BT’s much vaunted return to offering mobile phone services in the UK generated a huge amount of headlines this week, but the fact remains that for the moment the telco is offering little beyond low cost SIM only deals to existing customers – a proposition rivals such as TalkTalk and Virgin Media have been doing at almost identical prices for years.
The telco may have to delay the launch of handset deals until is proposed £10.5bn merger with EE is approved by Ofcom – in the meantime it hopes that discounted mobile packages will help it to reduce customer churn on its broadband packages and/or entice subscribers away from competitors.
‘It is not a number we publish but what we do see is that customers who take mobile from us are significantly less likely to churn [away] from us on broadband and their Net Promoter score [an index that measures the willingness of customers to recommend a company’s products or services to others] is significantly higher as well,’ Dan Meader, head of mobile at TalkTalk told Mobile. ‘It becomes a win on a number of fronts for us [TalkTalk] and also represents a revenue stream on our paid for products. From our side there has been a lot of demand, customers really value it and it creates that stickiness.’
Like other industry watchers Meader is surprised that BT Mobile would not offer a full suite of handsets and SIM only deals ‘from the off’ given that the associated device distribution deals are straightforward to arrange, and speculates that the EE merger may have altered original launch plans.
‘It does seem a bit strange to me that if you are offering a mobile proposition that you would not offer a full suite of SIM only and handset deals from the off. They [BT] signed an MVNO deal with EE a while back now and announced a long time ago that they were doing a launch around this time. I think they have fulfilled that but things have probably changed between them signing the original MVNO deal and the corporate activity that has taken place between those dates.’
‘I would imagine if you are BT with the EE piece going ahead you may not want to be too disruptive going forward and take value add to the market … that is probably what they are thinking,’ he added.
The battle for mobile subscribers is arguably a sideshow to the main source of conflict – the fight for subscribers to larger, more lucrative packages that combine telephone, broadband, mobile and TV services into a single bundle.
‘Clearly the market is moving towards quad play and a converged world, where customers just want to be connected wherever they go all of the time – they don’t really care whether its 4G, WiFi and we can obviously provide all the elements to our customers,’ said Meader.
As an MVNO TalkTalk Mobile will not actually be able to offer 4G connectivity to its customers until its switch from Vodafone’s network to that of 02 is completed, however, a transition Meader expects to happen ‘at the back end of the year’. In the meantime TalkTalk Mobile subscribers will have to rely on 3G and HSDPA connectivity.
The distinction between 3G and 4G is significant because mobile operators see increased data usage as their best bet for growing average revenue per user (ARPU) going forward, and video content uses more data than anything else.
‘If you look at the industry statistics, mobile data usage tends to be a lot higher for 4G customers than 3G customers … rule of thumb seems to be that it doubles compared to the equivalent for 3G though it could be that the early adopters are just heavy data users,’ said Meader. ‘That is obviously a good thing if you are charging for it [4G data]. The challenge is that if [data] usage goes up there is potential out of bundle risk for customers so it is a question of how to manage that experience. In TalkTalk we offer bill control mechanisms, cut off points, make customers have access to my accounts to look at and manage usage patterns, so I think we will see more development of those types of tools.’