The impact of liberalisation on the UK’s Directory Assistance Market

Plum carried out an assessment of liberalisation of the directory assistance market in the UK – both immediately following liberalisation in 2002 and in the subsequent 10 years. The study considered the nature of retail competition which has emerged, how price transparency has changed, and the extent to which Ofcom’s goals at liberalisation have been met.

It is clear that liberalisation led to innovation beyond what had existed in the UK prior to 2002 (e.g. provision of through-connect and delivery of a number via SMS) and significant widening of end-user choice of DA services. However, this has not led to an increase in use: the volume of DA service minutes in the UK declined by 47% between 2002 and 2009 and continues to decline at around 15% per year.

At constant prices, the average price per minute for DA services rose by 54% between 2002 and 2009 in a period when telecommunications prices generally were falling in the UK, while there is little evidence to suggest an improvement in quality. Liberalisation led to a considerable increase in the complexity of price structures which made it more difficult for consumers to choose between DA services on the basis of price.

The report concludes that the overall effect of DA service liberalisation was negative in the UK even though the scope of services available has increased: the report estimated that consumer welfare from DA services was reduced by just over £100 million between 2002 and 2009. This accorts with the 2005 National Audit Office report which noted that Ofcom could not, overall, demonstrate that consumers had benefited from liberalisation.