Voda and Orange deals may allow unhappy customers to take their revenge.
News that Orange and Vodafone will soon begin selling Apple’s iPhone in the UK will break O2’s monopoly on the handset, which must naturally be a concern for the operator.
Customers wanting an iPhone will now have a choice of operators to get it from, which brings back into play issues like tariffs and pricing comparisons, customer service and network reception. We sense Ofcom’s 3G coverage maps will be getting plenty of downloads in the weeks and months to come.
Still, O2 has had a good run with the iPhone, and it has other irons in the fire in preparation for the loss of its exclusivity – notably the Palm Pre. However, there’s another issue to consider: whether O2’s iPhone upgrade policy from earlier this summer will return to haunt it in January.
If you remember, there was much gnashing of teeth on blogs and online forums in June when it emerged that iPhone 3G owners wouldn’t be allowed to upgrade to the new iPhone 3GS without paying a fat contract cancellation fee.
O2 patiently explained that this was standard practice – mobile users can’t just break contracts because a shiny new handset comes along – and that the reason original iPhone users had been allowed to do so in July 2008 when the iPhone 3G went on sale was because the original iPhone had been unsubsidised by O2.
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The operator was in the right, but there were many frustrated early adopters. And here’s the thing: everyone who bought an iPhone 3G in July 2008 will see their 18-month contracts expire in January next year. Just as Vodafone starts selling iPhones, with Orange already doing so too.
See what I’m getting at? Churn. “You bastards wouldn’t let me upgrade to a 3GS last summer, so I’m taking my £35 a month to Vodafone/Orange...”
In other words, besides wondering how many new iPhone customers will choose O2 over its rivals, the operator will have to worry about how many of its existing iPhone users will dump it as revenge for its upgrade policy.
None of this is to suggest that O2 made the wrong call this summer. Would letting people break their tariffs in order to sign them up for another 18 months have been a sensible policy? Or would the costs and the sense that tariff-breaking was okay have outweighed any long-term anti-churn benefits? You’d need some serious bean-counting to figure that out.
But the situation does bring into focus the challenges posed by upgrade culture, where consumers feel real anger if denied the chance to change up their gadgets whenever they want to.
And the winner in all of this? Apple, of course. By early next year, it will have (at least) three UK operators fighting tooth and nail to sell its handsets to their customers.
But one more thing that O2 may want to remind customers of when they ring up to cancel their contracts in January in order to sign up for 18 months with another operator: there’s almost certainly a new iPhone model coming next summer.
And so the cycle goes on...
