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Are Mobile Networks in danger of being seen as mere 'utility' providers?

Mobile network providers are missing out on an opportunity to better meet evolving consumer
needs. Adopting a more proactive and innovative approach to proposition design and architecture could lead to greater market share and consumer engagement. With Ofcom having announced that from July 2019, consumers can ‘text to switch’ provider, it’s going to be more important than ever to have compelling propositions to keep customers on your base. Can the industry reverse the ‘race to the bottom’ or will it become just another ‘utility’ provider, where the key players are competing on price alone?

Historically, the core value proposition of the mobile industry has been the bundling of handset with a tariff plan. Customers were either on a contract with an annual/24 month upgrade cycle or a prepaid tariff. Over time, propositions have evolved hand in hand with advances like the development of smartphones and 4G data connectivity… and, as we know, the mobile phone became an indispensable part of our daily lives.

Fast forward to today and things aren’t quite as simple. GfK consumer insights and sales data in 2017 showed that more and more consumers were separating their mobile phone purchase from their tariff plan. The drivers behind this growing behaviour include a variety of areas that networks and retailers need to understand if they are to successfully position themselves in this part of the changing landscape.

This trend to de-couple the handset from the tariff continued to gain momentum across 2017 suggesting something clearly isn’t working for a portion of the market when thinking of traditional contract propositions. With so many tariffs and handset deals to choose from, many consumers are unclear what’s best for them and are put off from undertaking the process of finding the best deal. GfK Tech Consumer 360 data shows that 26% of UK contract handset upgraders didn’t even consider switching network because of the effort involved in finding an offer that might be better suited.

Whilst many avoid the complicated process of finding a new deal that’s best for them, there are growing numbers who are taking matters into their own hands and favouring non-traditional tariffs and deals as they realise these best meet their needs rather than the traditional propositions out there.

So what can network and service providers do to better address individual consumer needs? And how can they future-proof their propositions, stop competing on price and significantly improve margins, to avoid becoming just another utility provider?

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