of DQ services, is flawed: “A random market research sample merely picks up general awareness not overall market share and makes no distinction between heavy business users and light consumer users,” said a spokesman for the Telco7. BT claims to handle around 40 per cent of all DQ enquiries,” making it very likely that we are the number one choice overall”, said a BT spokesman.8

Usage / Services

In November 2003 Oftel published an ‘Evaluation of Directory Enquiries Services’ in association with ICSTIS. The report received widespread national media coverage and its findings saw Oftel on the receiving end of much criticism from the Press.

85% of UK adults are currently aware of the changes that were made to DQ services following liberalisation. This proportion rises to 92% amongst frequent users and falls to around four in five (78%) amongst non-DQ users. Awareness grew steadily from May 2002 when monitoring began until August 2003, where it has stabilised, as shown in the figure below9.

The Oftel/ICSTIS survey found that two thirds of users have not changed their usage patterns following the introduction of new directory enquiry services. Of the 1 in 5 customers who claim to have reduced their usage, the main reason given for doing so was cost and poor service. Any survey of the national press articles on this subject abounds with subjective evidence concerning poor service and increased cost.


> 26% of adults claim to be using the service less frequently;

> 9% said that they no longer use the service;

> 57% of UK adults currently use 118 services;

> 6 out of 10 UK adults aware of the changes to directory services were also aware that pricing structures vary between providers;

> 3 out of 10 UK adults have selected a 118 provider to suit their needs. Of those, 64% say they are satisfied with that provider;

> Half of the consumers currently using the service less were put off by either awareness or experiences of higher costs, and a minority by perceptions or experiences of poor service.

> 38% of the consumers are aware of the changes of the DQ services as well as the changes in prices and services being offered.

Factors that led to the creation of new regime

Up to now, consumers have had no option but to use the service provided by supplier of their telephone line. Under the new system, any organisation can market its own unique, branded directory enquiry number. The numbers have the format 118XXX. They replace the old 192 directory number.

Before the changes were made, there was a limited choice of services available for customers. But now, with more organisations offering directory enquiries, some offering different services at different prices, customers are now able to shop around and choose the type which suits them best.

Oftel claims that opening up the directory enquiries market to competition will improve customer choice. However, it is extremely difficult to find the best combination of price and services. Prices vary depending on whether a call is made from a landline or a mobile, and according to which company is used.

Porter’s 5 forces

Porter has identified five competitive forces that shape every industry and every market.

* Level of Competition

There is not much differentiation between competitors and the services being provided, therefore, there is much price competition. Despite the number of new entrants, only two or three operators will remain after two years. Three operators have so far emerged as the main players: Conduit (118888), The Number (118118) and BT (118500). BT will remain a major player, given its influence and resources.

* Threat of new entrants

Since there are over 129 new entrants to the directory enquiries market, the competition has already increased, living the existing and big players looking for alternative of delivering their service and get costumers loyalty. But eexisting players may already have a close customer relationship, making it harder for any other new companies who wish to enter this field.

* Power of suppliers

Since there is already a lot of competition in the directory industry, the suppliers have minimum power of how the market works as consumers have a wide range of serivces to choose from. It is up to the company to provide the best posssible services at a good price. But as my reasearch has shown, the major players are still in conrol.

Conduit for example formed a partnership with Vodafone for UK directory assistance services (see Appendix). This proposal is the result of the development of close co-operation between Conduit and Vodafone in the area of directory enquiries, and is a logical step for both organisations, allowing both to benefit from their mutual strengths.

* Power of Customers

With so many choices available, consumers can now easily switch between services as it is relatively simple, and the switching charges are very low. The consumers are more in control than the busines as they choose which service they want to use.

* Threat of substitute

There is a great thereat for the providers as there are alternatives available for consumers offered at lower prices, providing better service and serving the same purpose. Consumers can easily get access to an online directory service as well as using a manual directory e.g. phone book, yellow pages to find out the information that they are looking for. Both of these alternatives are cheaper and in some cases, less time consuming.

Trends in Profitability

Conduit has consistently been an industry leader in the Directory Enquiry market by introducing new technology, strong value-add services and preserving the continuously proven principles of personal service, quality and customer satisfaction.

The company was established in 1996, and they have successfully launched their own branded Directory Enquiry number. Directory Enquiries was their original scheme and they were Europe’s first Independent Directory Service Provider.

Conduit provides white and classified Directory Enquiry services to the public through its own branded operations and to client telecom companies. When a customer calls their Directory Enquiry service on a mobile phone they automatically receive a free SMS with the listing details they requested.

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