Black & White - a customer-centred mobile operator in NZ?

It was good to see some broad coverage of Black and White's Mobile offering - currently under Beta launch in NZ in Computerworld, Stuff and Geekzone. I worked with Johnathan during his time at Telecom and hope he and the team at B&W do well.

Most of the basics have come out so far.

B&W are re-selling Vodafone's existing offerings (including plans according to Computerworld) and providing their own branded handsets. They are solid mid-range handsets including a decent enough Nokia 6225c.

Feature-wise this looks like it will be targetted at the SME professional - a good niche with basic voice, text and email capability. 

There are a few things that particularly interest me.

1. The launch approach - a slow trickle to get this right is a great contrast to Telstra Clear's launch last week which went above the line with no real behind the scenes leg-work.  I think this 'slow' approach will give them a heap of speed - just by being so in touch with customer wants.Assuming that B&W will actually make changes based on Beta feedback, this will mean that B&W have a chance of surviving - more so that TC's proposition. Add to that the fact they are planning to add 1000 customers after the Beta, if things go really well for them they have constrained supply to the point where there will be value in just being one of the first 1000 customers.

2. Customer approach - it appears that B&W are looking at a proposition where business customers are not locked in on contract. This is very new in the NZ market and is a hard one to follow for Telecom and Vodafone as their accountants really won't like the idea of revenue uncertainty. But it's a massive value proposition for customers that will probably engender strong loyalty to B&W until the others follow. It's the approach of 'We are honoured to have you as a customer' as opposed to 'We are so scared of losing your money we will lock it in'.

3. Despite the comments on geekzone, the margins for a mobile reseller are pretty slim. The costs to acquire and service a customer are significant so you can't just look at the retail price for a mobile minute vs. wholesale. The Retailer has to cover service costs, handset subsidies etc etc. If you can get 10% margin out of that you are doing extremely well. B&W will only survive if they are able to reduce the costs to service and acquire customers and still provide better than the current standards of service. That means on-line, customer collaborative channels.

4. Value exchange within the Beta - this is brilliant. Sign-up your first 100 customers via Geekzone. Give them free service. Get them to test your products. Take on board their comments. Boom - there's your first 100 sales people, and free testing. Pretty good for a company of 10 people. 

5. Break-even point - B&W are playing in the SME space, traditionally the highest ARPU mobile customers. That is not necessarily the highest margin but it's an area that cellco's fight for pretty agressively. My guess is that if B&W were able to gain 10% of this market (say 50,000 SME's) that would put them in a good place. That might be enough to make Telecom and Vodafone start to follow suit on no contracts.

I think based on this approach and without bundling this will stand up pretty well against the other Tier 2 providers. It will be interesting to see whether NZ Communications takes a similar approach, and just compete in the market, or whether they will continue to blame the big guys for their lack of progress.

My guess is that the bulk of the B&W customers will probably be Vodafone to start with - they are the customers who probably see less value in a bundled offer. This is not at all bad for Vodafone - they get the wholesale revenues and reduce the costs of servicing these customers.

Where it will get interesting is when B&W start offering their own plans, and maybe providing some more utility with customer call data to improve the service offering. In the meantime, don't expect this to change the market for mobile data plans.