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Reflection on 36 Years in The Telecoms Industry

On October 1st 2015 I completed 36 years in the Telecoms Industry. On that day in 1979 I turned up as a Trainee Accountant to start work with Post Office (Telecommunications). That predates BT, Buzby and Maureen Lipman adverts about ‘ologies.

At that time never mind no email, internet or mobile phones we had no voicemail, PCs or push button phones. Call transfer meant passing over the handset. They were just introducing electronic exchanges but there were still plenty of the old noisy Strowger exchanges housed in multi story buildings. There were thousands of operators manually connecting calls.

In a generation and a bit that has all changed or has it.

Mobile phones started as bricks, got so small you could barely read the screen and now are expanding again to a size they don’t fit in a top pocket. Although the days of your mobile lasting 5 days on a single charge seems to remain a dim and distant memory.

You can now buy phone lines from hundreds of companies but still have to wait for a BT engineer to turn up – maybe.

Fibre broadband is rapidly reducing the costs for businesses connectivity enabling the growth of technologies such as SIP and VoIP. Trouble is the priority areas are residential so people can watch Netflix. Large swathes of central London still only have slow bog standard ADSL.

Some things don’t change – I recall working on a project in the 1980s to use artificial intelligence (then called expert systems) to reduce telecom fraud and although the techniques may have changed it remains an issue of which many companies fall foul.

Sadly also the growth of suppliers and increase in technology complexity has inevitably led to the growth of scams and tricks that less scrupulous companies have used to fleece unsuspecting businesses. Ofcom has now started to levy some fines but still a lot to be done.

With the accelerating rate of change probably what has taken 36 years to occur will probably now be repeated in less than 10. Certainly that is when BT has announced ISDN will have ended and maybe just maybe my phone will last over a day on a single charge. But that might be expecting too much

What Will the Telecoms Market Look Like in 2015

So we are just over one month into 2015 and it is already looking like it will be an interesting year in the telecoms market. Apple have managed to start two more law cases so no change there. They have also announced record profits. The CEO of Blackberry has demanded developers should be made to produce apps for his devices. Bit of a Stalinist approach to the market – you will build them even if no one wants them. This from a company that would never let anyone near their software – chickens coming home to roost.

Then it looks like all change in the UK mobile market with BT buying EE and O2 merging / being bought by 3. So what will this mean to consumers and businesses over the rest of the forthcoming year. It does always assume that Ofcom will allow there to be only three mobile operators in the UK when they have publicly stated they want four. An interesting challenge for the new head to find in her already bulging in-tray. I think she will allow it given the number of MVNOs that now exist who will be classed as quasi operators. After all you can pick up a mobile contract with your weekly shop in Tesco’s who often offer very cheap sim free phones with clubcard points thrown in.

It was all started by BT wanting to join the quad players (phone, broadband, mobile and TV) in the residential market. Following the launch of BT Sport they were just missing the mobile element having got rid of O2 many years ago. Having decided they didn’t want them back and EE were a better bet, they would be in a position to compete with Virgin. Sky have quickly responded with an announcement that it will launch a mobile service next – surprise surprise in conjunction with O2.

That leaves a few companies sitting on the edges of the dance floor looking at who’s left to partner up with before the evening is over. Most notably TalkTalk and Vodafone is that the next marriage made in heaven or would it be out of necessity?

That potentially would create four companies targeting the quad play domestic market in what is a price sensitive market and probably in a race to the bottom. The domestic broadband market is evidence of that where prices and one could argue service/product quality has fallen dramatically.

With all this focus on the domestic market both in terms of time and resources will the business consumer suffer. For the suppliers which will be the most lucrative to focus on – that will determine their priorities. For some businesses the potential of a single supplier may be attractive whilst others on principle do not like all their eggs in one basket. It should be noted that integration will take some time and businesses anticipating a single contact point for faults will be disappointed. BT do not offer it yet so expecting them to merge EE’s support into their existing centres quickly is being a tad optimistic.

Also of interest will be how the cultures and approaches of the combined companies in the various merging will work out. For example 3 have been ahead of the market in extending the mobile packages to overseas countries without charge. I am sure some companies with large roaming bills would welcome this change as the business providers continue to make large portions of their profits in this area.

Certainly I think businesses should be wary of making long term commitments until the dust has settled and they know what and more importantly who they are signing up with. The company they sign with may look very different by the end of the year.

Why do Telecoms Suppliers always compare their Prices with BT?

 

It is interesting to notice that in many industries everyone compares themselves to the market leader.  Whilst the telecoms industry is like many others in this respect, it also takes the opportunity to make some great marketing claims, which often do not stand up to reality.

For example on their website Unicom show a 57% saving for BT customers.  There is however a small asterisk that reveals the following when you click on the footnote tab: –

*Percentage saving based on a typical customer spending £500 with BT on their standard business rates, correct as published on 1 March 2013

It is important to note that BT’s standard business rates are effectively their price list and bear no comparison to what is offered in their normal deals.  We recently moved a client away from Unicom to another supplier saving them about 70%.  While I think we are good, I would never claim to get savings of 87% over BT.  In that instance Unicom also tried to claim penalty charges even though the contract had expired.  We soon put them right on that point. It is interesting to note that Ofcom are now investigating

A second favourite marketing ploy is that which compares on just one element, such as the line rental or UK calls.  For example XLN advertise 77% savings on landline rentals.  This example was taken from the XLN website on 10/9/2013.

xln

 You will note that their comparison with BT is based on BT data that is 10 months old and does not reflect the current BT offer.  They also show the comparison on the 1st year rental only, despite the fact that it is a two-year contract.  In the detail it highlights the fact that this price is for 6 months only.  The saving then drops to 25%, which is still not bad, but still only on a par with most other business providers.

Another supplier, Chess Telecom, has a similar table. This example is taken on the same day as the XLN table.

chess 

On the XLN table the prices shown for each supplier are different from those on the Chess table.   Also it is not clear that Chess have set-up charges for calls.  This enables them to make a price promise on the actual call rates and yet they often end up more expensive than ours as none of the contracts we negotiate ever have a call set-up fee.  We recently analysed a bill from Chess to a client.  With the set-up fee, the effective cost per minute of a local UK call was 2.64p not the 1p they claimed.  We placed the client on a contract with a genuine rate of 0.85p per minute with no call setup – almost 2/3rds of Chess’s rate.

So, as with most marketing, there is an element of truth but it is not always the whole truth and nothing but the truth.  If you would like to understand what you are really paying and a get genuine set of comparison tables to see what you could be paying, contact us on 020 9012 0845.