The Impact of One Touch Switching Mandate on UK Consumers - ETI
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January 24, 2024

The Impact of One Touch Switching Mandate on UK Consumers

The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch. The Broadband Bunch is sponsored by ETI Software and VETRO FiberMap.

Pete Pizzutillo:

This episode of The Broadband Bunch is sponsored by ETI software and VETRO FiberMap.

Hello and welcome to another episode of the Broadband Bunch. My name is Pete Pizzutillo. I am at Connected Britain 2023. I am joined today by Marcel Horst. He’s the CEO of the Common Wholesale Platform Limited. Marcel, thanks for joining us.

Marcel Horst:

Thank you very much, Pete. I am very pleased to be here. Also, I am very excited about the event and the enormous amount of activity. You can hear the background noise, and you can see how busy this is here today.

From BT Labs to Leading Common Wholesale Platform Limited

Pete Pizzutillo:

Yeah. Did you speak today? Or you speak tomorrow?

Marcel Horst:

Yeah. Yeah. We had a fantastic round table this morning. Well, it was fantastic from the perspective of we got a really great audience. We had about 69 people turn up at the round table, and there were only 16 seats around the table. But after we overcame that, we had a fantastic, really clear debate about readiness for One Touch Switching.

Pete Pizzutillo:

Yeah, I’m sure. So before we get into that, maybe tell me a little bit about how Marcel ended up in this seat running this company.

Marcel Horst:

Yeah, so I have been in the telecom industry pretty much all of my working life. I started off back in 1988 at BT Laboratories. I moved from BT to energies to help find wrapped fiber around electricity pylons. Next, I moved from energies to Colt, where we built the Colt internet service, and then, subsequent to that, all of Colt’s data centers around Europe. Then, I moved to Bulldog, where Bulldog helped to unbundle the local loop before it was acquired by Cable and Wireless. And then, actually, I left the telecom industry for a bit and came back into it again some years ago. And more recently, about two or three years ago, I was asked to set up Common Wholesale Platform Limited because of my background in wholesale services.

Navigating the Fiber Revolution in the UK Telecom Industry

Pete Pizzutillo:

So you’ve seen a lot. You’ve seen some ups and downs in this industry, a couple of different gold rushes if you will, and some technological changes. Why Common Wholesale Platform? Why was that the right move for you to get back into the business here?

Marcel Horst:

Yeah, so Common Wholesale Platform is the right thing at the right time because what is clearly happening in the UK industry is that there are still a large number of alternative network providers that are building fiber networks in order to gain a market share of fiber penetration across the UK. There is a massive benefit of getting into that market because the UK government also sees full fiber connectivity as a really big differentiator for the economy.

So the more people that are connected to a full fiber service, the better it is for the UK economy. Historically, the fiber connections didn’t grow very quickly, because there was a perfectly working copper network that the incumbents were sweating that asset. And therefore, it’s taken a while for fiber networks to start to be built. But they are being built now at an enormous pace. And I think some 15 billion investment is going in from the investors in alternative network providers. Some 15 billion is going in from BT and Virgin and another 5 billion from the government to try and reach the hard-to-reach places in rural areas.

Simplifying Customer Switching

Pete Pizzutillo:

Yeah, and there’s a lot of excitement around that. Coming from the United States, we’re also going through this injection of billions of dollars. But one of the differences here is this One Touch Switching mandate from the UK government. Just for our listeners to understand what that is, and then maybe explain to us how you guys are supporting that.

Marcel Horst:

Yeah, absolutely. So One Touch Switching didn’t come about overnight. It’s probably been four years in the making. It did originate from some of the regulations in Europe when Britain was still part of the EU. But the rules and the regulations have sort of stayed through the Brexit process. And Ofcom, the UK regulator, has basically set a set that every retailer in the UK must comply with this new regulation in order to create a real benefit for the UK consumer to be able to switch from one provider to another.

Why is that? Well, a bit like electricity or gas, if you want to switch from one provider to the other because you’ve had a bad service or you don’t actually get a very good deal, then you should be able to do that in a very easy way.

Demystifying One Touch Switching

Pete Pizzutillo:

Sure.

Marcel Horst:

What One Touch Switching is about, it’s what is called a gaining provider-led process. In the gaining provider-led process, the gaining provider will talk to an end customer. He will say to that end customer, “Okay, you’d like our offer. Would you switch from your existing provider to us?” The end customer says, “Yeah, I’m interested in doing that.”

What the One Touch Switching process allows is to send messages between the gaining provider through a hub in the middle to the losing provider, for the losing provider to then send an implications letter to the end customer to say, “I know you want to leave us, but you still have to pay a couple of months off contract remaining. And by the way, you’ve got a router from us that you have to return. So okay, as long as you’re happy with that, please go and move to your new provider. But do be aware, we will send you a final bill.”

Regulatory Deadlines, Enforcement, and the March 2024 Launch Date

Pete Pizzutillo:

And so is this happening as we speak?

Marcel Horst:

And what is happening here is that, as I said, it’s been sort of four years in the making. But the original deadline when this service was supposed to be live, so the regulator has allowed the UK industry to try and get its own act together to make this happen. And the UK industry did not meet the deadline of the 3rd of April 2023.

The regulator was a bit upset about that and therefore sent out a, “Well, you’ve missed the deadline. Therefore, we are now going to send out some enforcement notices and start pushing, I suppose, the retailers in the UK to try and get themselves ready as quick as they can,” which in the center of that is a central hub platform that can handle that switching traffic. And that is now due to go live on the 14th of March 2024. And the time between now and then is to carry out testing with that platform.

Unveiling Complexities and Preparing for the Big Bang Launch

Pete Pizzutillo:

I mean, did the OFS understand the complexities of that request? There are not only technological issues there, but there’s a lot of coordination and business coordination between the consumer and the two different providers. I mean, was that all kind of thought through? Or is it a kind of unveiling as we’re working through the problem?

Marcel Horst:

I would say it is unveiling itself as time goes by. We’ve been in this space for a while because we had a One Touch Switching compliant platform last year. And as a result of that, we can already see some of the pitfalls unearth themselves. We’re helping a lot of the members of our platform that is connected to the main hub provided by an organization called TOTSCo or the One Touch Switching company.

And yeah, we’re just helping our members to get through this readiness activity so that between now and March, they will be ready. It’ll be a big bang launch. So come the Big Bang launch 14th of March, those members will be able to take a switching request either as a gaining provider — obviously, that’s what everybody’s interest is — but also from a regulatory perspective to act correctly and appropriately as a losing provider.

Balancing Customer Freedom and Provider Practices

Pete Pizzutillo:

It seems to me that it opens up another can of market dynamics. You can buy customers. Typically, it’s kind of an introductory rate to get people to switch. Are there conversations around restricting those types of practices? Or how many times does the consumer flip back and forth?

Marcel Horst:

No, no. Well, generally in the UK, consumers do sign up to a commitment for the service in order to get an advantageous price point for their broadband service. So they may sign up to a 12 or 24-month contract. Therefore if they sign up for that, they are obliged to sit out that contract. And there may be contract termination charges associated with that.

Pete Pizzutillo:

Sure.

Marcel Horst:

So flipping back and forth, well, possibly there could be providers out there that say, “Actually, you don’t have to sign a contract with us. You can just go on a one-month rolling contract.” That’s certainly possible. And I do agree it’ll open up opportunities for innovative creative retailers to start really leveraging and benefiting from this One Touch Switching scenario.

Simplifying Consumer Switching While Managing Complexity in Telecom Packages

Pete Pizzutillo:

Yeah. I mean, from a consumer practice, I love it, because switching has always been a pain. No matter if it’s your cell phone or broadband company, they put a lot of layers of friction in there and pain. But as a sales and marketing guy, there are some pretty interesting ideas. I mean, you think about bundling, or you think about contract duration. I mean, there are ways to say, “Yes, you can switch.” But you build in the friction on the backend, that pain, especially if the consumer’s going to be responsible for their commitments.

Marcel Horst:

Absolutely. Clearly, the more complicated you make your product, the more complicated the switching process is. So part of the switching is also kind of to de-bundle your package. So if you currently have a package that incorporates telephony and broadband and TV services, that first needs to be disassembled and say, “Okay, you’re moving the broadband provider to this organization. Do you wish to move your telephony at the same time?”

“Yes, I do.”

But that organization doesn’t do telephony. What are you going to do now? So there are an awful lot of different scenarios that need to be tested. And that is the process that we’re writing at the moment to test those scenarios.

Telecom Mergers and Its Influence on Switching

Pete Pizzutillo:

And especially in the UK with the consolidation that’s kind of being hinted around here, it’s really interesting where you may have a relationship with a local provider that gets consumed by a larger regional player, and that could be a trigger for you to say, “You know what? I’m going to shop. It’s a compelling event to go shop it around.” You said March 2024 is the deadline.

Marcel Horst:

Mm-hmm.

Pete Pizzutillo:

It should be pretty interesting to see how those dynamics play into consumer thinking. What about businesses? Can businesses have the same rights?

Marcel Horst:

Yeah. So for businesses, actually, the regulation for gaining provider-led switching was already set out to be applicable from the 3rd of April 23.

Pete Pizzutillo:

Okay.

Streamlining B2B Switching

Marcel Horst:

So if you are a provider of business-to-business broadband services, then as a retailer of that service, you should be following, not the One Touch Switching process, but the gaining provider of that process that says, “If a business comes to me and says, ‘I like your service, but I’m currently with another provider,’ then that business should take all the obligation to contact that other provider, get all the relevant information, and make the switching help occur seamlessly.”

The way switching works is that you first have to connect the new service before the old service is disconnected. So there shouldn’t be any break in service to any premises.

Pete Pizzutillo:

So thank you for that. So you also have the wholesale component to what you do. Can you tell us a little bit about what you’re trying to do there?

The Convergence of One Touch Switching and Wholesale Services for Streamlined Telecom Operations

Marcel Horst:

Yeah, so we did believe that there’s a massive connection and overlap between switching and wholesale services. So switching from a consumer perspective only involves a retailer-to-retailer transaction. Those retailers, ultimately, need to do something with wherever they buy the wholesale service from, so that their network provider.

So what we’ve done on our CWP platform, we’ve created extensions to the One Touch Switching process, which actually involves the wholesale network provider. If a gaining provider says, “Yeah, I’ve got an order for a customer that is interested in our service,” then we can reach out to our wholesale provider to say, “Yeah, this is the service they want. Are you able to provide that within the standard lead time of two weeks?”

And then the process can start to carry out that switch. And on the losing provider, they can do exactly the same thing. They can then reach out to their network provider to say, “Okay, it looks like we have lost this particular customer from the network. Please disconnect the service on the 14th of April,” whatever. Yeah.

Tracking Customer Churn as a Key Performance Indicator

Pete Pizzutillo:

Is any of that information going to be public now that you’re collecting it? So we can look back in a year and see who gained the most, or who lost the most?

Marcel Horst:

There is a little bit of research that Ofcom does that says how many customers certain providers have in terms of market share. And yeah, it would be interesting to see once this is launched in March to say 6 months or 12 months afterwards to see what’s happened.

Pete Pizzutillo:

Right. I mean, because there’s the net promoter score, the NPS scores, and customer satisfaction which people always hold up as a banner. And you suspect how much is that is actually accurate? But if you can actually show churn, that’s a really telling transparent indicator of who’s doing well and who has some work to do.

Marcel Horst:

And I must say, in the UK, we probably have some 8,200 network providers. And within those network providers, there’s some really, really innovative, creative organizations that put customer service first and foremost that have creative service portfolios and creative bundles. Therefore, I think they would stand the gain from this switching process.

Overcoming Hurdles and Ensuring Regulatory Compliance

Pete Pizzutillo:

That’s interesting. So the deadline is coming up. It is about five months out. What’s going to stop us from hitting that deadline?

Marcel Horst:

What will stop us is the industry from continuing to not be ready. But then I suppose it’s up to the regulator to say, “Enough is enough.” What potentially could be the case is that the central hub provider will not be ready. Although, it’s fair to say we have now carried out a complete end-to-end transaction in the past week. So we’re now starting to see real platforms and real computers starting to talk to each other to make this happen in reality. Although there’s still a lot more work. There are a lot of exceptions that need to be tested and checked. But I think we’re on a good path towards March 24. If you were to ask me, “Do you think this will happen on the deadline,” right now, I would say, “Yes.”

Pete Pizzutillo:

Well, that’s good. I love the optimism. So what about scale? Have you guys thought about and projected what the percentage of churn is going to be? And how do you build your systems to support that kind of volume?

Anticipating Changes and Market Shifts in the Telecom Industry

Marcel Horst:

Absolutely, yes. So when we started crafting our platform, we very much had scale and scalability in mind. We worked closely together with an organization based in Lithuania called Mediafon DataPro. And they already switch 1.6 million transactions a month on their platform. So it was a very, very scalable platform that we’ve implemented. Obviously, we hope that the other platforms out there do exactly the same thing.

Pete Pizzutillo:

Yeah. We’ll find out. Good luck to you. Thanks for joining the show. When you come back next year, what do you expect to be different here at this show or within this market?

Marcel Horst:

I think, in a year from now, we will see some changes in providers. Providers that have really embraced this, I think, are quite important for the industry’s regulatory-driven activity. But I think it’s far more important for the retailers themselves. Get themselves ready. If you’re not ready, somebody else will pinch your customer.

A Customer-Centric Approach to Telecom Innovation

Pete Pizzutillo:

Right. That’s true. It’s an innovative way to approach this problem that we all know is key. It’s putting the consumer, the subscriber first; right?

Marcel Horst:

Absolutely.

Pete Pizzutillo:

We’ve been talking to Marcel Horst. He’s the CEO of the Common Wholesale Platform Limited. Marcel, thank you for joining the show.

Marcel Horst:

It’s been a real pleasure. Thank you very much, Pete.

Pete Pizzutillo:

And good luck with your rollout. I know you have a lot of things to work through, but I’m confident you guys will get there. So I am looking forward to seeing how things play out for you guys in 2024.

Marcel Horst:

It’s been great talking to you. Thank you.

Pete Pizzutillo:

This will wrap up another episode of The Broadband Bunch. We’re here live at Connected Britain 2023. I am talking to Marcel Horst, the CEO of the Common Wholesale Platform. Thank you for listening.