The Supplier Merry-Go-Round

My guess is that the average customer wants a good service and does not much care who gives it to them. But if they do not get a good service, they want to know who to complain to. In a world where customers are bought and sold, and where the companies that send the bills are different to the companies that provide the service, customers may find it very hard indeed to know who is responsible for what. Virgin Media are a great example. Poor service by ntl and Telewest over the years means that customers got educated about who their supplier was. They learned the hard way the difference between what ntl and Telewest were supposed to do and what they actually did. So when ntl Telewest rebranded as Virgin Media, nobody was fooled. The spat with BSkyB in the end proved to be a convenient smokescreen for the poor financial results for Virgin. Truth is that they were hoping a rebrand and some adverts with Uma Thurman would fool lots of potential customers into thinking that new Virgin = great service. Instead customers realised new Virgin = same old ntl Telewest. So nobody has been flocking to the company, and it is not because the phone lines are jammed with people wanting to leave over a few missing Sky channels. The problem is that customers have been educated by the telecoms industry – educated to understand the difference between the brand and the underlying reality. So now many look beyond the brand to see who really does what. And if you put a shiny new brand on a rotten old product, the customer is savvy enough to understand that.

It is interesting to chart what has happened with some elements of the customer merry-go-round. Less than a decade ago, ntl bought the UK retail customers of Cable & Wireless. A few years ago, C&W bought Bulldog, a broadband ISP. C&W made a mess of Bulldog’s retail business, so they sold the retail customers to Pipex, renamed the Bulldog business “Cable & Wireless Access” and refocused it on wholesale. The first C&W Access wholesale deal was with Pipex, so they were serving many of the same retail customers as before. Telewest and ntl went bust, then merged, and have now become Virgin Media after merging with a business with a great brand but no network. A few days ago, Virgin Media signed an exclusive deal to buy LLU from C&W Access until 2011. In the meantime, Pipex may be sold and if it does will probably terminate its deal with C&W Access. So in less than 10 years we see a switch from ntl (as was) buying customers from C&W and putting them on its own network, to Virgin Media (as is) renting network, possibly exclusively, from C&W to service its customers. At the same time, C&W sold its UK retail customers to exit that market, then bought a company and its customers to re-enter that market, but made a mess of it so sold its customers again. And those customers will probably end up on the network of one of the long-term strategic rivals to Virgin. What a strange and complicated palaver. If you told C&W customers (hands up who remembers the Mercury brand – the first brand to challenge BT’s monopoly in the UK?) this would happen 10 years ago they would probably have stared and shaked their heads in disbelief. But tell them today and a large number would not only understand, but would be shaking their heads for another reason. Because whilst the celebrity execs are bonused on all this high-profile corporate deal-making, nobody seems to be paying attention to customer service. So let us see if Virgin makes more apologies and excuses in future, when its new LLU customers start complaining….

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.