The growing irrelevance of the operator: Now I just need connectivity

I’ve been a little silent here on Mobile Industry Review lately because I’m slightly bewildered by the new reality sweeping across the marketplace. I’m sure it’s familiar to many readers — that is, your operator is almost completely irrelevant to you nowadays.

It’s been a reality that’s slowly established itself in my mind. Of course I’ve always been happy to utter emotive, “these guys are toast” statements for many years, but it’s always been underpinned by the possibility of a change of strategy.

The death of operator relevance was demonstrated clearly in my own personal dealings with the UK players. I was spending about £500 a month with accounts on every network — contract accounts — so I could test the latest and greatest services. And then it occured to me: Why do I spent £50/month with O2? Why am I bothering?

My primary account is on Vodafone. I got to the point where I couldn’t tell the difference.

So I dumped the O2 accounts. With zero ceremony. There was no attempt to retain my business. I told the efficient customer services chap via internet chat that I didn’t need the lines any more.

He simply said (words to the effect of) “Ok” and gave me a termination date. What he did do is swap both accounts to Pay-as-you-go so that I won’t be marked as “lost” to O2 until about September time when the 2 PAYG sims I’ve received expire.

There was nothing the chap could offer me to stay. Shocking.

There was no attempt to discover whether they could switch my other business to O2. Or could they promise me a new iPad? Or a subsidised ‘whatever’? No. Nothing. They simply let me go.

And the worst part of it? This suited me perfectly fine.

Over at 3, I had to dick about myself getting an upgrade to the iPhone 4S. I really don’t know why I bothered. I ended up — at their request — paying off my existing 3 iPhone 4 contract with the proceeds of the sale of that device. I had to sell it myself. Then I established another contract for the iPhone 4S. The sales agent was delighted as it made his figures look better. I should have thought better and just bought the iPhone 4S. There was no additional value offered by 3 in this whole transaction. Indeed I was helping them out.

Over at Vodafone, I called them to terminate two additional contract lines that were irrelevant. I think, if I search deeply within my consciousness, the reason I still had them going was to feel good. You know, way back years ago, spending “a lot” with an operator was a good thing. You got better service, a few extra perks, handset discounts, that sort of thing. Now each contract line is judged on it’s individual merits. So there’s little point in me having them “to hand”. The sales agent explained I needed to terminate the lines in writing. Utterly flipping stupid. I sent an email as requested and was promised an answer within 2 business days. 10 days later I called again and the lady I spoke to just cancelled the lines there-and-then.

No attempt to retain the spend. No attempt to upsell. Again, this suited me fine.

And that’s what has been irking me.

I don’t appear to be able to buy anything more from these operators.

If anything, thanks to these new “unlimited everything” price plans, the only way I will be spending more with my operator(s) is:

– if I want additional lines
– if I am a crazy user of data
– if I roam abroad

I find this astonishing.

I’m the edge case, though. I recognise this.

I have an iPad 2 on contract from Vodafone. It’s got at least another year to go. I’m currently about to sell that to Envirofone. I’ve bought the new iPad already, directly from Apple. That revenue and additional contract commitment should have gone to Vodafone or one of my other operators. Instead it’s disappeared.

I’m still a Vodafone customer. But that’s only a temporal issue, relating to the last contract I established with them for the iPad (setting aside the fraudulent one that still hasn’t been rectified).

Right now I don’t see any value between the operators. They’re now merging into one for me. They’re simply connectivity suppliers. Previously I held them in a greater light. I felt I got more than just the brand. I’m not sure precisely what I was thinking.

For quite a while I’ve been suggesting all sorts of possible actions from contracting to deliver all my IT requirements (eg £150/month for an iPhone, iPad and MacBook Air) or some kind of special “Vodafone Black” account that gets you into airport lounges and charges 5p a megabyte for international roaming. Or five SIMs with one number. And so on.

We’ve obviously seen next to no additional action from the operators beyond their continued desire to stick to the knitting, flogging the PAYG horse and doing their best to move all contract customers on to 24-month agreements to try and put off the pain.

Certainly the average consumer doesn’t think like me. The most they’ve noticed is that the handset subsidies appear to have all but disappeared and that contracts are now 24-months. Meanwhile they’ve begun spending steadily via their mobile devices on everything from eBay to Dominos to Amazon and Apple. And meanwhile the dominant message from the operators has been “buy a phone (from us, maybe), choose a price plan, goodbye”.

They’ve nothing more to offer.

Indeed if you look at the product and service mix from the operators, I don’t think we’ve seen this change since the introduction of GPRS data as a new offering.

The price has certainly changed — downward.

But that’s it.

Zero innovation. I’m speaking broadly of course. There’s the odd little nod to “new stuff”.

Broadly, though, they’re still busy selling minutes and texts and megabytes. I can’t tell the difference now.

I’ve an iPhone on 3 and an iPhone on Vodafone. I seriously can’t tell the difference. They both cost the same. Three has a slightly better data price (ie “unlimited”) but that’s immaterial to me and most of the world especially since the network isn’t good enough to handle iPlayer at HD on the train. I’ve got WiFi at home and work.

I really don’t care who provides my electricity at home. As long as it’s there and the cost is largely “reasonable” I have don’t care. I’m surprised to say that’s now precisely how I’m feeling about mobile operators.

  • http://twitter.com/Jebelious Andrew Gribbin

    To me it seems the majority of the mobile market has just stopped innovating, never mind the opertors. As you said they are a bit pipe for everyone to have a level of access. On my commute in to work the operator i am with at present i can happily sit in the back of the car attempting to view content online, only to be dissapointed that i can at max get an Edge connection so i am therefore limited to what content i can now view for over 90% of the trip.

    Not only that but the networks seem to ‘Think’ they know what their consumers want when it comes to options available for a new tariff. Like you i would love the ability to change my phone more often (every 6 months would be ideal) and i would be very happy to hand my current phone back after 6 months to be able to change. i would even be willing to sign up for 5 years in order to do this as long as i got what i needed to not have to may ‘much’ more for the privelage.

    I have to say i agree with all of you post, and the operators need to look at themselves and innovate soon and really offer something different.

    Boot note – i have read on a few forums all the problems/hype around particular networks and i must say that for me i have never really had any problems with any network that i have been with, i find if you do not need to call customer services then you tend not to have any problems.

  • http://www.mobileindustryreview.com Ewan

    Agreed Andrew.

    Do you think their position is rescuable?

  • http://twitter.com/Jebelious Andrew Gribbin

    I do, you can start to see some signs at the moment of the Brands trying to re-establish themselves. Vodafone seem to heavily be getting involved in Music and targetting the younger consumer. I think O2 and Vodafone are getting more scared that Orange and T-Mobile are starting to go full steam ahead since the merger so i think we will start to see some fearce competition soon.

    We just need someone to take that first step and do something bold that shouts out from the roof tops ‘Look at me i am ***” and we are doing this!

    There is still some loyalty out there, if you look at the forums around and what people are saying alot of people try to be loyal but if something doesnt happen soon i think alot more people will be thinking like you are..

  • http://jamesvincentuk.blogspot.com james vincent

    I hear what you mean Ewan. I’m frustrated with vodafone these days. I’ve been loyal to them but it’s starting to fade. Why wont they provide for our needs? I been told I cant change plan till 9th June 2013 when my contract ends. I cant have any extra data, But HEY! 2GB for £15 extra, ra ra ra… So it’s a MiFi job full time now then. There’s nothing new, nothing exciting from anyone. 3 are releasing a Web Cube for the home. Great but we’ve seen similar, this will just bang out the wifi signal for upto 30 meters apparently. vodafone has done nothing to improve 3G coverage here in south east wales, speeds are just so disappointing, still maybe 3mbps if i’m lucky. I’ve seen 3 improve coverage and speeds so well upto 9mbps. I’ve got three b’band account with 3, one tablet, MiFi, and a dongle for my best mate. So I’m happy to give them my money [and my mate’s money] I would gladly have a mobile contract with 3 but seening as vodafone wont let me drop my tariff I cant afford one.
    @twitter-60853454:disqus I like your idea ‘change phone every 6 months’. it seems that us consumers come up with the good creative ideas. but the networks are just to concerned about screwing about with minutes texts and data. or lack of from vodafone.

  • http://www.i2SMS.com/ Giff Gfroerer, i2SMS

    Ewan, the one area I think carriers can still be relevant is in the mobile payments field.  I can still look back on SMS and mobile payments and the carriers wanting 40 to 55% of any payment.  I thought to myself back in 2007 if they just took 5% or even 10% the market would be huge and ongoing.  Instead they opted for five to ten times what they were consciously entitled to.  And look what happened to premium SMS…

    However, just as Ford Motor Company saved themselves from oblivion after years of bad decisions, the carriers can still do the same.  We remain convinced mobile payments can be their savior.  I’m not talking solely NFC here, (another topic whether a hardware solution is necessary when a software solution can do the same), but mobile payments encompassing all avenues.

    The carriers still have the relationships with the end users, yes waining, but they still have them.  They still have access to the credit processors and the banks.  They can still innovate here and bring something really simple and effective to the table.  They have lost the app market, losing SMS to IM and other OTT services, being priced down on data, but I maintain they still have the relationship with the end user.  

    Go for the mobile payments side, innovate here, bring the end user something they can actually use, and then don’t charge an arm and a leg for it or someone else will do the same on this product and leave them out yet again.

    Oh, by the way, I actually went to your site yesterday to check that you were still around and my subscription was up to date as I hadn’t heard from you in so long!

    Giff

  • Simon

    Ewan, There is one thing carriers can do differently.  That is provide a service in rural areas.  We get 2g Vodafone at home and 2g O2 at work.  That is it.  Two phones that (mostly – on a dry day) connect in different places.  Zero investment for 10 years and no prospect of any in the next 10.  Voice and SMS on a good day, data zero.  Urban folk and foreign tourists are amazed that iPhones et al do not work.  Before trying more innovation these operators need to try providing a service of some sort.

  • http://www.mobileindustryreview.com Ewan

    I agree with you. They can’t even motivate themselves to get this right!

  • Chris Lewis-jones

    back with a bang Ewan!

    Great post and I completely agree! Where was the forward thinking Exec 5 years ago that said, hang on a minute, why are we are investing vast sums fighting a loosing battle trying to deliver on device content and services? Lets focus on on getting a LTE/4G network live years before the competition.

    Surely it wouldn’t have taken a crystal ball to forsee that connectivity was going to be the major stumbling block to unlocking the full potential of handets? Imagine the market advantage they’d have now. Unsuprisingly short term profit remains king.

    As for the utter lack of interest in retaining customers…baffling!

    From a consumer POV I’m not sure there is a way back. I don’t think your average normob sees them as anything more than a necessary evil these days. Where I do see potential though is with marketing opportunities they can offer brands.

    O2 are a good example of this, through their priority customer data they offer some great location and day-part targeting options as well customer segmentation. Relevancy is the golden goose when it comes to cost effective marketing and the operators have the opportunity to deliver this in spades. The problem is scale. Increasing the volume of customers opting in to share their data in return for relevant offers/messaging is the key and there is talk of all the operators binding together to aid this. It could become very interesting.

    Mobile payment is another opportunity for sure but the banks are gearing up for this big time, Barclays PingIt app the prime example before NFC penetration brings tap to pay mainstream. 

    Opportunities beyond contracts are out there for the operators but wether or not your average consumer will be debating the merits of operators like they do OS’s seems unlikely.

    Chris

  • http://twitter.com/rayleee Raymond Lee

    In the UK, the MNO’s cannot and will not be able to differentiate themselves with Mobile Payments. They are in a position where regulation dictates what they can do with a card payment product and the public’s desire to actually use a phone for payment, whether NFC or mCommerce. If you look at the plans for all three major networks, they are going to offer or are offering a stored value account (SVA), a mobile ‘wallet’ of some form and potentially some form of smart vouchering. The only difference is whether it is Visa or Mastercard. 

    O2, to be fair, are showing some innovation with O2 Money and we should see this in public later this month. But with the MNO JV waiting for clearance, we do run the risk of having a homogenised product that will look and feel the same on all networks.

    The comment re. Pingit is rather misleading depending on what you know about payments. Pingit is not a payment app as such. It is P2P and I struggle to see the real value of P2P when cash is just a convenient (heresy for some in my market).  

    The real differentiators should be about WiFi offload, innovative billing, secure networks, phone management etc. Bring some of the enterprise stuff to the consumer market. 

  • http://www.mobileindustryreview.com Ewan

    Excellent points Ray

  • http://twitter.com/gzost Alexander Gödde

    Phone financing with a contract, like all financing, costs more than paying full price at purchase, so the decision for the phone and network are completely separate by now. 

    There are, however, ways to differentiate on the contracts, and it is amazing how simple it is to stand out in today’s operator landscape:
    o2 Germany is my provider of choice because
    – they allow me three SIMs with the same number (one active for calls at any time, but all can be active for data, and counted towards the one data allowance with my contract).
    – they do not place any restrictions on how I use the data (no silly no IM/no VOIP)
    Their network could be better, there are better prices to be had elsewhere (with one of the MVNOs), but these two factors are what makes them more acceptable than the rest – where, really, both should be something that everybody offers.

  • http://www.mobileindustryreview.com Ewan

    Alexander, isn’t it ridiculous that you have 3 SIMS with one number and in the UK that functionality isn’t available?

  • http://twitter.com/rayleee Raymond Lee

    Multi-sim used to be available in the UK – I had one for my old carphone before bluetooth became the norm for inbuilt carphones. I was told that it was cancelled because of issues with 3G but that never made sense to me.
    I would love that functionality back to let me take the phone I want out for the evening or for work. 

  • http://twitter.com/gzost Alexander Gödde

    Absolutely. In a multi-device world, it should be an available add-on to every contract.
    But then, as you said: it’s the operators. Even the more enlightened ones among them are not anywhere they should be in terms of – well, I was going to say innovation but, really, it’s just offering what’s common sense.

  • http://twitter.com/steely_glint Tim Panton

    There are some signs of intelligent thinking going on at the edges of operator thinking….
    GiffGaff (the “user-supported” MVNO) is the natural conclusion of what you are saying – and guess what? – It is a wholly owned subsidiary of O2 .T-mobile are doing interesting things with 3g data rate differentiation – I recently bought a month’s worth of internet connectivity in the Netherlands for 10euros. A good deal, but the data rate is capped at 368kbits/sec – it’s 3g not HSPA. (on a PAYG SIM it is a cheap alternative to roaming).  

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