Until recently most home phone re-sellers were offering their services having part unbundled the local telephone exchanges. This means that they can offer a competitive call plan, but the line rental remains with BT.
This is very important in two key respects. First BT continue to bill the customer for line rental and hence have a route into the home to try and persuade the customer to “come back to BT”. And second, psychologically BT remains the “mother brand” in the mind of the customer – it’s clearly their underlying service which the upstart re-seller is hiring to offer their services.
But with full local loop unbundling, the new home phone seller takes over the entire line and can offer a call plan, plus line rental. BT is therefore completely cut out of the equation with the consumer and has no ongoing billing relationship. This is a fundamental difference and we think it will herald big changes in the home phone market, with an acceleration of customers away from BT.
Our recent research shows that 33% of people have not changed their home phone supplier in over 5 years, reflecting natural inertia and BT’s central position in home phone consumers’ minds. And whilst it is true that several companies have been offering the full call plan and line rental package for some time, it is set to increase greatly now that Sky are really getting behind their fully unbundled service; so too are an aggressively expanding TalkTalk, who are soon to acquire Tiscali (who can also offer the fully unbundled service); and Orange are building their fully unbundled network too.
Indeed, Sky are currently writing to their 9 million customers encouraging them to move their line rental over to Sky. The Sky communications explain: ”We have built a new state-of-the art network which uses Local Loop Unbundling (LLU) to give us end-to-end control of your broadband and phone service, instead of ‘renting’ the connection from another provider”. “We’re using the latest technology to offer you a great experience and to offer you new features in the future, such as managing your voicemail through Sky.com. Carrying voice and internet signals over our own network also means we can offer unbeatable value for money. You don’t have to do a thing – we’re transferring Sky Talk and Sky Broadband customers to our new network automatically, with minimal disruption to your connection. Your account details, including your home phone number, email address and username will all stay the same. Your Sky TV service will not be affected.”
In addition Sky’s recent Sky+ HD campaign offers free line rental for 12 months when you join Sky as a digital TV customer.
So we believe that as these fierce competitors to BT like Sky, TalkTalk and Orange up the ante, and BT is removed from customers’ homes, BT will find it much harder to win back home phone and broadband customers in the coming months and years.