4G Mobile from BT. Game-changer or another BT Fusion?
Genie Mobile, originally a BT company, was the UK pioneer in mobile data
In 2001, when mmO2 (previously BT Cellnet) was de-merged from BT and re-branded O2, I was the Marketing Director for BT’s Italian consumer internet business called Genie. In anticipation of the de-merger, all BT’s overseas consumer internet businesses were re-branded Genie and encouraged to become virtual mobile operators like Genie Mobile in the UK. Genie Mobile, owned by BT, was the UK’s challenger mobile brand, targeted at young people who wanted big text bundles rather than voice minutes.
Following the launch of O2 in the UK, the Genie brand disappeared worldwide but many of the team (including myself) were integrated into O2 UK’s Marketing and Sales team. O2’s aim of generating a higher proportion of revenue from mobile data than its UK competitors was testament to Genie Mobile’s success in attracting these high value young consumers. The de-merger prospectus noted,
“mmO2 plc believes its positioning as a leader in mobile data will be critical to its future success…mmO2 plc intends to build on the relationships forged by Genie, its mobile internet business with key suppliers and early-adopter customers to increase average revenues per user and reduce churn across its customer base”.
Since 2001 the volume and value of mobile data has exploded with the advent of faster networks, smartphones, ip content and apps. Later this year, will see the return of BT as a consumer mobile brand, addressing this unquenchable consumer demand for data services.
Rather than discussing the rationale for BT re-entering the market which has been well documented, this post aims to offer some opinions about factors that will be currently pre-occupying BT’s Marketing and Sales team as they prepare for launch. I have not interviewed BT staff or worked in BT for some years, so all views are personal based on my experience working in the UK’s mobile, telecom and pay TV sector.
Market opportunity – 9/10
Although the UK market has 5 established mobile operators and over 10 mobile virtual network operators, I believe there is space for a BT mobile brand. Over 9 million UK households already take a telecoms service from BT so they have the credibility to provide a mobile service. The launch of BT Sport is helping transform BT’s image from a safe, predictable consumer brand to a faster moving aspirational brand. BT Sport will have widened BT’s appeal to younger customers who are the highest value mobile segment. I also believe BT’s trustworthy, quality and reliability values will resonate well with many customers who have become frustrated with the sales, network quality and service offered by some incumbent mobile operators.
Marketing Spend – 9/10
BT will undoubtedly spend millions £ launching their mobile proposition so awareness will be top of mind as consumers enter the busy Christmas period. BT are cash rich compared to many of their mobile competitors who have been juggling the competing customer demands of delivering low prices and providing ubiquitous fast and reliable mobile connectivity.
Product 6/10
In BT’s recent results presentation they highlighted their competitive advantage as “the ability to create single converged offerings….combining fibre and 4G…that meets customer needs for fast and reliable data and voice services wherever they are.”
To enable households’ voice calls and mobile data to be carried over the broadband network, BT will need to upgrade customers’ Home Hubs. Out of the home, BT will use a combination of its 4G spectrum, the network sharing deal with EE and its 5 million plus wi-fi hotspots. The resultant product should enable BT to offer very low priced voice and data deals for customers no matter where they are, and on whatever connected device they are using.
Providing seamless connectivity, and technical issues related to home hubs broadcasting 4G as well as wi-fi signals, are I anticipate in the process of being tested. My mind goes back to 2005 when BT launched a combined fixed and mobile product called BT Fusion. BT Fusion aimed to slash the cost of making mobile calls when at home or in an office. Handsets were limited to a Mororola BT Fusion phone. Customers used Vodafone’s mobile network or BT’s wi-fi hotspots when they were outside, and BT’s ADSL network when calls were made inside. In the home, the phone connected to BT’s home hub (initially bluetooth, then wi-fi compatible), creating a small mobile cell. Calls were carried at low cost over BT’s broadband network and in-building connectivity was improved.
At its launch BT championed its “ease of use”. Ovum described BT’s new service as an industry “watershed”.“The separate fixed and mobile telephony services are no longer discrete but are intertwined. It is not overstating the case to say that the industry will never be the same again”.
Customers and many analysts thought otherwise. For a whole host of reasons customers didn’t buy BT Fusion in the volumes anticipated and analysts were generally unimpressed. One described it as “the Rover 75 of the phone business”.
The product that BT are proposing does sound as if it has its roots in the BT Fusion project so here’s hoping lessons have been learnt.
Proposition & Pricing 7/10
To grab the headlines the proposition will undoubtedly contain something significant for FREE.
One of BT’s key strength is its 2 million plus fibre customers. Compared to Sky and Virgin, BT’s TV business is small so they won’t start by launching a quad play bundle like Virgin Media. The proposition will be a combined fibre and 4G mobile proposition to address their customers broadband access needs no matter if they are using a PC, laptop, mobile or tablet, inside or outside the home. It will be a “data connectivity” proposition.
I anticipate that BT will offer a “household” proposition to cover the communication needs of all members of a household. Such propositions are rare in the UK compared to some countries, so synching up all household members existing mobile plans into a single BT mega package will be inconvenient for some. However, when a household does flip to BT mobile, the low acquisition cost of acquiring 2,3,4 or more customers via one sale is financially lucrative, especially if BT are using their existing sales channels. With multiple customers joining, the new revenues per household generated will also be significant. BT’s ability to use its own spectrum, wi-fi hotspots and its core network to deliver the majority of calls and data should more than compensate for the cost of its network sharing agreement with EE.
Creative execution 8/10
As mentioned, BT will strongly target their existing customers. They could use their current “broadband student” advertising creative route. It fits well with both the product proposition and younger people who are big mobile spenders.
However it is a safe, familiar creative vehicle and given they are aiming to be game-changers in mobile like sport, there is a good likelihood that BT will challenge the status quo and do something new.
Handsets 6/10
One of the biggest weaknesses of BT Fusion was the lack of compatible handsets. I assume that BT are working with all they key manufacturers so that they can compete strongly with the existing mobile operators. “Halo” phones still dominate the mobile purchase decision. This was borne out when I recently reviewed all the leading UK mobile operators and the major retailers (Carphone Warehouse and Phones 4) to see what handsets they were promoting online and in store. In 90% of cases, they all promoted the same “halo” phones.
Channels 6/10
I have some question marks over the effectiveness of BT’s channel to market capabilities.
Unlike any of the mobile operators and retailers, BT currently don’t currently have a high street presence. EE has 600 stores and is expanding. Vodafone has recently announced 150 new stores taking it beyond 500, O2 has 450 and Three 345. The operators are investing in this channel as they recognise the importance of establishing a strong direct relationship with customers to increase loyalty and reduce the cost of sales through third parties. They have also seen the success of Apple’s combined store/e-commerce strategy.
I did some work in 2013 comparing the sales effectiveness of BT, TalkTalk, Sky and Virgin Media call centres. Although the BT sales people I spoke to were knowledgeable they didn’t have that cutting edge but professional sales focus. The volumes of calls I made wasn’t statistically significant but the BT results did suggest that how BT capture, then use customer information to target and progress sales, could be improved. Personal examples I came across included not calling back prospective new TV customers, not re-contacting customers on the anniversary of a broadband contract BT lost a year previously and not following up on both cancellations and enquiries about BT Sport.
Overall 7
I hope you found the post thought provoking and valuable. My overall rating of 7 suggests that I believe BT will succeed when it re-enters the UK’s consumer mobile market later this year. Only time will tell if it becomes a game-changer. I certainly hope that all the lessons of BT Fusion have been learnt so that something that just about works technically isn’t launched, frustrating prospective customers and shareholders.
If you have any comments I would be delighted to hear from you.
Angus Mitchell is the founder of Athenic Consulting Limited based in Harpenden, Hertfordshire near London. Established in 2009, Athenic Consulting design and deliver winning marketing and sales solutions for firms of all sizes. They offer consultancy and interim marketing services to European clients including Sky, Google and Sepomo. Prior to establishing Athenic Consulting, Angus worked in marketing roles in the UK, Italy, Spain and Sweden for brands including O2, BT, Ericsson, Genie Mobile and Infinito.it. He also founded a specialist Italian wine company, Dodici.
Email angus@athenic.co.uk
Mobile +44 774 223 2394
Web www.athenic.co.uk
