Despite the fact that it has been only 18 months since the deregulation of directory enquiries, and that there are as many as 30 different 118 companies in operation, two firms dominate a market that is now worth £300m a year.
Since BT was forced to halt its 192 service in August 2003, The Number's 118 118 and BT's 118 500 have established market leadership - with a combined share of 67% - by spending millions on advertising.
With a budget of just over £20m, Irish firm Conduit was one of the biggest spenders following deregulation, but its 118 888 service failed to win over consumers. Now, in an attempt to shake up the market and steal a slice of BT and The Number's share, Conduit is relaunching its service.
At the heart of the planned revival is Conduit's decision to ditch its focus on brand campaigns in favour of more direct-response-led activity. To do this, it has appointed Tequila/London to handle its £10m advertising business (Marketing, 31 March).
Both Conduit and Tequila have a job on their hands. Not only is their marketing budget about half that of the two market leaders, but, according to the latest Ofcom report, awareness of Conduit's 118 888 service has fallen significantly: only 4% of consumers remember its number, compared with more than half for 118 118.
Conduit's performance has differed greatly from the one predicted in the run-up to deregulation. Because of its experience in other markets, Conduit's was widely tipped as one of the services likely to do best.
However, its launch strategy, using ads featuring a superhero character to promote the number and voicing the sequence as 'double one, double eight, double eight', backfired. The company failed to achieve anywhere near the market share expected.
'It added confusion to an already confused market. Deregulation was about the launch of the 118 (one one eight) sequence as a replacement for 192, not any other. Conduit misjudged this,' says Martin Ashfield, managing director of industry monitor 118Tracker.com.
At launch, 118 888's focus was on price but, while independent surveys confirmed it was one of the cheapest providers, Ashfield says this had no bearing on the situation. 'There was a misconception that there would be a price war, but it is not about price and never will be,' he says. 'Consumers are not that bothered as they didn't know what they were paying for BT's 192.'
Wieden & Kennedy's managing director, Neil Christie, who worked on 118 888's launch at Euro RSCG London, says Conduit made a series of fatal errors: 'It failed to get the right number (118 118), which was bought for £2m by The Number. Then it started advertising before deregulation, when people were not interested in what 118 was all about.'
Now Conduit is taking a different strategic route. Having deep pockets has something to do with success, but a memorable number has also been key. In recognition of this, Conduit is now trying to get consumers to think about its number using a different sequence - one one eight, triple eight (118 888) - which it considers more memorable. According to insiders, it is planning to highlight specific aspects of its offering, particularly mobile and online. However, Wieden & Kennedy's Christie warns this is likely to be pointless. 'Consumers aren't interested in the service offering - they just want the number,' he says.
Yet, Conduit is not alone in pushing the breadth of its service. 118 118 and Yellow Pages' 118 24 7 have also adopted this in recent marketing activity. Yell's latest ads focus on the three ways in which it can help consumers find numbers: through 118 24 7, online or in the Yellow Pages.
There is also evidence from Ofcom that suggests a third of consumers are giving up on phone-based services, preferring to use the web to find numbers instead.
While one aim of the deregulation process was to offer consumers more choice and remove BT's stranglehold, the main players were attacked almost immediately for their service standards.
Thousands complained of dropped calls, hidden charges, and calls being routed through India and the Philippines. Eighteen months on, these problems still exist. Last month, a damning report, published by the National Audit Office, slammed the switchover from 192 to 118 as a 'pointless waste of time'.
For most of the big players, however, accuracy has improved, according to Ofcom. The Number is top with a rate of 94%, followed by Conduit (92%) and BT (83%). Despite this, consumer bodies remain critical, with one source labelling the market 'a waste of money, with complicated charging plans'.
Deregulation was also meant to end BT's monopoly on directory enquiries, but consumer bodies are starting to warn that another monopoly is developing, with the market sewn up by BT and The Number. 'It was never a level playing field; it is purely about the power of marketing and the media,' says Oliver Durkin, director of Durkin media and founder of a new service, 118 789.
Conduit hopes its relaunched service will prove a significant challenge to BT and The Number. Having got it so wrong the first time, few in the telecoms world are confident that it will be able to make a difference this time, not least because its marketing millions have been spent and, in the words of one rival, 'the land-grab is over'.