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Monday
Oct152012

It's not me, it's you.

In July 2009 I did something I hadn't done in over ten years, I signed a mobile phone contract. The release two years earlier of the iPhone had significantly changed the mobile communications market and the lack of mobile data and apps on the work phone I was using meant I was missing out on new developments in the market.

Three years later I found myself out of contract with O2, my mobile network provider. As I was happy with my current iPhone this seemed like an opportune moment to contact O2 and reduce my monthly bill, but two weeks later I have sworn off O2 for the foreseeable future and have come to realise that the mobile network providers are the latest legacy industry whose lack of foresight threatens their future.

While the specifics aren't important they will be familiar to anyone who has been frustrated by poor customer service. Phone calls to O2 went unanswered, some calls were disconnected due to high call volume and many were abandoned simply because I was unwilling to spend even longer on hold. I even visited my local O2 shop thinking that might help, but the employees pointed out they were retail staff rather than customer service staff and were therefore unable to help me, then handed me a land-line phone and asked me to sit in the corner. It was only five minutes later that I realised that I was in the same phone queue I'd been trying to get to the head of for several days. The person I had spoken to in-store had passed me off to someone else and was busily selling new contracts to new customers, he appeared to have no interest in supporting current, paying, customers. O2 and I were done.

It took a further 24 hours before I was able to get in touch with an O2 representative, and that was only through an on-line text chat function on the O2 website, and it took over an hour to get the PAC code I needed so that I could retain my existing phone number. In less than ten days I had gone from content customer to an ex-customer vowing never to return, and at no point in the entire process had I managed to speak to anyone.

Over the last 20 years the mobile networks built a hugely profitable business based on selling expensive ‘value-added’ services to consumers over their networks. But the mobile phone industry is now a high-tech industry at the consumer end as well, and as many high-tech companies have discovered if you are not the disrupting factor in your industry someone else will be. Like so many before them, the mobile phone networks are reluctant to kill their cash cows. For example, global research company Ovum says that in the next four years US mobile operators will have lost $54 billion in SMS revenue, in no small part because they were happy to continue charging extortionate prices for SMS services beyond the point customers had cheaper and better options, they simply drove customers away.

The mobile network providers are in the process of being relegated to the position of basic infrastructure providers rather than that of added value service providers. Owning the customer relationship has allowed mobile network providers to ignore the changes in the industry but the Internet can now provide all the services phone companies currently do and so much more as well. I spent two weeks in California last year and by using freely available WiFi hot spots I was able to stay in touch with friends and family without incurring any roaming or international charges from O2.

The widespread adoption of smartphones has changed the mobile phone industry. Rather than look at the direction technology is pushing their industry and getting behind that change, companies like O2 are choosing to dig their heels in an attempt to maintain existing business models. While you can argue that there are some advantages to the mobile network providers subsidise the high up-front cost of smartphones by locking customers into expensive multi-year contracts to. You can even put forward an arguments that explains  that companies like O2 appear to be cutting back on customer services but any company that fails to place the highest value on customer services is treading water at best. Nothing is more frustrating for the customer than being being told "You've come through to the wrong department", "I can't deal with that", "you'll need to contact someone else" or the line from an O2 employee that so annoyed me this weekend "I'm retail service, not customer service so I can't help." Companies like Apple have shown that any interaction with the customer is an opportunity to improve their impression of you and differentiate yourself from competitors. View customer service as a function to run as cheaply as possible and it will cost you customers.

Those long term contracts so favoured by the service providers may offer low cost access to expensive smartphones but they don’t offer value for money.  Subsidised phones are not the bargain they seem and if you are willing to pay the full up front cost of your mobile phone you will save money in the long run, and that’s before you take into account that you are no longer locked into a 12 or 24 month contract.

While there will undoubtedly be well researched and reasoned justification why customer service has become so poor, the unfortunate truth for mobile network operators is that they are no longer in the unique position of adding value to the mobile communication experience. The real advances in mobile technology are driven by the likes of Apple and Google and it seems that the situation will only worsen for mobile network provides.

There is a good chance that at some point in the future I will go back to using the O2 infrastructure either through an MVNO (mobile virtual network operator) like Giffgaff or even directly as an O2 customer, but what I will never again do is sign a long term contract with a mobile phone provider, and for that I should thank O2.

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