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"All these different tariffs on the mobile market are confusing me. I would like to see things made simpler and more transparent." Eva Winkler, customer of O2 Germany |
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Competition and regulation | Pricing | Customer service | Customers with special needs | Privacy and adult content | Supply chain Our mobile services deliver clear social benefits. The mobile communications industry has created many thousands of jobs and widespread opportunities for training and development in what is a fast growing, high-tech sector of the economy. Our services are highly sought after by people of all different age groups, backgrounds and circumstances. As new services develop they will transform many of the established ways we live and interact, both at work and at home. Mobile telecommunications is already allowing people to work more flexibly with less need to travel extensively and enabling them to create a structure to their working lives which can be better balanced between work and home-life commitments. It is also one of the most inclusive technologies, with more than 50 million users in the UK alone. The wireless device is also increasingly becoming a powerful medium for information and entertainment, a trend that will accelerate as new, more sophisticated data services become widely available. We work hard to share our enthusiasm with customers and to understand what they would most like wireless applications to deliver. Mobile services also pose some important social challenges and we are clear about these. While in the developed world mobile telecommunications is broadly available to people, pricing and poor infrastructure mean that it is not equally available to all. Even in our markets where this service is well established, like Ireland, the availability of access to broadband network outside the main cities is a priority for the Irish Government. In Ireland, O2 is the only mobile operator to receive Government funding to conduct pilot trials to investigate if wireless is the best and least disruptive way to spread broadband access in more rural areas to bridge this digital divide. We are assessing the feasibility of installing wireless broadband services into civic offices in the West of Ireland to explore the role that mobile can play in the national broadband roll out programme. The digital divide between the developed and developing world is most stark. In many countries, mobile is being adopted from scratch, avoiding the traditional first step of fixed line services. But the fact remains that as mobile markets develop at incredible pace in the developed world the gap between them and most developing countries is widening. |
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Competition and regulation mmO2 operates across a footprint of four mobile communications markets in Western Europe: Ireland, the Isle of Man, Germany and the UK. Most of these markets are highly competitive and subject to strict regulation. In three of our markets we face competition from between two and four other mobile operators. Yet the mobile telecommunications industry remains one of the most regulated sectors of the economy against a lingering perception that call charges are too high and that pricing is not transparent enough. The mobile industry is still relatively new but is no longer in its infancy. The explosive rates of growth in mobile phone ownership have now slowed as penetration reaches saturation point. Independent estimates suggest that there are now more mobile phone subscribers around the world than fixed line phones - 1.4 billion against 1.1 billion. But slowing growth does not mean we are facing less competition. If anything the reverse is true. Where operators once engaged in a fierce battle for subscribers, they are now competing strongly to offer the best customer service, the best solutions, and the best prices. The introduction of 3G services will only intensify this competition further. As mobile technology becomes more data-intensive, we will inevitably face competition from other sources as a whole range of technologies using internet-protocol-based systems, like messaging direct from personal computers to mobile phones, vie with each other for the attention of customers. We seek a constructive relationship with regulatory authorities. But our belief is that regulation needs to evolve to meet the changing nature of the industry. We have argued strongly that too much emphasis is put on the micro-regulation of the industry, particularly by European agencies, and that this threatens to stifle inventiveness and investment in what is still a highly capital intensive industry. We believe regulators should look more at the overall competitiveness of the mobile market rather than at specific pricing issues. Regulation should be lighter and be about promoting competition, investment and innovation in the industry so that efficiencies can be realised and passed quickly on to the customer in the form of better services and lower prices. We believe that regulators should only intervene where it is clear that competition and consumer protection laws are too weak to offer safeguards for the consumer. The industry is currently facing a range of regulatory investigations. The price of calling mobiles has been investigated in the UK and other EU member states. The European Commission is investigating roaming charges - the price callers pay when they are abroad and using another network, where they find themselves paying both to make and receive calls. The UK Competition Commission has recently ruled that cuts proposed by the regulator, Oftel, to the cost of incoming calls onto all mobile networks - so-called termination charges - should be deeper. The Competition Commission proposed that O2 UK's termination charges should fall by an initial amount of 15 per cent and a further 15 per cent per year for the next three years. Our reaction to this determination reflects our generally pragmatic approach to regulation. We decided not to follow our competitors in seeking a legal challenge to the decision. We believed it was more important for mmO2 to move forward and remove further uncertainty over our future. However, we also made it clear that we needed to recoup lost revenues. We will do this by delaying other planned tariff reductions, reducing subsidies on new phones and by delaying the introduction of our 3G service until the second half of 2004. |
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Pricing our products clearly Concern about the pricing of our services often stems from the complexity and profusion of mobile phone tariffs in the market as a whole, a factor that is at times beyond our control. We are aware that many customers find it difficult to distinguish between different service offerings and we are working on improving the information and advice we give to customers. Each of our operating businesses has been developing a new approach to segmenting our customers according to their pattern of usage. By understanding when and how much they use their phones, we are better able to offer them services that meet their needs and their budgets. Customer service training at all of our call centres has been intensified to ensure that when a customer calls to seek advice or complain, our advisors will answer their calls promptly, have access to the right information or support from colleagues with more detailed knowledge. Call centre employees work in teams, led by a team leader and often also supported by a team coach to provide regular training and support. This is important work and we are seeking to improve our performance here. In a highly competitive market, we want excellent customer service to be one of the main things that sets us apart from other operators. |
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Customer service We measure customer satisfaction in a number of ways. In the UK these include use of the Claes Fornell International (CFI) measure, which refers to an external benchmarking study covering the complete understanding of customer satisfaction; and the Event Driven Customer Satisfaction Measure (EDCSM). Our call centre operations in Germany were commended during the year. O2 Germany was voted top call centre operator in Germany in a poll by the consumer technology magazine, Tomorrow. By contrast our UK call centres became stretched early in the year after a period of employee reductions. Levels of service have since been restored and we are working on a number of initiatives, including IT solutions, to boost our performance and to ensure it improves continuously. |
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Catering for customers with special needs The launch of the O2 brand during 2002 involved intense advertising and promotion. We believe that successful companies are those that reflect the diversity of wider society. This drives our approach to diversity within the Company and is carefully reflected in the services we offer. The response to the launch of our brand has been extremely positive both from our employees and our customers. We believe this reflects a genuine view that the Company is seen as fresh and vital and has modern and inclusive values. O2 UK has made special provision for customers with special needs and disabilities. These include invoicing in braille, large text size and audio for people with visual impairments. Our network is used for numerous services supporting people with special needs, like text services for the deaf. A new accessibility UK web site 'O2 Access for All' is being prepared to provide a guide to the services and support we can offer customers with disabilities and special needs. The web site also makes clear our commitment to offer opportunities for disabled employees. However, we recognise that this is an area that we need to look at more closely as we develop new products and services. Our membership in the UK of the Employers Forum on Disability will assist us in learning more about the needs of the disabled. |
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Privacy and adult content Customer privacy is an increasingly vexed issue. Although we are committed to respect and safeguard customer confidentiality, we are obliged by law to make customer records available to the police under certain circumstances. Heightened security fears in recent months have led the UK Government to rule that other emergency services should have access on demand to these records. We handle this issue with great care balancing individual rights to privacy and wider national security issues. Camera phones are now becoming widely available and are already proving very popular. But we recognise that, in some circumstances, these pose a separate threat to individual privacy, particularly the privacy of vulnerable groups like children. We already publish advice on the safe and responsible use of phones on our web site. Another issue of growing importance to customers and other stakeholders is adult content. They want to know what safeguards we are putting in place to ensure that children and young people do not get access to inappropriate material. As mobile phone technology advances it is expected to become a channel for services demanded by the public including pornography, gambling, financial services and other types of push-marketing. We aim to protect vulnerable people, particularly children, from seeing or hearing unsuitable content. We are exploring the use of content filtration technology that will block access to certain types of content. |
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Supply chain Customers not only want to be sure that we operate in a responsible way, but that the companies that supply us are responsible too. During the current year we have developed an ethical procurement policy which was adopted by the Executive Committee in February 2003. It has now been endorsed by the Board and plans for the implementation of the policy are currently under development. This policy spells out the standards we apply as a company and the standards we expect our suppliers to adopt. Our aim is to encourage suppliers to make similar demands of companies further along the supply chain. In implementing the policy, which is based on the Ethical Trading Initiative Base Code, we will work collaboratively with our suppliers and use the principle of continuous improvement to guide our relationships. We aim to do this directly with our suppliers as well as through industry bodies, such as the Global e-Sustainability Initiative that we have recently become members of. Our aim is to ensure that suppliers comply with all national and other applicable law and regulations relating to the standards, including health and safety, payment of living wages, and the use of child labour. Among the issues that the newly created Corporate Responsibility Advisory Council has debated this year is the sourcing of mobile phones and equipment. The Council has concluded that we need to ensure that the products we sell are manufactured appropriately with consideration to both the social and the physical environment. As a result we have entered into discussions with some of our suppliers to better understand this manufacturing process. mmO2 aims to pay all of its creditors promptly. The payment terms for major contracts are agreed at the same time as other terms are negotiated with individual suppliers. It is the Group's policy to make payments for other purchases within 30 working days of the invoice date, provided that the relevant invoice is presented in a timely fashion and is complete. The Group had 39 days' purchases outstanding as at 31 March 2003 based on the average daily amount invoiced by suppliers during the year. |
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| Multiplying What mobile can do >> |
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| PDF: THE REPORT > |
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