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Monday, November 03, 2008

Mobile broadband - O2 highlights dissatisfaction and returns management

Last week, O2 announced a refresh of its mobile broadband offerings - an area in which it has been pretty weak in the UK so far. As part of its press release, it also yielded some findings from a consumer survey it had commissioned.

In particular, it highlighted the concept of "mis-selling" of mobile broadband - for example, customers' irritation at extra heavy costs for roaming that they hadn't been made aware of at the time of purchase, or what happens if promises of 3G coverage don't match reality.

Disabling "default" roaming privileges, forcing consumers to call customer service and get a lecture on the pricing realities obviously isn't as good as just lowering the cost to sensible levels, but should at least mitigate the risk of serious bill-shock.

More interesting to me is the idea of a 50-day money-back "happiness guarantee", which will apparently "allow customers, who purchased directly from O2, to return the device within 50 days of purchase with no termination fees being charged and any costs for purchasing the device being refunded".

It will be interesting to see whether this forces the competition into reciprocating. And even more interesting to see how this plays into the USB dongle vs. Embedded 3G notebook debate. It's one thing returning a dongle after a month - it won't need much "refurbishment" before it can be re-used. It's another thing entirely dealing with a notebook with an internal 3G module - returns management could be a nightmare for both customer and operators.

Just think about the practicalities for a minute - you buy an embedded-3G notebook. You configure it, download various new applications, start using it, set the passwords, register your copy of MS Office, start using the mobile broadband. Then maybe it doesn't work properly immediately. Or maybe it works OK in the study where you unboxed it, but not in the bedroom when you move it the next day. Or a week later, your network operator tweaks their local cell tower's set-up, or you move house, or you suddenly get congestion in your cell as 10 neighbours sign up.

So you go back to the shop. You complain about poor coverage. Maybe call customer services. You have a dilemma - you need to find another notebook, another operator, or both. If it's an "unlocked" 3G notebook, bought from an independent retailer, you can probably just try another network's SIM in the same device, without too much extra hassle besides sorting the cancellation and new sign-up. But if you've got a subsidised or locked notebook - perhaps bought from the MNO's own retail outlets - you have a problem. You would have to cancel the contract, download your data temporaily onto a USB stick or old PC (if you have one), delete your data & apps from the hard drive, and rebox it before returning it. Then the store would have to reformat the hard drive, check inside the PC to make sure you haven't added/changed anything (memory etc), reinstall all the bundled applications, test it..... and then find someone who will buy a "shop-soiled" laptop. And deal with all the back-office things like cancelling the MS Office licence.

Bottom line - I'd be very surprised to see anyone - including O2 for that matter - offering an equivalent return guarantee for embedded-3G notebooks. (If I'm wrong on this and someone's already doing such a policy, please let me know).


Paul said...

Hi Dean,

Over here on the wrong side of the Atlantic there's no need to worry. The offers are so lousy, no-one will touch them.


Customers will be able to get up to $150 off a laptop with embedded 3G modem if they sign up for a two-year data plan with AT&T......To get the discount, users will have to sign up for the AT&T's DataConnect service, which costs about $60 a month.

Perhaps you've hit on the real reason that Vodafone cornered the market for Dell mini's - all returns go back through their own channels.

To be honest I've seen plenty of well-priced handset offers being based upon refurbished products so I think that there is a market out there.

Of course the real solution is to fix coverage and capacity issues, since then 1/5 customers upset with coverage and 50% wanting WiFi would be placated.

Anonymous said...

02's offer is pretty poor, coverage is worse.

This research of their's misrepresents the market.

David Chambers said...

I think there is a natural evolution as technology like this rolls out.

We saw this with WiFi, where we started with PC Cards and Dongles, then it became embedded into notebooks by default. The rapidly updated variations of 802.11b/g/a/n etc. meant their was a risk in buying an embedded laptop that the technology would quickly become outdated. But you could fit an extra PC Card or USB dongle if you really wanted to upgrade your WiFi technology before you replaced your notebook. These days, you don't think twice about what type of WiFi comes included, and you'd be surprised if it wasn't.

Mobile broadband is moving from the USB dongle to embedded. This is attractive from a practical point of view, ideally with an unlocked laptop/notebook where you can just install a SIM card of your choice and maintain flexibility. I wonder how long it will be before we see multiple SIM card holding laptops, which are smart enough to work out when you're roaming or in poor coverage and choose the best/cheapest network.

It's a completely separate issue whether service providers should be offering subsidised, locked-in, embedded laptops. This could still become reality in the long term and/or will satisfy that part of the market which prefers to buy gagdets on credit with a subsidised deal. Contract terms may be quite onerous, but these deals will still attract much interest.

Meanwhile surely the market is now mature enough to buy an (unlocked)embedded PC and separate data SIM card (possibly from separate suppliers).

Dean Bubley said...


Thanks for your comment.

One of the big fallacies I see in mobile broadband forecasting is the false linkage between embedded WiFi and embedded WWAN. The curves will be extremely different, for many different reasons - for example cost, test procedures and multiple frequency band support. There is no "private" use case for embedded WWAN, you have to use a (billed) service. For WiFi, you use home/office WiFi for free - paid hotspots are simply a corner-case.

I agree that we will see a slow migration to embedded 3G, for some users, over the next 4-5 years. But the idea of it being "built in" by default in all laptops is wishful thinking, and ignores the costs and realistic uptake rates.

Some people (eg you & me, probably) will certainly consider an embedded PC with separate data SIM. But we're just the over-visible "tech-aware road warrior" community. I'm less convinced it's a desirable option for an accounting clerk in a pharmaceutical company, who takes his notebook home with him once a month.

I completely agree with your thoughts on multi-SIM (or ideally soft-SIM) laptops though. For people who do want 3G/WiMAX connections on their notebooks, there's no reason to stay with a single operator, especially given typical roaming charges.