Archive for May, 2007

My guess is that the average customer wants a good service and does not much care who gives it to them. But if they do not get a good service, they want to know who to complain to. In a world where customers are bought and sold, and where the companies that send the bills are different to the companies that provide the service, customers may find it very hard indeed to know who is responsible for what. Virgin Media are a great example. Poor service by ntl and Telewest over the years means that customers got educated about who their supplier was. They learned the hard way the difference between what ntl and Telewest were supposed to do and what they actually did. So when ntl Telewest rebranded as Virgin Media, nobody was fooled. The spat with BSkyB in the end proved to be a convenient smokescreen for the poor financial results for Virgin. Truth is that they were hoping a rebrand and some adverts with Uma Thurman would fool lots of potential customers into thinking that new Virgin = great service. Instead customers realised new Virgin = same old ntl Telewest. So nobody has been flocking to the company, and it is not because the phone lines are jammed with people wanting to leave over a few missing Sky channels. The problem is that customers have been educated by the telecoms industry – educated to understand the difference between the brand and the underlying reality. So now many look beyond the brand to see who really does what. And if you put a shiny new brand on a rotten old product, the customer is savvy enough to understand that.

It is interesting to chart what has happened with some elements of the customer merry-go-round. Less than a decade ago, ntl bought the UK retail customers of Cable & Wireless. A few years ago, C&W bought Bulldog, a broadband ISP. C&W made a mess of Bulldog’s retail business, so they sold the retail customers to Pipex, renamed the Bulldog business “Cable & Wireless Access” and refocused it on wholesale. The first C&W Access wholesale deal was with Pipex, so they were serving many of the same retail customers as before. Telewest and ntl went bust, then merged, and have now become Virgin Media after merging with a business with a great brand but no network. A few days ago, Virgin Media signed an exclusive deal to buy LLU from C&W Access until 2011. In the meantime, Pipex may be sold and if it does will probably terminate its deal with C&W Access. So in less than 10 years we see a switch from ntl (as was) buying customers from C&W and putting them on its own network, to Virgin Media (as is) renting network, possibly exclusively, from C&W to service its customers. At the same time, C&W sold its UK retail customers to exit that market, then bought a company and its customers to re-enter that market, but made a mess of it so sold its customers again. And those customers will probably end up on the network of one of the long-term strategic rivals to Virgin. What a strange and complicated palaver. If you told C&W customers (hands up who remembers the Mercury brand – the first brand to challenge BT’s monopoly in the UK?) this would happen 10 years ago they would probably have stared and shaked their heads in disbelief. But tell them today and a large number would not only understand, but would be shaking their heads for another reason. Because whilst the celebrity execs are bonused on all this high-profile corporate deal-making, nobody seems to be paying attention to customer service. So let us see if Virgin makes more apologies and excuses in future, when its new LLU customers start complaining….

Bookmark and Share

I hate spam. I get lots of it. Some of the spam I get is obviously the result of poor control over corporate data. For example, some dishonest T-Mobile UK employee must have thought it would be a good idea to profit from the email addresses of everybody working there. As a result, I used to get lots of spam at back in the days when I worked there. Two years after I left I went back again to work on a project. When I went back I found that the same spammers were still spamming my old email address (somebody needs to take a look at those spam filters…) But at least spam is visible. We can see what is happening with our data. If data can be given to spammers, it can also be given to people prepared to do far worse.

They say that information is power and time is money. But you can combine those phrases in many ways. Information is money. At the moment, telco and media businesses are trying desperately to gather as much information about us as possible. Take a look at recent announcements relating to Google. Whilst Google is keen to get as much data as possible to boost revenues from targetted advertising, the EU is concerned that Google’s policy of retaining search data for 2 years is excessive and hence illegal. But how much of the money made from information is being spent on security? The problem here is that people with the right access might find it very easy to steal data and sell it on to a criminal enterprise.

Whenever I am looking for an example of a telco that got things spectacularly wrong, I think first of Bulldog. Bulldog is the now partly defunct broadband ISP purchased by Cable & Wireless. And right on queue, here is a news story of how a Bulldog executive stole the customer database. One source of comfort to Bulldog will be that the potential for illegality will be limited because, according to former customers, most of their data was wrong to begin with ;) Another source of comfort to Cable & Wireless is that the reputation damage will be next to nothing. When Cable & Wireless bought Bulldog, it had a great reputation with retail consumers, but comprehensive mismanagement caused C&W to pull the plug on Bulldog long before this example of wrong-doing and poor governance came to light. But the underlying question remains for telcos that intend to do better than Bulldog did. The question for telcos and media companies is: have you balanced the value triangle for information, security and reputation? Some of the money made from gathering and holding information has to go back into security. And if not enough goes into security, the cost will be paid elsewhere – in terms of reputation.

Bookmark and Share

I am not the type of person to pay a few thousand dollars for a report that is based on an opinion poll of guesses and quotes from men selling snake oil. But if you browse the web long enough you can find snippets of what gets included in those reports for free, which is interesting in itself. So it seems that Juniper Research have concluded that global revenue losses are set to fall – see here and here. Interesting. Not that I take it seriously. But it does make me think of a few questions (although I know the answers already):

  1. Why does the Subexazure revenue leakage survey (see here for the 2006 version) fail to ask what revenue assurance managers think revenue loss will be next year as well as in the current year?
  2. Would that lead to a change in results of the type Juniper predicts?
  3. Without asking that extra question, is there any incentive for revenue assurance managers to be realistic when giving their opinions and predictions?

I think you can work out where my thinking leads…

Bookmark and Share

As predicted, the Eurocrats have voted to cap mobile roaming charges. And as expected, most of the press have focused on how popular this will be with customers. For good examples, take a look at the story televised on BBC News and as written in the Financial Times. Note how the BBC video shows that customers assume roaming charges are excessive (I doubt any of the people interviewed actually know what the actual costs to telcos are…)

One consideration missed by the Euroclowns is that limiting cross-border revenues should encourage cross-border consolidation. Rather than giving away a large chunk of revenues to another, possibly rival, service provider, the long-term goal will be to avoid roaming by always keeping customers on your own network, wherever they are. So expect the speed of mergers and acquisitions to increase. That may not be so popular in some countries with operators that are the targets for takeover (like Italy). It will also lead to some tension in countries like France, which are fine with investing overseas but do not like foreigners buying up their companies. In the meantime, the industry must hope that the decrease in prices sees an increase in traffic, which may mean plenty of headaches for those businesses already struggling to manage dataflows and settlement with roaming partners. Expect revenue assurance to be better focused on roaming as a result. Gone are the days when you should be happy to wait a long time for a customer’s calls to be provided on TAP files – there will be more pressure to rapidly convert calls into cash. On a network infrastructure level, the smart operators will realise they need to keep working on having the strongest radio signals where people enter the country. If you can get phones to roam on your network when a person crosses the border, there is a much better chance that subsequent calls will be made on your network. So more focus should be placed on building at key points like airports and border crossings for roads and trains. And finally, the Euroclods have tried to do customers a favour by ensuring they get a text explaining the roaming charges when they enter a new country. That is smart business anyway, as many customers are too scared to make calls, so hardly needs to be enforced by government. It seems 80% of roaming calls are made by business users – meaning people who do not care what the bill is. Changing the behaviour of tourists may lead to higher revenues in the long run though it will damage revenues from corporate customers first. So the mobile industry had better do a quick u-turn and start promoting low tariffs instead of fighting them. If it can persuade young holidaymakers to take their phones to the beaches and use them as a way to keep in touch with each other, or to use the phone to get updates on travel news and local information in their native language, the mobile industry will get more than extra revenues. It will be more popular with its customers. And if the mobile service providers were more popular with customers, it would be harder for the Euroclueless to interfere in their business….

Bookmark and Share

EU mobile operators are currently smarting from the EU’s agreement to cap the rates charged for roaming in the EU. Certainly Viviane Reding, the commissioner behind the price cap, seems to revel in bashing industry and is uncompromising in tone and approach. But many of the mobile industry’s counter-arguments were disingenuous. Nobody doubts or denies that these operators make a lot of money from charging for roaming. In fact, the threat being used by operators is that they will have to increase other charges to compensate. What does this tell us? Well, it tells us in pretty straightforward terms that some calls – roaming calls – are being charged at excessive rates in order to subsidise other kinds of calls. These other kinds of calls – local and national standard rate calls – are the ones that customers look at most closely when choosing a telco, but are also important to strategic objectives like fixed-line substitution. I know this is no simple cartel that has driven up the prices of roaming. If anything, the problem here is the usual one in telcos: operators try to squeeze every penny out of other operators when they do not have to suffer the unhappiness of the end customer who ultimately pays. But the overall tendency to favour local and national call rates at the expense of roaming does create an unfair competitive burden on the fixed-line operators that the mobile carriers now openly compete with. And if substitution of mobile for fixed is successful, it could mean fixed-line providers being driven out of business, leading to less competition and increased prices for customers in the long-run. So whilst the EU has been fairly heavy-handed in how it has targeted mobile providers, the best argument that the mobile players can come up is not very persuasive: intervention could lead to more balanced pricing that more accurately reflects the real cost of providing a service. For the eurocrats, attacking the mobile players is an easy way to increase their popularity. Regulating against straight bananas and writing long constitutions has left the European citizen cynical about the purpose of the EU. It is a bad sign for the mobile industry that in a confrontation with the EU over prices, the typical European supports the eurocrats and thinks Viviane Reding is doing a good job.

Perhaps I should be more charitable to the mobile operators who have created such a marvellous infrastructure for working together. They have truly created a new communications empire. By working collaboratively, they have benefitted the world. But of course, that supposes they do work collaboratively. Roaming is underpinned by the bilateral agreements between operators. But the technical and business models for roaming are so well established now, and the profits so clear, I find it surprising that there are still so many more bilateral agreements yet to be reached. Okay, there are diminishing returns in reaching more roaming agreements with more operators, but in the end companies make money for providing a service, not for failing to provide one. The costs of setting-up a new roaming agreement are largely one-off, whilst the revenues will persist indefinitely. This means it should be econmically rational to aim for roaming agreements with every foreign network in the world. Perhaps operators are wary of offering roaming if they lack the resources to test handsets actually work abroad. I can understand that providers are wary of a negative customer reaction if someone takes a handset abroad only to find it does not work. But I was disappointed with my own carrier’s seeming solution to the problem: if not sure, just say the handset does not work for roaming. I am in Japan at the moment, and knowing a thing or two about technology, I was pretty confident that my 2100 MHz UMTS phone would work on the Japanese networks. The advice from my service provider was that I was wrong and that it would not. Perplexed, I check the advice on NTT DoCoMo’s website. Their answer was not much more helpful, but at least it was honest; it said my handset might work but they made no guarantees. Why it would not work is beyond my technical understanding. My phone model is also sold in Japan, so there is no obvious reason for obstacles to interoperability. So I took my phone to Japan, and yes, it worked. So if I had listened to the advice of my mobile provider, I would probably have got a local SIM and my provider would have missed out on the revenue. So whatever the mobile operators think of Viviane Reding, perhaps they can take a good look at themselves and find ways of making more money and providing a better service at the same time. If they did that more often, they may even find their popularity rises. Perhaps one day the mobile providers might be more popular than bureaucrats…. but not anytime soon.

Bookmark and Share