Site AdminJoined: 07 Apr 2006Posts: 784Location: United Kingdom
Orange has opened up a new front in the fight for broadband customers after abandoning its fixed-line network and cutting a deal with BT to offer better high-speed internet.
The move is Tom Alexander’s first significant strategic decision as chief executive since Orange and T-Mobile merged last month to create a company with nearly 30 million mobile customers and an ambition to up its game in the burgeoning broadband market.
The company will now go head-to-head with the market leaders BT, Virgin Media and TalkTalk, and sharply increase competition. That could drive charges down for the customer. Orange has moved to cut its losses after spending hundreds of millions of pounds on its network over the past decade. It will piggyback on BT’s national network and almost double the size of Orange’s broadband footprint, freeing up resources to invest in improving its product and customer service.
BT will take over Orange’s fixed-line infrastructure and integrate it into its network, which should vastly improve the experience for Orange’s 840,000 broadband customers and extend the mobile phone company’s coverage in fixed-line to the entire country. Orange’s present broadband network reaches about 65 per cent of the population. About 61 staff will be transferred to BT.
The deal also opens up the possibility that T-Mobile will look to launch branded internet services for its customers to cross-sell fixed-line broadband to its 13 million users.
Orange’s poor performance in broadband is a far cry from the days of Freeserve, which was acquired by Wanadoo in 2000 and subsequently merged into Orange by its parent company France Télécom. Freeserve was the largest internet provider in the country when the French company took it over.
Orange has improved its standing in the mobile market since Mr Alexander took over as chief executive in 2007, but it has continued to lose significant market share in the competitive broadband sector. Its customer base fell below the one million mark last year for the first time in a decade.
Orange is the country’s fifth-largest broadband provider, but the only important ISP in decline. It has had its broadband operations under review for ten months and considered abandoning the market altogether.
Bruno Duarte, Orange’s vice-president of strategy, told The Times that it had decided to take the drastic step of outsourcing its network to make providing broadband commercially viable.
“We are not satisfied with where we stand with broadband, as our customer base is declining and our performance is poor. But we need to remain in fixed-line broadband so decided to fundamentally change what we are doing,” he said.
Mr Duarte argued that the company’s problems related to its ageing infrastructure. Orange has invested hundreds of millions of pounds installing its own equipment in local exchanges over recent years, but Mr Duarte said it would have needed to spend much more to get its network up to scratch.
Orange’s mobile business has been propping up its broadband activities, which lost almost £80 million last year, despite generating nearly £200 million of revenue.
The deal with BT will put Orange in a similar position to Vodafone, which offers customers broadband services but rides on the back of the BT network. o2 (now Sky) had its own network infrastructure after it acquired Be Broadband in 2006.
Mr Duarte said that divesting the network would allow Orange to step up its investment in improving its competitive position. Despite launching expensive advertising campaigns for its mobile phone products over recent months, broadband marketing has been restricted to online and direct channels.
The decision to pass its network to BT mirrors a similarly dramatic move last year by Kingston Communications, the Hull-based fixed-line telecoms company now trading as KCOM. It handed over its network to BT and signed a wholesale deal to get national coverage and reduce its costs substantially.
No surprise. Orange UK seems lost with no idea of a route to go, apart from the desperate shotgun marriage with T-mobile, cut adrift into a joint venture from its parents. Any port in a storm ...
As for broadband, you can get BT broadband from BT if you want it (or from a specialist reseller with proven QoS), not secondhand via Orange; or go to Sky/TT who have their own national network, or o2 (now Sky) (and in the latter case change your mobile phone whilst you're at it), Orange customers. Those cos. invested or bought the specialist suppliers whilst Orange slept (or were tied up and gagged at the wheel by FT).
So just their usual knee-jerk panic and have they thought it through - despite having effectively done the minimum (and less) to provide fixed line broadband for several years. They don't manage the business in my opinion, and as other resellers demonstrate BT as a supplier still need to be managed effectively to ensure a good service. From my experience this "handover" to BT has been going on for over 12 months: the unbundled phone services and LLU speeds in my area have already been reduced to be virtually identical to those on BT (and will doubtless now decline again), and the lack of recent investment in the local mobile infrastructure (e.g. compared to Three) is also apparent. It does explain their feeble attempts to lock their remaining customer base into new contracts - if they need the money without providing the goods. If they're listening, should this change in service delivery allow customers to escape the lock in their contracts?
I wonder if Orange Broadband (in name only) have even 12 months further life? At least (as evidenced on this forum) the customers gave it their best shot: I suppose it says something when a brand might get more support from its customers than its owner - is Orange the British Leyland of the telecomms industry viz a hotchpotch mix of businesses, starved of funding and with cast-offs technology? Perhaps it won't be missed!
PS A word to Orange PR: how about as the new name for the joint venture: BT-Mobile? Orange is also the colour of the sunset.
Last edited by merv on Sat Apr 17, 2010 10:17 pm; edited 3 times in total
It'll have to at least change it's name to 'BeigeProblems.co.uk' or whatever when the <a href="http://valuemobiles.at/theside">T-Mobile</a> merger goes through.
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