Irish Indo: Why phone customers would lose out with 'winback' curbs

sceptre

Well, here's a surprise. Obviously Michael Bride has never been pestered by winback agents over the phone and to his door, making promises they can't substantiate and carrying price lists they won't show (as documented on this board)

Why phone customers would lose out with 'winback' curbs
Irish Independent
Monday 4 August 2003

THERE'S hardly a household in Ireland that hasn't been touched by the magic hand of deregulation in the telecommunications sector, particularly in the area of fixed line telephony. All of those brightly coloured leaflets listing the money-saving prefixes to use before dialling a telephone number are thanks to deregulation. And one must concede that, for all the inconvenience of receiving this mail, let alone opening, reading and filing it somewhere safe, it is good to have a choice of companies to use when making a phone call.

It is for this reason that I read with surprise a recent consultation document from ComReg which could lead to a reduction in competition. The consultation paper is in respect of Carrier Pre Selection (CPS). Launched in January 2000, CPS enables consumers to route calls, over the Eircom network, but through the operator of their choice, thereby allowing them to select the best pricing option for their needs.

In response to the competitive threat that CPS posed, Eircom set up a new division within the company to orchestrate a 'winback' campaign, aimed at contacting customers who had left Eircom and inviting them to return. So today we have the various CPS operators vying for business, competing against Eircom and each other.

But ComReg alleges there are a number of problems with CPS in Ireland. Specifically, it says CPS penetration levels are below the EU average, and that 'churn' levels (the movement of consumers from Eircom to another licensed operator and back again) are high here, ranging from 40pc to 80pc for individual operators in any given month. This, according to the regulator, is undesirable as it impacts adversely upon operators other than Eircom that are active in the market.

ComReg points out that high CPS penetration goes hand in hand with high consumer awareness of the CPS product and cites Switzerland, Sweden and Denmark as good examples in this regard.

In proposing a solution to the above perceived problems, ComReg has mooted a number of options, all based upon restricting the practice of 'winback'. The proposals put forward by ComReg range from a four-month 'no contact' period after an operator has lost a customer, through to a twelve-month moratorium on all 'winback' activities by all operators.

It may at first be difficult to see how a restriction on information, imposed by the regulator, could benefit the consumer. However, in the logic of the regulator, a consumer is better off if they can try the new service for a period of time - let's say a year - before the company that they previously used for that same service is allowed to contact them. Only then, says the regulator, can a consumer be expected to make a proper choice.

However, there are just a few difficulties with the proposals, which become all the more notable when considered alongside ComReg's supposed statutory objective of promoting competition.

Firstly, any no-contact period or moratorium on 'winback' only applies to companies with which the consumer concerned had a previous contractual relationship. So all other companies are free to bombard the customer except that one company, which will not be permitted to contact that same customer and try to win them back. How does that foster the promotion of competition?

And what, in an extreme example, if a customer samples three or four operators within the twelve-month period? Does this mean this customer cannot receive information designed to win them back from any of the three or four operators?

A further difficulty in relation to the proposals lies within the ComReg consultation paper itself. How on one hand can the regulator state that low CPS penetration may be linked to low consumer awareness and in the same breath cite the high levels of churn as a rationale for prohibiting 'winback' activities? High levels of churn are, by definition, a by-product of high consumer awareness. Consumers would not be able to switch between different CPS operators if they were unaware of the existence of different CPS products.

Notwithstanding any or all of the above, one perennial question remains in respect of the proposals put forward by ComReg. How can the consumer be assisted by a prohibition on communication from companies who wish to win their custom? It is for consumers to decide what is best for themselves, not for the regulator to decide on their behalf. ComReg is in place to regulate the environment within which competition can take place, not to take steps to inhibit competition just because CPS penetration levels are low and churn is high. Yes, Eircom has been successful in winning customers back, but that is a matter for Eircom and the customer. If only Eircom were a low fares airline instead of a telecoms company, it might expect praise, not penalty, for its success.

The proposed actions by ComReg are unwarranted, unnecessary, interventionist in the extreme and most probably contrary to the Policy Direction on 'Regulation Only Where Necessary' as issued by the Minister for Communications, Marine and Natural Resources under section 13 of the Communications Regulation Act 2002.

Which brings me to my final question - where is the Minister in all of this? A Minister quick to claim the credit for flat rate broadband access is slow to surface when hard decisions have to be taken on complex issues. But that is a matter for the regulator, might be the retort of the Minister. And how right he would be. But the Minister does have responsibility for policy in this area and where the regulator is acting with unbridled power and arguably outside policy, it is incumbent on the Minister to become involved.

Within the last few weeks, the Minister's Department issued a press release to accompany new legislation in the area of telecoms regulation. The press release stated that the new legislation is intended to provide a 'lighter regulatory touch where markets have become more competitive'. Well, here we have a competitive market in CPS. Do we see a lighter regulatory touch being administered by ComReg? Quite the opposite, in fact, and there is no evidence to suggest that the regulator with lighten its 'regulatory touch' in the near future. Considering the Policy Direction issued by the Minister and the prevailing competitive environment, one would wonder whether the phrase 'out of touch' might be more appropriately applied to the regulator.

Michael Bride is Head of Regulatory Affairs & Employment Law with the Communications Workers' Union.

The Indo's Letters To The Editor mail address is independent.letters@unison.independent.ie by the way, if anyone who has been plagued with winback attempts (including those of the lying kind) by agents from any irish telco feels like letting them know your feelings on the matter.

sceptre

Mr Bride seems to be making a valiant attempt to convince us that we're all as a people just playing the usual part of Irish begrudgers. The focal point of the mini-rant in the first half of the article seems to be

If only Eircom were a low fares airline instead of a telecoms company, it might expect praise, not penalty, for its success.

so I'll happily deal with that.

The funny thing is that Eircom has a short list of characteristics that are very reminiscent of Ryanair. A disregard for the individual customer, an emphasis on pricing (albeit in the wrong direction), a scathing disregard for regulation and government interference. Here the similarities broadly end. The one item that certainly distinguishes Eircom from Ryanair is that Eircom have a delivery monopoly at the infrastructure level: they control the last mile. If the comparison held true, Ryanair would own all the airports and would reluctantly permit other airlines to land there at a large price. It would charge more than any of the other airlines when using its own airport and would prefer to ferry everyone around in Fokker-50s. Any threat to promote the use of other carriers would have Ryanair rushing to announce that it might not buy those large Airbuses after all. Yes, thats right, Eircom aren't really Ryanair. They're AerLingus circa 1985. Monopolist, no regard for customer service or the influence they have on the future direction of infrastructure in which the State has a significant moral interest and an intense dislike for regulatory measures from their friends in power. Oh yeah, they overcharge as well.

If Eircom were a low fares telco I'd lead some applause myself. And as I can personally verify, in at least one sales training meeting last year the reps were told to say "whatever you need to say to get the customer back"

More than ever I'm convinced that any alternative last mile infrastructure (wired, wireless, bouncing peanuts off the moon and back) will have our beautiful incumbent running for the toilet bowl.

Here's where Comreg are set to make a correct decision if they only hold to their guns. of course if they water this down they'll raise cries of "Toothless" from this forum and elsewhere and rightly so. It's all about the consumer. That's why they're there. No-one cares if Eircom's debenture holders have to buy fewer cigars this year. I don't begrudge the company its little luxuries - I do begrudge them using an Irish newspaper owned by a major shareholder in an attempt to win over limited public opinion while lying on the doorsteps about their pricing schemes (the testimonies are here in this forum for all to read).

sceptre

Actually while I'm at it I'll deal with Michael Bride's one attempt at logic as well

How on one hand can the regulator state that low CPS penetration may be linked to low consumer awareness and in the same breath cite the high levels of churn as a rationale for prohibiting 'winback' activities? High levels of churn are, by definition, a by-product of high consumer awareness.

Comreg are concerned that low awareness of alternative providers is resulting in very few customers switching away from the incumbent. That's part one.

Next, because of the repeated winback attempts (which are dubious and misleading in the view of many contributors here), of those few people aware of the alternatives, many are switching back to Eircom. That's the churn & that's part two.

High levels of churn are sometimes as a result of customer awareness. Not always. Sometimes they're as a result of dubious and repeated sales tactics.

I've never been contacted by Eircom at all and even I get it. Mind you, I'm not a pineapplehead.

NIBBS

It's hardly a surprise that a Tony OR company, in a round about way, pushes the wares of another Tony OR company, as I've said before on these Boards I've been extremely well mannered to the number of people who called to my house from Eircom (I was out of work at the time) but the phone calls persisted - it appears that you are put on a five week rota when you tell them you aren't interested, then when you complain like my missus did you get pushed back a couple of weeks - but I'm pretty sure that we'll get a call in the next two weeks from them, they are persistent and at least I might save someone else by informing the poor individuals that there products are nowhere near other offerings on the market (haven't talked to one of them that knew what the competitors offered - they rely on the fact that people in Ireland no nothing of the telecoms market).......

Sceptre - the comparison to Ryanair is uncanny, but they are complete opposites, Ryanair obviously have a blatant 'f**k you' approach to things, but they don't seem to ever have a problem with competition - if they owned the Airports this may be different of course, but they don't. They have introduced competition and upset the Imcumbent very much..........whereas Eircom are and it really does appear to be deliberate, trying to ensure the competition can't deliver the same products..........wouldn't it be great if somebody with ridiculous amounts of money came in and set up a completly new network.........get that Abramovich lad from Chelsea over......
in a few years no company will want to come here - everything is overpriced and our Telecommunications and Transport networks are atrocious..............Welcome To Ireland

dahamsta

Sceptre, you've debunked the arse out of him, why don't you print it out and send it in? CC the IT while you're at it.

Don't forget to ask Michael's Bride for Michael's brother* if he's a member of the ESOT.

adam

*Terrible pun. Sorry.

viking

Nice responses Sceptre, I hope you've put them in a mail to The Editor of the Indo.

viking

gandalf

OK I'll fire a response to this as well. Basically this guy is a spokesman for Eircom as all of the Eircom members he represents will be in ESOT.

Adam I don't think he is a member of ESOT. From the search I did on the web he seems to be linked to the IBOA as well.

Gandalf.

Paddy20

Reading this load of twaddle only enforces my reasons for not buying a newspaper for over three years. The Irish "Independent" ?.. give me a break.

Paddy20:rolleyes:

sceptre

Originally posted by Paddy20
Reading this load of twaddle only enforces my reasons for not buying a newspaper for over three years. The Irish "Independent" ?.. give me a break.

Indeed. I sent in a response (which I doubt they'll print but can't just let it go). Obviously what I wanted to send in was

Sir
Your paper is shite
Regards &c

but sticking to the topic at hand is always a good thing.

dahamsta

From: adam beecher [dATddyDOTbeecherDOTnet]
Sent: 05 August 2003 13:35
To: independent.letters@unison.independent.ie
Subject: Rubbish

Dear Sir,

The members of IrelandOffline would like to share with you:

http://boards.ie/vbulletin/showthread.php?postid=1040014

I agree with sceptre. Please make your paper more absorbent.

Regards,
Adam

I don't mind giving you a hand.

adam

Eurorunner

Email Sent.

_________________________

With reference to the above article in your Monday 4 August 2003 edition,

please note that i agree 100% with the sentiment expressed here:
http://boards.ie/vbulletin/showthre...?postid=1040014

Furthermore, it is my intention not to purchase any of your publications for as long as i live and will also encourage others not to do so - citing this article as a prime example of the waste of paper that your 'independent' 'news'paper represents.

Good day.

_________________________

Paddy20

I was just wondering if Mr Bride is a Journalist and/or an accredited member of the NUJ?..if he is he should resign or be kicked out of this Journalists Union.

Paddy20.

sceptre

Letter from Joe McNamee in today's Indo. Uses the phrase "huge abuse of dominant market position", which makes me feel all fuzzy inside. Focuses on advertising though (which is a side issue IMHO not mentioned in the original article) but at least it's something printed.

Sir - Re the letter from the Communications Workers' Union on 'win back' advertising by Eircom. It opposes the idea that Eircom should be temporarily prohibited from advertising via direct marketing to win back customers using carrier preselection (where a customer dials a code to select a different phone operator from Eircom) and it misses the point on a number of levels.

First, Eircom has a database of customer information which no competitor has access to - not just names and addresses but historical billing information too. Use of this information to win back customers would give Eircom a huge advantage over competitors without action from ComReg.

Furthermore, Eircom can use its network information to establish the exact patterns of usage of carrier preselection, to target its advertising as effectively as possible - another luxury competitors do not have access to. While ComReg appears willing to accept this, the French regulator (ART) has insisted that France Telecom delete such information (in line with EU data protection law, contrary to what appears to be condoned by Irish practice) when it's no longer needed for billing purposes.

Regardless of what carrier preselection service is used by a customer, Eircom still charges line rental and, to date, has been permitted to include low-cost advertising in the same envelope as the phone bill - giving it a huge and unparalleled advantage over all competitors.

It is a huge abuse of dominant market position to permit Eircom to use its power to access customer databases and network data and then target advertising at customers using carrier preselection - as such, the small delay imposed by ComReg can be regarded as excessively lenient.

It is disappointing and a little peculiar to see a letter, written by a trade union representative, so in favour of big business and practices which are bad for consumers, bad for competition, bad for Irish businesses and ultimately bad for employment. The only organisation which appears to be lobbying on the side of consumers - abandoned by the Communications Workers' Union - is the IBEC telecoms users' group.
Joe McNamee,
Castlebar, Co Mayo

There's a Joe McNamee who's EuroISPA's Regulatory Affairs manager (I assume it's not the same chap as he'd surely be based in Brussels?)

stormkeeper

That's a lot of reading... I kinda gave up 1/3 of the way through that article, mainly becaause it looks like a pile of crap. That winback suspension that Eircon are meant to conform to (seems apparant they don't) would probably level out the playing field for the other telcos in a regard, since they have all the historical info and such, as mentioned by the letter posted a bit after the article...

With regards to this part here:

Firstly, any no-contact period or moratorium on 'winback' only applies to companies with which the consumer concerned had a previous contractual relationship. So all other companies are free to bombard the customer except that one company, which will not be permitted to contact that same customer and try to win them back. How does that foster the promotion of competition?

And what, in an extreme example, if a customer samples three or four operators within the twelve-month period? Does this mean this customer cannot receive information designed to win them back from any of the three or four operators?

It seems a bit long winded in a way, but back to the main point. Basically, in that kind of situation, the consumer, after sampling those 3/4 operators should/would have then decided who is the best operator to stay with, with no pressure from those 3/4 operators, which is good in a way... No one to sway your opinion of who to go for, and thus, you get a good deal that suits you, as in the end, it's the consumer, not the operator who chooses to go with a particular operator.

Sorry if it seems a bit incoherant, it's a tad hot, which affects my thinking...

I'll try to explain it better if needs be...

sceptre

Well, I'm surprised to be printed. Friday issue

Sir - It is interesting that Michael Bride ('Why phone customers would lose out with 'winback' curbs', Business) uses the phrase: "If only Eircom were a low fares airline instead of a telecoms company, it might expect praise, not penalty, for its success." In an article in the same issue ('Almost half of firms unhappy with telecoms services here') it was stated that: "In the fixed line market, dominated by Eircom, half of respondents said they were either dissatisfied or very dissatisfied with price."

The one item that certainly distinguishes Eircom from Ryanair is that Eircom has a delivery monopoly at the infrastructure level: they control the 'last mile'. If Mr Bride's comparison held true, Ryanair would own all the airports and would reluctantly permit other airlines to land there at a large price. It would charge more than any of the other airlines when using its own airport and would prefer to ferry everyone around in Fokker-50s. Any threat to promote the use of other carriers would have Ryanair rushing to announce that it might not buy those large airbuses after all.

If Eircom was a low-cost telco, I'd lead a round of applause. But with a 20pc rise in line rental charges this year, putting the current monthly rental charge at €22.50 including VAT - well above the European average of €14 - it is hardly a low-cost telco.

Michael Bride's sole attempt at logic in the article seems to be that, given the churn level documented by Comreg, there must be a high awareness among consumers. From examining Comreg consultation papers I can see that Comreg is concerned that low awareness of alternative providers is resulting in very few customers switching away from the incumbent. And, because of the repeated 'winback' attempts, of those few people aware of the alternatives, many are switching back to Eircom. High levels of churn are sometimes as a result of customer awareness - not always. Sometimes they're as a result of dubious and repeated sales tactics.

Comreg is about to make a correct decision if it sticks to its guns. The telecoms companies may not like it but consumers will.
Seamus Ryan,
Catherine Street, Limerick

dahamsta

Excellent, well done sceptre. I'm a little surprised you got published too, although not entirely shocked: there must be a certain level of disillusionment at the paper with the way the O'Reilly's treat it like their personal op/ed column. No doubt little old Gav will get a bollocking from Tone for not keeping a bolshie like you out of his hallowed broadsheet.

adam

Paddy20

sceptre,

Goody, thats what happens when people become pro-active like your good selfs positive action. Instead of the deadpan negative - whats the point - attitude which seems to prevail amongst the majority of our citizens.

No wonder Eircom gets away with so much, and pro-active [not exactly brainy]!, hoodlums tend to prosper in Ireland.

Paddy.

Dustaz

Well played that man.


Now i really think we should follow Adams suggestion and work on the papers absorbtion. It might make me buy it in emergencys more often.

Paddy20

Dustaz,

That propaganda rag called the "Independent" paper is even unworthy of being used as [Emergency!] bog roll. As you might catch the dreaded STD disease called PCCGD! i.e. "Manic power crazed corruption Disease".

For which there is NO KNOWN CURE?.. so be warned!.

Paddy.

Paddy20

Sorry,

That dreaded incurable and very contagious disease. Shoul read:- MPCCGD - i.e. [Manic Power Crazed Corruption Disease].

Its the heat, its the damn heat!, I tell you?..

Paddy.

stormkeeper

The heat tends to make you think of other words, or omit letters or words... Not good if you have a long rant planned...

Btw.. Good letter sceptre That's showing them..