Do Belgian Consumers Want Choice?
Orange (née Mobistar) recently (re)entered the space of fixed telecom with its TV offering. It added 17,600 new subscribers (source: Orange Corporate). That is hardly enough to make a dent in the Telenet x Proximus 80% duopoly. However, it raises the question: do consumers want choice?
For years I have been observing users and conducting an informal 3-part survey about their experience with Belgian Internet service providers (ISPs).
Satisfaction
“What do you think of your provider?” That question triggers 3 types of reaction:
- Horror stories
- Non-chalantness: “It is OK. I guess.”
- Slight joy: “I am satisfied.”
The horror stories revolve around problems with incorrect billing, terrible customer service experiences, and disastrous encounters with technicians. The typical effects of a duopoly; where the customer is a burden.
Being an infrastructure provider is tough. Even when everything goes perfect 99% of the time, customers only think about their infrastructure provider when there is a problem. It is no wonder that telecom companies often rank in the top 10 in the most hated companies.
However it does not have to be that way; learned helplessness is not an excuse. An interesting case is the American MVNO, Ting, which ranks highest in customer satisfaction.
Choice
My next enquire is often around the person’s knowledge of other choices in the market. The answers fall into 2 categories:
- They only know 1 other option (which they have tried in the past and are not too keen on going back).
- Or they know about a couple of other operators, but often these are brands of a bigger operator, e.g.: Scarlet to Proximus.
The truth is that there more providers out there. You can find them on the comparison engines and there is an association of ISPs (www.ispa.be) that tries to bring them together.
Changing
At this point I ask why they have not changed providers. It comes down to:
- It is too painful to switch.
People remember the pain the brought them to switch in the first place: it was the rock and a hard place type of decision. I can attempt to argue that it is no longer true; now that the cable connection is in place the change should be much simpler. But they do not want to hear it. Perception is reality.
Orange’s Long Battle to Enter Your Home
This is not the first time that Orange enters the fixed and TV market. It is the third.
Its first attempt was when it struck a deal with Proximus (then Belgacom). After what I would imagine were tough negotiations, Proximus pulled out without any explanations.
For its second attempt, Orange (probably) struck a deal with the M7 Group (TV Vlaanderen / Télésat). Orange outfitted its shops with the fancy new TV settop box, its beautiful remote, and a gigantic TV to show it off. Except I never found a shop where I could actually try the product, the shops themselves did not have it installed. That attempt died a quick death, too.
For its third attempt, Orange took the public good in hands and brought a case to the IBPT, the Belgian regulator. Orange wanted to open up the cable operators. It was successful. What that means is that it can now use the networks of the coax operators: Telenet, Voo, and Numericable. So, if you are an existing customer of any of these ISPs you can switch to Orange.
The Fox and the Hen House
Orange’s battle to open up the coax players created a monstrosity.
It is not the first monstrosity either.
Proximus network is also an “open access network”. An open access network can be compared to the existing a road system. Anyone can operate a transportation company on top of the existing road system.
In contrast, a closed network, aka Vertically Integrated Operator, is one where one entity:
- owns the roads (PIP on the graphic, Physical Infrastructure Provider),
- manages the rules of these roads (NP, Network Provider),
- and operates the transport company (SP, Service Provider).
But the Belgian “open access networks” (those are air quotes, by the way) have a gigantic problem with them: Orange’s supplier is its biggest competitor .
The odds are stacked against Orange. The PIPs — Telenet, Voo, and Numericable — have absolutely no reason to make this process smooth for Orange. The PIPs have all the leverage and keep the barrier to entry high:
- Entering ISPs must pay a high upfront fee ; €1,8 million (€600k per network, 3 networks)
- Activation fees per each individual customer.
- Monthly fee per active customer.
- and a plethora of other fees .
You can find more info on the IBPT’s site ( link ).
At the end of all that pain, Orange will have little room to differentiate itself.
Customers Want Choice, but Will They Have It For Long?
It makes me happy to see Orange’s financial results. It shows that there is room for competition. Customers do want more choice.
Also, Orange has show that it can penetrate the penetrate the market. However, I wonder long of a runway they have. The financial wound of the 3 attempts to enter the TV market is unlikely to be healed by 17k paying subscribers.
Nonetheless, it is a breath of fresh air that Orange is brave enough to try.
This post first appeared on LinkedIn Pulse.
