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Ofcom attempts to unstick the sticky bundle

ofcomhq

Ofcom HQ, London - via Flickr © Matt Biddulph (CC BY-SA 2.0)

  • Ofcom wants to make bundle switching easier in UK
  • Proposes two alternative processes
  • Will decide by summer 2017

The UK regulator has today put forward proposals designed to make it easier for UK consumers to switch from a bundle of services provided by one provider - say voice, broadband and TV - to another bundle by another provider, or even no bundle at all.

That smooth bundle switching process is to be enabled across the different networks - Openreach telecoms network, KCOM in Hull, Virgin Media cable and Sky satellite.

Why? Ofcom says that even though around 884,000 switches per year are already made between these networks there’s no formal switching process to help people to do it and that its research shows that such a process is required.

It says that while most people who switched between different networks said they found it ‘very’ or ‘fairly’ easy (81%), when probed further about their experiences almost eight in 10 (79%) also said they encountered some kind of difficulty, including lost service (17%) on average for around a week during the switch; while 22 per cent double-paid by an average of £22 as a result of their old and new contracts overlapping. So they really found it easy to get ripped off, rather than just ‘easy’.

Ofcom’s proposal is to place responsibility for switching providers in the hands of the winning provider. That makes sense since that’s the provider with the most to gain from an efficient handover.

But Ofcom has also paid great heed to the ‘awkward explanation factor’ inherent in the current ad hoc arrangements where the losing provider attempts a ‘please stay with us’ retention process and the customer has to feel guilty for having the temerity and, quite frankly the rudeness, to suggest he or she might want to leave.

It may sound ridiculous to non-British ears, but Brits will do anything to avoid such awkwardness, up to and including staying on with the old provider for yet another year at completely avoidable expense.

Ofcom’s solution to that part of the conundrum is so British it almost hurts. It’s proposing that the switching process should be placed entirely in the hands of the winning provider, so the customer doesn’t even have to contact the old provider, but can just run off, as below.

Option 1: No need to deal with old provider

switching-gpl-v4

The above is Ofcom’s favourite option. It’s also mooted an alternative it’s describing as an enhanced version of the existing arrangements (below).

Option 2: Deal with both

switching-candr-new-v3

Under this arrangement customers would still have to contact their existing provider to cancel services, but could do so without the embarrassment of having to speak to them on the phone. Instead providers would have to offer a range of cancellation channels rather than just the fraught “exit via the retention expert” one. These could include a web chat or a painless Web option on the online account.

Ofcom says both its options would also reduce the risk of loss of service (before the other service was ready) or the risk of double-paying since the new provider would be in charge of coordinating with the loser to ensure the old service wasn’t switched off before the new one is active and the new provider would also ensure that the notice period is coordinated.

While these proposals have no doubt been under discussion for a while, the move must be an overall poke in the eye for at least two of the UK’s big service providers who now face the prospect of a possible uptick in ‘churn’ (the rate at which customers move from one provider to another) as, when and if, they feel themselves liberated from the red tape hassle involved in moving.

One of the big advantages of the ‘triple play’ bundle from the provider point of view was always its tendency to reduce churn and retain customers longer - much of that  for the reasons outlined above, but also because selling a higher-cost bundle of services usually means a lower ‘cost of sale’ as a proportion of the revenue expected from the bundle. It’s just good economics.

But if the history of consumers exercising choice in other liberated UK markets - electricity and gas, for instance - is considered, perhaps the dominant triple play providers have little to worry about. It’s turned out that in those markets consumers often prefer to stick with the devil they know rather than go to the trouble of taking on another provider promising lower prices but - they believe - not delivering, no matter how transparent the process and how ‘de-obfuscated’ the pricing is made for them.

Ofcom is seeking views on these options by 21 October 2016. It will then consider all available evidence before publishing its decision by summer 2017.

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