IDC Comment: Vodafone aims to paint customers' homes Red, with Vodafone Connect
10 Jun 2015
John Delaney, Associate VP, Mobility – IDC, @john_p_d
Today, Vodafone UK is launching Vodafone Connect, a new home broadband/home phone service to complement its current range of mobile services. The service tariffs include three speed options (up to 17Mbit/s, up to 38Mbit/s and up to 76Mbit/s) with prices starting at £5 per month plus line rental on an 18-month contract, for customers of Vodafone's mobile services.
In effect, this is Vodafone's first earnest attempt to enter the UK's home broadband market. Vodafone briefly offered a service based on wholesale ADSL a few years ago, but the scope and extent of that earlier foray were very limited. Vodafone Connect looks a great deal more ambitious. It seems that a lot of investment is going into this venture, both for provisioning and for marketing.
Vodafone Connect is being positioned as a premium-quality broadband service, a position supported by:
- The backhaul infrastructure that Vodafone owns and controls, using the network that it acquired along with C&W Worldwide, and then upgraded
- A dedicated Vodafone Connect customer-care team, based in the UK (Glasgow)
- A premium home router, with advanced features including 802.11ac support, dual-band/dual-concurrency operation, beam-forming capability and four gigabit Ethernet ports
- A smartphone/tablet app which enables an extensive range of home network management functionality
Reinforcing the premium-quality message, Vodafone's Head of Quad-Play Guilhem Poussot describes Vodafone Connect as "a business-grade service at consumer prices". At present, only consumer tariffs have been announced, but it seems likely to us, given Vodafone's traditional strength in the UK business market, that tariffs for small/medium enterprises will follow before long.
For a premium service, Vodafone Connect is priced very competitively, especially in view of the fact that there are no usage limits on any of the tariffs, including the entry-level one. The preferential tariffs offered to Vodafone mobile customers look particularly competitive, and what's striking is that these are available to all customers, including those on prepaid. In effect, the only thing you need to qualify for the lower prices is an active Vodafone SIM. That said, though, it's clear that Vodafone is aiming for customer relationships that are more wide-ranging (and stickier) than that, on both the fixed-line and mobile sides of the coin. Additional incentives are on offer to customers of Vodafone's Red range of postpaid tariffs, and as Poussot puts it: "we want to paint the whole house red!" In IDC's view, it seems clear that the primary purpose of Vodafone Connect is to improve rates of customer acquisition and retention in Vodafone's UK mobile customer base.
Vodafone Connect is certainly an emphatic and ambitious entry into the UK's home broadband market. However, a growing and lucrative percentage of that market is looking for a multi-play bundle, either triple-play or (increasingly) quad-play. At present, one element of multi-play is conspicuously absent from Vodafone Connect: TV. That won't be much of a problem in the early phase of market entry, as there are plenty of low-hanging fruit to pick among potential customers who are not interested in pay TV. Before too long, though, Vodafone will need to add TV in order to remain a credible UK broadband competitor – and in particular, to compete effectively against a merged BT/EE, which looks likely to major on quad-play offerings as soon as possible after the merger goes ahead. Vodafone has already outlined plans to bring out a cloud-based OTT TV service in the UK, in the fairly near future. We look forward to hearing more about those plans soon, and to assessing Vodafone's ambitions in the wider market for triple-play and quad-play services.
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