Orange steps up the mobile phone 'tariff wars' with free US flight offer
Orange has upped the ante in the increasingly competitive land-grab for mobile phone customers by offering a free flight to the US to customers joining its network over the coming weeks, putting a new bundle from Vodafone in the shade.
Orange's move may appear reminiscent of the infamous Hoover free-US -flight fiasco last decade, though the mobile phone company has limited the offer to the first 20,000 customers who apply. Yet the move shows the days of offering customers a few free texts to switch networks are well and truly over.
Orange pioneered the trend of offering its subscribers fringe benefits when it launched its two-for-one cinema ticket deal earlier this decade. These days, customers looking to change networks are offered an increasing array of free goods to join networks, including games consoles such as the Xbox 360 and the Sony PSP.
Orange launched the promotion last week, and has already had around 10,000 people apply. Existing and new customers who sign up to £30-a-month contracts will be eligible for a free flight to four US cities, including New York, or to a range of European destinations, such as Madrid, Amsterdam, Berlin and Paris.
Although the offer runs only to 13 September, an Orange spokesman said it is likely to be renewed if it proves to be successful.
About a million customers switch mobile phone networks in the UK every month, and high-profile campaigns offering lucrative freebies have become increasingly important in tying down high-spending customers to long-term contracts, attracting new subscribers and moving pay-as-you-go users on to more expensive contracts.
However, while some customers will be tempted by a free flight to the US, others look for better value and more inclusive minutes when switching networks.
Vodafone has unveiled a package aimed at customers looking for more value in their monthly contracts. Customers who pay £40 a month will be offered unlimited calls to landline numbers or unlimited texts to any network. Tim Yates, head of Vodafone UK, said: These new offers within our pay-monthly price plans give customers great value for money."
Robert Grindle, an analyst with Dresdner Kleinwort, said operators are looking to play a balancing act between offering more value for customers while also increasing the amount of money they earn from those subscribers every month. He likened it to a "super size-me model" where fast-food and coffee chains offer larger portions to customers who choose to spend more.
These new promotions are not born out of desperation but are part of an ongoing trend where high-value users are tempted into spending more," he said.
Steve Weller, a spokesman for the price comparison site uSwitch, described Orange's offer as "one of the most attractive freebies we have seen in the mobile industry. Those who want to fly to New York could jet off with an extra £230 in their pocket from the money saved." However Mr Weller warned that strict conditions apply and that customers should ensure that the contract is right for their needs.
Carphone Warehouse in free-laptop move
Mobile phone companies are not the only companies throwing in a freebie to drive market share growth after Carphone Warehouse launched its free- laptop offer yesterday for customers subscribing to AOL's broadband package.
Charles Dunstone, the head of Carphone Warehouse, said he expects that more broadband companies will start offering devices like laptops with subscription packages given the rising popularity of portable computers among customers.
"I envisage this is the way that broadband will go," he said, adding that many teenagers value their laptop more than their mobile phone.
Younger customers are also becoming more frustrated when they cannot get online if their parents are using the computer. Mr Dunstone said he believes a free laptop will be more compelling than a free set-top box for delivering digital TV. "Young people aren't interested in downloading a movie. They want to look at YouTube," he said.
Carphone Warehouse said that there will be 160,000 free Dell laptops available for customers subscribing to AOL's £19.99-a-month contract. He said that the laptop, including the router, retails at about £500. More than 50,000 people have already registered for the deal.
Mr Dunstone said the new offer does not pose the same risk as the disastrous launch of TalkTalk's free broadband offer last year where thousands of consumers were left frustrated after the company took months to connect them to high-speed internet. Mr Dunstone said the finite number of laptops available means it won't face the same problems.
Mr Dunstone said that Carphone will maintain the AOL brand for higher spending users who are happy to pay for security and inclusive hardware while its TalkTalk brand will be aimed at consumers who are more interested in lower prices.
Carphone Warehouse also launched a new in-store concept called The Broadband Shop aimed at providing impartial advice to confused consumers over what high-speed internet package best suits them. As part of the launch, the mobile phone retailer will begin selling Virgin Media broadband in its stores for the first time.