On day two of CCS Insight’s predictions, director of consumer and connectivity Kester Mann
conducted an interview with Marc Allera, CEO of BT’s Consumer Division.
Q) The cost of living crisis is the topic on everyone’s lips at the moment. Is it right that the telecoms industry is looking at implementing inflation based price rises during difficult times and what is BT doing to help customers that may be struggling to pay their bills?
This is an important topic and we can see businesses and consumers under a lot of pressure. Pretty much every product they buy, trade and consume are going up in prices, Many of which are exceeding inflation. We recognise that and we understand the importance of working with our customers and are doing everything we can to support them. However, as an industry what we have to recognise is that telecommunications is a very small proportion of consumers’ spendings. There are much greater areas of their income that are consumed by things like energy and council tax. So telecommunication as an industry is providing really good value for money and it’s a product that consumers are using 50 per cent more of, every single year as well.
More or less for the same money, the ARPU of our country is amongst the lowest in Europe and significantly lower than the US. So I think consumers are getting a great deal out of telecoms, but like any industry right now, we are also experiencing price pressure. So we created a price mechanic that allows us to pass those benefits to consumers when prices aren’t increasing so much, as they did a couple of years ago, but also allows us to have some buffer when we have prices that are increasing and we are not immune. And I think the sector has to find a way to build a more resilient infrastructure. The UK needs a more resilient infrastructure. We definitely don’t want what happened in the energy infrastructure where everything was just focused on price and not value for money. That’s why I think it’s very important to have a clear pricing mechanic that’s linked to the costs that go up and down in our business. We recognise these are exceptional times but I think the narrative from too many people in our sector has focused disproportionately on price and not value for money or resiliency and innovation and not getting out of that cycle.
Q) Would you say that BT is a bit more exposed during hard times and customers may look to downgrade and take out a subscription with a more budget provider?
In a recession you do see pressure on price from certain segments of the economy. Our stand has always been you can buy cheaper but you can’t buy better, we do focus on quality of networks, service, experience, other value added services for consumers so they feel like they are getting great value for money. As consumers are bringing together broadband, mobile and TV and other services we believe we can provide value for money, so it’s not something we are complacent about. We have got a broad set of tools to play with, we are not a pure-play broadband, pure-play mobile or pure-play TV. We’ve got everything in the locker and a little bit more, to create bundles and packages and value for money for consumers and are certainly not complacent. I think the next 12-18 months are going to be very challenging for consumers.
Q) What about customers that need extra help?
At BT we recognise its our responsibility to serve all kinds of customers, but I don’t think the burden should fall exclusively on us, but we’ve been happy and proud to lead the way on social tariffs on broadband and now extending it to mobiles as well and they are specially aimed at customers who are on universal credit and offering them a low cost option, if they are eligible for low costs, high quality connections which we know is important for them.
Q) You talked about EE expanding beyond the connectivity that it currently provides. Could you tell us a little more about it?
We made a couple of announcements. The first is that we are focusing all of our efforts now on convergence and leading in the home as we bring together broadband, mobile services together on our EE brand, but still BT is playing an important role for us particularly on stand alone broadband, landline and other services. We also announced that as part of that, EE will be looking to expand beyond services that traditionally are expected from us like broadband, mobile and TV, into new areas like home security is one area we will be moving into first and we’ll make some announcements to make about that in partnership with some very strong players and its very much our approach. So we like gaming, home security, insurance, and we think these are areas close to consumer homes, close to our home and we have a right to play.
Q) Historically the telecoms industry has been guilty for making things overly
complicated and we got a prediction this year that one operator moved away from
referencing technologies like 4G or 5G in some of its marketing. How do you feel about that and what is BT doing to make things more simple for customers?
That’s an interesting prediction, so much narrative is driven by the equipment manufacturers across the network manufacturers than the handset providers as well and that creates an awareness of categories in consumers minds. For example we have seen very high profile devices proudly saying this is a 5G device and customers not knowing what this is, but just thinking it is better and faster than 4G, so I think it would be a bold move to move completely away from that. I do agree that as an industry we make things very complicated, and one of the advantages we have and you’ll see over time is that with the converge core as broadband, mobile networks come together and are able to work much more seamlessly for consumers without them needing to proactively select the bearer that they need to get the connection from. We think we need to simplify things, but I’m not sure if we’ll go as far as completely removing the need for explaining these technologies because they are a shorthand for capability, safety, security and what you can and can’t do for people.