Post Office strikes up broadband service

Consistency and support crucial to success, says analyst

Ian Williams, vnunet.com 17 Oct 2007

The Post Office has quietly launched an ADSL-based broadband service in the UK following an initial announcement in May.

The launch builds on the rollout of voice products based on wholesale line rental more than two years ago.

The company will use Post Office branches as the primary sales outlet, but will also run a national advertising campaign to increase customer awareness.

Thus far the Post Office phone service has not performed as well as anticipated, with around 400,000 voice-only customers against original estimates of around a million by 2008.

The Post Office is offering three 12-month packages, priced between £15.95 and £25.95. Two have bundled voice services, and one is broadband-only.

The services aim to take on competitors such as BT Retail and Orange rather than the cheaper players. The broadband service has been entirely outsourced to BT Wholesale.

The Post Office's straightforward and attractive offering has been welcomed by Ovum, although the analyst firm warned that will have to maintain a high level of service if it is to succeed.

"The Post Office will have to win on two major counts in order to succeed with what it is highlighting as an 'upper quartile service at a lower quartile price'," said Mark Main, a senior analyst at Ovum.

"Firstly, it must gain a strong marketing push to get itself into the running against already established competitors that know the market better.

"For that it will need to incentivise staff to promote the new service when staffing levels and queue times are creating other pressures in post offices.

"Secondly, and more importantly, it has to deliver on speed consistency, something that is getting a lot of attention in the media today, and on service support throughout the customer lifetime.

"With the entire service outsourced, it will need BT Wholesale to deliver expertly in order to challenge the many providers with a foothold in the market. "

The Post Office launch has been timed to coincide with the end of the minimum rental period of Carphone Warehouse's 'free broadband' offer, which has angered many customers because of poor availability.

Ovum believes that the Post Office is not just focusing on UK households which have yet to connect to broadband, but on customers switching from existing providers such as Carphone Warehouse.

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