Orange gets back on the ballORANGE, the mobile-phone company that made its name by trying that bit harder for customers, was recently rapped for misleading advertising.
The Advertising Standards Authority upheld a complaint against a broadband ad in which Orange promised “unlimited UK and international calls . . . and unlimited downloads”. In fact, there were “fair use” caps on both aspects of the service, limiting calls to 1,000 minutes a month and downloads to 40 gigabytes (GB) of data.
Orange has a similar problem with the flat-rate data bundles it introduced in May to encourage people to access the internet via their mobiles. Some customers have been irritated to discover a “hidden” usage cap ? this time set at 30GB of data.
These incidents are indicative of the decline of one of the great brands from the 1990s. From the introduction of per-second billing onwards, Orange established a reputation as the customers’ friend ? a company that would shun the opaque money-making schemes of its rivals.
Seven years after its takeover by France Telecom, it has shed much of its former lustre. One City analyst said: “It has lost its way. The strategy went awry and the brand was tarnished.”
Jean-Pascal van Overbeke, the vice-president who heads Orange’s UK mobile business, does not duck the issue. “The brand has been eroded, absolutely,” he acknowledged. “We lost our track a bit. It’s a combination of the competition copying a lot of the positioning, and us doing less to differentiate ourselves.”
But Van Overbeke believes he can see the first signs of a revival. Seven years after paying £4 billion for 3G mobile spectrum, mobile internet services are finally starting to become popular. He said 2m of the company’s customers now access the internet from their phones every month.
“We really believe we are at a [crucial] moment,” he said. “People are using the internet more every day. We can feel it’s coming. We see 2m users, we see the revenues we get, we see what’s happening on the web. We feel it in our figures.”
Orange is not alone in this. The mobile internet was once a dirty term in the industry, because the reality of “wap” browsing was such a disappointment. Now Vodafone is willing to put serious money behind the slogan: “The mobile internet is now” ? and Apple is entering the mobile arena with its internet-browsing iPhone.
Critics contend that the Orange brand was damaged not by any one big failing, but by numerous small ones ? such as the limitations on its “unlimited” broadband and mobile deals. A series of management changes, and the change of priorities forced on it by France Telecom’s financial crisis of 2002-3, sapped its energy, and weakened its focus on keeping customers happy.
Although this caused no immediate harm to Orange’s financial results, its customers’ loyalty was tested. Its industry-leading level of churn ? that is, departing subscribers ? rose substantially before peaking last year at 25%.
Van Overbeke said the relationship with France Telecom has often been awkward. Orange (the group, not just the UK business) has remained based in London but control has shifted to Paris.
Under financial pressure, France Telecom ? a traditional telephone company ? dumped Orange’s original vision of a “wire-free future” in favour of a “convergence” strategy that combines mobile with fixed-line services such as broadband. The group’s British internet arm, originally called Freeserve, was rebranded as Orange.
Sanjiv Ahuja, Orange’s chief executive for the past three years, doesn’t speak fluent French and is reckoned to have struggled to assert his authority. Although he remains chairman, he recently stepped aside to be replaced by Olaf Swantee ? Orange’s fifth chief executive in seven years.
Another important factor was the slowing growth of the mobile industry, and the slow take-up of mobile data and entertainment services.
Orange believes that mobile internet technology has finally matured to a point where services ? such as browsing for information, online shopping and auctions, or seeking maps and directions ? can be delivered in a form that makes them easy to use.
For example, picture-messag-ing was one of the mobile industry’s great disappointments. Nearly everyone loved camera phones but few people could be bothered to send pictures.
In contrast, Van Overbeke is excited by the results of a trial with Nokia, which built in an option in some of its phones to allow pictures to be uploaded easily to an online album. More than 80% of those who had phones with this feature are uploading photos to a web portal where they can be seen by friends and family.
With this experience, Orange is working with eBay, Bebo and other popular web businesses to produce versions of their services that are simpler or otherwise more “relevant” to people who are out and about with their mobile phones.
The mobile internet simply cannot replicate the full experience that is possible with a computer, said Van Overbeke. “People want to snack,” he said. “We need to identify the mobile part of the service that we can make perfectly relevant on the phone.”
Orange was slower than rivals such as T-Mobile and 3 to introduce flat-rate data tariffs, which give customers certainty about what they are spending.
Van Overbeke suggested that these plans were only a partial solution because they required customers to commit to spending almost £100 a year.
Moreover, he insisted the slow take-up of the mobile internet had faced a bigger hurdle than the price of the service. Cost was important, he said, but not as important as persuading consumers that the service was relevant to them. Better handsets, more targeted applications and more understanding among consumers was finally making that happen.
In the next few months, the company will make changes to its Orange World mobile portal to make it easier to use. Free sections of the site will be clearly labelled “free to browse”. And Orange will use its customer information to help users find what they are looking for more quickly.
It will also start to charge for internet usage by time rather than by data usage, making it easier for people to understand how much they are spending. Van Overbeke said selling 15-minute sessions would encourage people to try the mobile internet without having to sign up for a flat-rate plan. “You cannot be afraid because whatever you do there is a maximum per day,” he said.
Orange hopes these steps can help restore its brand to its past glory. “There are small innovations coming every week, every month, that will put Orange in the driving seat,” said Van Overbeke. “It will help us reposition this brand where it always has been ? as the champion of the customer.”
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