Why consumer packing and pricing is important for B2B service providers

Home broadband is not just for consumers. Many of the biggest spending home broadband users are actually homeworkers and microbusinesses who rely on consumer packages to run their businesses – often with their apps in the Cloud. Many B2B service providers still struggle to target these customers with business services, or bundle and price services that address their needs. Too often, service providers put all their effort into marketing packages that target leisure activities such as content and gaming, while failing to address the working needs of customers. Despite the fact that homeworking continues to increase.

Instead of pushing content, games and marketing-speak that picks out features that support media usage, service providers need to have at least one package that provides homeworking features – preferably a bundle that can be added on – and which includes security software, Microsoft 365, conferencing, website packages and so on.

Service providers are reminded that 75% of businesses in the UK have no employees, and 99.9% of them are SMEs. The biggest growth area in the economy since 2008 has been microbusinesses, and yet still most service providers are not adept at addressing these customers’ needs. We would argue that the artificial divide between home and business packaging is looking increasingly old fashioned and increasingly unsustainable.

Microbusinesses in particular are usually network-dependent and affected by changes in prices and packaging for household broadband. Below is a summary of some of the changes being rolled out this month in the UK – with some service providers lowering prices and others hiking prices it’s a very mixed picture.

Vodafone puts broadband charges up

Vodafone’s standard fixed line home broadband packages will be increasing by £2.50 per month from December 2019 for 600,000 customers. The increase will not apply to their full-fibre FTTH Gigafast packages with Cityfibre. The price rise is a hike of approximately 10% on current prices. Acknowledging the likelihood that this will stimulate dissatisfaction and churn, they are promising to keep charges the same if customers re-contract for 18 months.

Sky launches G.fast powered Ultrafast 1 and VoIP packages

Sky Broadband has officially launched (21 October 2019) their G.fast powered Ultrafast 1 (145Mbit/s) broadband and VoIP (SOGEA) phone packages, with prices starting from £39 per month. Customers can expect unlimited usage, a VoIP-based phone service (SOGEA), unlimited access to WiFi hotspots from The Cloud, plus parental control and anti-malware application Sky Shield, nuisance call blocking application Sky Talk Shield and email.

The new packages offer guaranteed download speeds of 100Mbit/s, with fee-free early termination possible if the speeds drop below the threshold for three consecutive days.

However, the fly-in-the-ointment is that Openreach’s 330Mbit/s capable G.fast technology currently only covers around 10% of UK premises and plans beyond March 2020 are currently under review – adding a layer of uncertainty.

PlusNet increases charges

Plusnet has announced it will increase its prices for broadband and phone services on 3 December 2019. It also intends to withdraw its old “broadband without line rental” packages from sale. The increases will not apply to those customers who have fixed price contracts from 8 August 2018 onwards, or Line Rental Saver customers (annual pre-paid line rental).

Most of the changes are increases in per minute call charges, although the standard monthly cost of line rental will increase by £1 to £19.99. All of Plusnet’s optional calling add-ons – such as free evening and weekend calls – will increase by an extra £1 per month.

BT and Virgin offer special time-limited pricing

BT and Virgin meanwhile have both be vying for business with their time-limited offers. In October Virgin announced it would give customers £150 bill credit when they sign up to one of its bundles such as Big Bundle, Bigger Bundle, Bigger Bundle+Sports and the Ultimate Oomph Bundle (with prices starting from £33 per month). In an interesting tie-up, both it and BT have been offering a year of free Amazon Prime membership (worth £79 per year) as part of their deals.

BT meanwhile cut the price of its Superfast Fibre Essential package by £2 to £27.99pm. This option delivers 36Mbit/s plus unlimited downloads and BT’s Stay Fast Guarantee. It also reduced the cost of its Superfast Fibre (50Mbit/s) offering by £3 to £32.99pm. In its next move it offered £150 BT Reward card to new customers.

Clearly these two are matching each other’s offers closely.

Omnisperience’s view is that dynamic offers like this are designed to encourage out-of-contract broadband customers away from rivals, but they frustrate as many customers as they delight. Customers that miss the deal by a few days feel annoyed; existing customers feel let down that they’re not offered the same perks as new customers. This type of offer may feel clever, but it’s not customer-centric as it underlines that the provider is focused on acquisition strategies rather than retention.

Post Office focuses on light users

The Post Office has carved out a niche providing services to forgotten or ignored segments. Initially, its USP was that it will let you pay anyway you want for your broadband, at a time when other service providers in the market pressured customers into paying by Direct Debit. It recognised that older people, in particular, like to pay in cash on the bill date, but their needs were not being accommodated.

Its next move have been to offer a low-spec broadband service for a cheap price. As other providers have rushed after huge download speeds and unlimited data, the Post Office has come up with an inclusive offer for £15.90 per month. Depressingly, the 12-month contract rises to £30 after a year – revealing yet another acquisition focused provider – but for those 12 months you can enjoy no data caps or download limits, inclusive line rental and free landline calls to other Post Office home numbers. Of course there’s a wrinkle! You only get 11Mbit/s, so you can’t ingest anywhere near as much data as someone on 10 times that speed, but then some customers don’t need or want data-hungry services.

KCOM gets out of handset market and completes full fibre rollout

KCOM has announced that it will stop charging rental fees for its landline phones from November. Ownership of the device will switch to customers. In a letter to customers, the company said: “This will save you money as you no longer have to pay rent, but also means you are responsible for any issues with the phone such as if it needs repairing or replacing. There is no need to return your handset.”

This comes hard on the heels of the company’s announcement (10 October 2019) that it has now completed its £85 million full-fibre rollout, meaning that everyone (200,000 homes and businesses) in the Hull region has access to full fibre, compared to a national penetration of just 8%. The cost of the rollout is dwarfed by the benefits deriving from it which, according to Innovation Observatory, amount to an additional £469 million of economic wealth to Hull and the surrounding areas.

And in the mobile world…Daisy introduces unlimited data packages

Daisy has announced what it calls “carefree data usage” for its customers. Commercial Director, Jeff Hardie, said: “Customers have been waiting for heavy data plans that fit their lifestyles for the past few years and we’re pleased we can finally offer them unlimited data plan options. Our customers have been able to get unlimited minutes and texts as part of their mobile plans for a long while and, for the first time, they now don’t have to feel restricted by their data usage either.” The plans will start from £27.50 (excluding VAT) per month for a 24-month SIM-only plan (SIMO).

Posted by Teresa Cottam

Teresa is the Chief Analyst at Omnisperience and has over 25 years' experience in the telecoms and technology markets. She is an expert on SME and enterprise telecoms, and has considerable vertical market expertise. Her research focus lies in helping B2B telecoms firms become more commercially successful by better understanding and meeting their customers' needs. She is a judge of the GSMA Global Mobile Awards (GloMo's) for customer experience and enterprise innovation, and for the UK Cloud awards. You can follow her on Twitter @teresacottam

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