Cannibalization is a sticky matter

Tony Poulos

Cannibalization is a sticky matter

November 19, 2012

As featured on TM Forum's the Insider blog

So, here’s a Wi-Fi calling service that allows customers to use the unlimited calls from their home phone talk plan on their smartphone – whether at home, at a friend’s, or even abroad. As long as there’s a Wi-Fi connection, users will have the freedom to use their home phone plan’s inclusive calls on smartphones, regardless of wherever they are and no matter which mobile operator they use.

“Through an intuitive app that will automatically detect whether a call is possible and whether that call is included in their home phone talk plan. This even includes phoning the UK from abroad, so holidaymakers could wave ‘au revoir’ to the shock of roaming call charges or hefty hotel phone bills.” So goes the marketing spiel from Virgin Media in the UK as it announced SmartCall, billed as the UK’s first ‘converged’ calling plan. (There’s that awful ‘c’ word again).

Virgin Media also claims to be the first provider of all four broadband, TV, mobile phone and home phone services in the UK, so you would have to ask why it would potentially cannibalize its mobile business to keep its fixed line broadband customers happy. According to Graeme Oxby, Virgin Media’s executive director of mobile and home phone, “SmartCall will stretch the home telephone cord all the way to wherever you might be, whether in a coffee shop in Cornwall or on a beach in Bali. All you need is a home phone from us, a smartphone and a Wi-Fi connection.” (I’m not sure Graeme has been to a Bali beach lately but we get the drift.)

Perhaps home phone customers consuming Virgin’s broadband and TV services are more valuable than their mobile customers being serviced through its MVNO? Or is it that there is little crossover of the two customer bases? Either way, we will not likely be told. However, full credit to Virgin for providing what is essentially a free VOIP service that looks and feels like an extension of the service their customers are used to.

This is an example of something we will be seeing more of in the coming months. Not satisfied at sitting back whilst their long distance traffic dwindles due to the numerous OTT offerings their customers are being bombarded with, Virgin makes consistency and ease of use a key stickiness factor.

Earlier this year Virgin Media introduced a Line Rental Saver by which customers could save even more. For a one-off up-front price of £120 ($150), when paid in advance by debit or credit card, customers can get an entire year of home phone, saving £46.80. The company has also introduced a new talk plan that, for the first time in the UK, will include unlimited calls to UK mobiles.

Combined, these make a compelling case to stick around. For those of us that are starting to suffer from ‘VOIP-APP fatigue’ there will some comfort in a Virgin-like package (no pun intended). If you have ended up with Skype, NimBuzz, Viber, etc all running concurrently on your smartphone and then been unable to work out which of them is calling, you will know exactly what I mean.
 

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Tony Poulos

 

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