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BT Slashes Communicator Prices

The Times has reported that BT is slashing the cost of BT communicator calls.  The new pricing and marketing programs are very aggressive (1/2p per minute to up to 27 other countries), and demonstrate the seriousness with which the incumbents view Skype, and the margin that still remains in a PSTN long distance call.  There is still more margin, though.  If BT were North American, that price could still drop another 10%.

At this point, does the average consumer care?  Probably not.  I chatted with my dad a couple of days ago, and encouraged him to use Skype.  I told him it was free, to which he responded "My calls are already virtually free".  He uses one of the many 1010 dial-around services.

BT really is fighting the wrong war. As the Times article points out, DSG International (owner of the UK Dixon’s chain), and PlusNet (a UK ISP) are both diving into the Internet calling market too.  When anyone can jump into the market, your tactics have to change.  The BT marketing team is trying to price compete, when they need to compete on brand and market share. 

What if:

  • BT built a Price Club / Costco model.  For an annual fee, calls are free. SunRocket is doing that very successfully right now here in North America.  Most people burn through 1100 minutes per month of calling time.  At 0.5p per minute, BT could offer unlimited calling to anywhere for 5 pounds per month, and still make money. 
  • BT simply declared that all calls between BT subscribers, whether on a land line or the PC, were included in the monthly bill. 

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