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I think the nature of the beast has shown that companies should have fixed their service issues ages ago, but their service is as bad now as it was 10, 15 years back, and they haven’t fixed that.” Currently, there is a differentiation between the network builders, who are future proofing their offering by building in 10G capability to their network; others are building networks with less of a ceiling, so they will face a challenge in 10-15 years when the copper has been phased out. Meanwhile, appetites for data are skyrocketing year on year along with customer expectations around Rampling memorably calls the ‘triumvirate of key levers’, product, price and service. Isn’t reducing prices endlessly a fruitless race to the bottom? It is well known that consumers, once they’ve been offered low prices, resist paying more. Price wars don’t generally benefit anyone in the long run. Rampling smiled and said, “I don’t buy “the race to the bottom” idea as there are consumer trends and market trends that are counter to this. One, people are prepared to pay more to get more, as our models consistently demonstrate. Two, there are massive out-of-contract hikes as operators seek to recover the investment in their networks, so in some cases prices are actually rising. People vote with their feet and we’re finding service is actually important to them. I think it is a race to give customers the broadband life they want and deserve.” Loyalty? What loyalty? Peter also touched on an interesting phenomenon that divides consumer behaviour and affects ISPs in a significant way. The agile switcher, the aggressive hunter, always looking for a better deal, devouring price comparison websites (the type that probably remembers to use up coupons and vouchers before they expire) – we all know that person. You might even be that person. Then there is the resister, the reluctant switcher, the risk averse consumer who knows where he is with his provider. It isn’t about brand loyalty at that point, it is about risk. Anyone living in a house with teenagers or works from home will probably relate to that aversion. Peter says, “When there’s more than one person in the house, there’s a whole lot of baggage that goes with whoever’s responsible for the broadband. There’s risk avoidance at play here along the lines of, “Well, if I switch, is there going to be a
platforms instead, giving them a better market position and higher revenue multiples in the stock market. Striking a good balance between delivering great seamless connectivity on one side and remaining relevant to the customers on the other is no easy task. I think many ISPs are struggling to find how to capture their customers’ attention because delivering ever-higher capacity numbers no longer works as well as it used to. That is what’s driving the trend towards network APIs - ISPs are looking for ways to deliver new functionality on top of the connectivity.” Speak to an ISP directly however, and the views are complex and varied. Peter Rampling is Chief Commercial Officer at Community Fibre, which was earlier this year voted top-ranked provider of 2024 by Which? in its annual ‘Best & Worst Broadband’ report and doesn’t agree at all. “It’s not a homogenous marketplace by any stretch of the imagination at the moment. “If you think about the broadband market 10 years ago, I’d agree it was very difficult for players to differentiate themselves. We’d like to think that we have differentiated, because people do have choices now,” he said, pointing to pricing, speed and service as differentials. Fibre to the Home however is a key differential. “Once you’ve had fibre installed, the reliability is obviously much better than old slow-motion copper technology, because it’s not down to the vagaries of electricity and leaky pipes that affected it. It’s just consistently reliable.” As copper is phased out this will be less of a marker but for now, it is an important point. It also potentially ties the consumer to the provider, since you risk having the front of your house littered with boxes if you keep changing provider; the box belongs to the provider after all, not the household. “If the service is that great though, why would you ever leave?” Rampling laughed. Then there is the industry perspective, something most consumers will be less aware of. “If you’re buying wholesale, by definition, you’re paying a chunk of money to BT Openreach, and that then constrains your ability in terms of what you charge. If you’ve got your own network like we have, then you can continue to be competitive. So, I think there’ll still be product differentiation. I think there’ll be price differentiation. And
customer experience is “communicating with customers on their terms”, meaning however and wherever is better and more convenient for them. In fact, says Max McShane, Head of Digital, “I can guarantee that if a customer wants to communicate by interpretive dance, there’s a team of employees at Octopus Energy just willing to reply in the same way.” Perspectives vary on differentiation when it comes to ISPs, who see things in far more granular detail. Consumers tend to view the provision of broadband as much like any other utility; one consumer we spoke to made the point that “Internet services are a utility, but I don’t think service providers have to be as accountable as other utilities. There is much more latitude if there is a broadband outage compared to a gas or electricity outage, for example.” He went on, “Less is more: service providers are keen to bundle everything together as a way of making themselves exceptional, rather than focus on core service delivery. For example, EE want to sell you a TV now rather than focus on service quality. Vodafone are giving away wireless Bluetooth headphones this week. This isn’t really necessary and speaks to more vacuous sense of competition for the sake of it, rather than pride that ‘my product is better than yours’.” This view is echoed by our friend Bjorn Ivar Teigen at Domos, whom we met earlier. “You point out a big problem for the industry. For the pure business of delivering connectivity, success means becoming an invisible utility. A role which is unlikely to impress investors. So many ISPs are looking to become technology Internet services are a utility, but I don’t think service providers have to be as accountable as other utilities. There is much more latitude if there is a broadband outage compared to a gas or electricity outage, for example.”
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Volume 46 No.3 September 2024
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