Orange’s problems with its broadband service are further evidence that the “once great” British brand has lost its way under the ownership of France Telecom, according to industry experts.
The telecoms giant is facing a consumer backlash after thousands of users were unable to connect to the internet for more than two days at the end of last month (MW last week). Enders Analysis senior analyst Ian Watt believes the company risks losing ground in the highly competitive broadband market if it does not improve its service, and thinks that part of the problem is that Orange has to follow a pan-European strategy directed from Paris.
That view is shared by Ovum senior analyst Carrie Pawsey, who believes France Telecom’s acquisition of Orange six years ago has led to an erosion of brand equity.
Losing its edge
“Orange has certainly had some problems since France Telecom took over,” she says. “Previously, it was very much seen as an innovator on product and marketing issues. But much of that innovation and edginess has since been lost.”
Pawsey is particularly critical of the company’s “animals” pricing tariff, which sees consumers categorised as dolphins, racoons, canaries or panthers according to their mobile habits. An Orange spokesman says the concept, which has featured heavily in its recent marketing activity, has led to the company’s best take-up in five years, but it has been called “meaningless” and “confusing” by detractors.
When it was launched in April 1994, Orange was credited with awakening consumer interest in a service aimed squarely at business customers. As the fourth entrant into an already crowded UK mobile phone market, it positioned itself as an everyday service “for everyone”.
In 1996, Orange became the youngest company to enter the FTSE-100 and was valued at £2.4bn. It boasted the lowest churn rate and top ratings for customer satisfaction. Pawsey adds: “Customer service was one thing that differentiated it. Now there are issues over customer service and it will struggle to regain that image.”
German company Mannesmann bought Orange in 1999 but was forced to offload it after itself being bought by Vodafone. Orange’s brand strength was such that France Telecom bought it for more than double the value of its assets.
But some question whether the once “quirky and individual” Orange brand is still as valuable after being under the control of such a vast corporation for six years.
One advertising agency executive says: “Being part of France Telecom has tarnished what was once a great British brand.” The source adds that Orange is now just the “facade” of a colourless, corporate giant.
But Gartner research director Martin Gutberlet claims that view fails to acknowledge the changes that have taken place in the industry.
Times are changing
“Orange was a cool company in the UK – but that was at a time when the industry was growing like hell. To have that brand at a time when the industry is not fast-growing is far trickier.”
An Orange spokesman admits the company has been through a period of change, but argues that consumers will soon see the benefits. It is now time to take on the likes of BT, Sky and NTL in the convergence stakes, he says, adding: “Now, we are in the big league.”
But as many of those rivals know only too well, it is vital to get a grip on customer service to remain at the top.