Mobile Operators, Utilities and Customer Segmentation

For many years the best way to insult a mobile operator was to suggest to them that they were just a pipe for voice and data.  They’d foam at the mouth and point out that they were a brand, not a utility.  They’d justify this by pointing out that they had marketing people and that they offered differentiated products.  It took a far more expert brand in the guise of Apple to make the commercial point with the iPhone, which was offered to mobile operators on the “stick it up your pipe and smoke it” principle, giving the consumers to Apple and ultimately forcing the operators into a price war in supplying a largely undifferentiated consumer data pipe.

At the same time, utilities were beginning to think that they might be more than a pipe.  Particularly in areas where the market is deregulated, allowing consumers to switch energy supplier, they’ve been toying with ways to attract customers through segmentation and selling other services.

On the same day this week, in the UK, we’ve seen two interesting examples of this playing out.  O2, which had been chasing the health market with their Help at Hand and Health at Home products, unexpectedly pulled out.  At the same time, British Gas launched an initiative to become the energy supplier of choice to young renters.  It’s useful to consider what these say about the potential to gild your pipe and rise above the status of utility.  As we enter the era of the Internet of Things, the market will need service providers who can aggregate services and who have trusted relationships with consumers.  These moves suggest that although utilities and network operators ought to be well placed to extend their relationships, they may lack the skills to do so.

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