Monday, 8 June 2009

Orange unveils animal plan for business: the "Trojan Horse" £10/month 5GB MBB plan

Orange has signalled an aggressive pursuit of the business MBB market in the UK with the launch of a £10/month 5GB plan. Minimum term is 2 years and the offer lasts until the end of July. Details here. This represents a significantly better deal that their consumer users get. The consumer £10/month plan offers only 1GB/month (albeit on an 18 month contract).

This goes counter to a lot of the arguments in my soon-to-be published Perspective for Analysys Mason "MNOs must differentiate SME and SOHO mobile broadband propositions from consumer offers". MNOs must take advantage of business users lower price sensitivity and they need to differentiate their offerings to provide additional value that will be appropriate to business users, e.g. sharer plans, customer service and ultimately superior quality of service.

Orange has in recent years gained a lot of attention for its eye-catching animal plans. It's surprising that they haven't termed this one the Trojan Horse. By simply going for the lower price, Orange is using mobile broadband as a way to sell other business services in the UK. It is a loss-leader. The price reflects that. At £2/GB it is surely well below a sustainable level of profitability. So it is assuming a very low utilisation rate by business users. Not unreasonable given that enterprise apps tend to be lower bandwidth. But they are indulging, potentially, in below cost selling.

It also raises the question of how successful this strategy will be. Cross-selling is much more difficult to achieve than MNOs might hope, without pursuing aggressive cross-discounting. SME and SOHO users have a much more haphazard approach to telecom purchasing than Orange might hope.

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