Taking on the big guns of broadband

One of the minnows taking on the big guns of broadband and their mass marketing campaigns is TenTel, a £500,000 start-up two years ago by Borders-based Canadian entrepreneur PJ Darling who also created Spark Energy.

For Ayrshire-born managing director Robert McKechnie, 46, who made his name running the global Office Depot contract for RBS, the chance to build a disruptive challenger in the consumer telecoms market was one not to miss.

Sky’s latest revamp of its packages this week, following moves by BT, TalkTalk and PlusNet last month, gave the TenTel boss the perfect opportunity to make his pitch.

“The cost of broadband and premium TV is being subsidised by increasing landline prices, which means that customers who just want phone services are paying the price for those who want premium TV and broadband, “ McKechnie said.

“Many providers promote misleading headlines, such as ‘free broadband for 12 months’ when in reality they are increasing their line rental costs and hidden charges. As an industry we must be more transparent about our pricing and help the consumer to make informed choices by separating charges for landline, broadband and premium TV.”

If your line rental cost appears to have been going steadily up, it has. Landline charges have increased faster than fuel and general price increases over the last five years, according to Which? It says the cost has risen by between 45 and 64per cent over the past six years – inflation is at a cumulative 20per cent.

McKechnie went on: “Increases in the cost of line rental remains an ongoing issue for the consumer with many of the major telecoms providers. A way of avoiding this is to choose an independent telecoms provider - however this can prove difficult when tied into long term contracts. TenTel remains committed to keeping prices low for all customers by only charging them for services they require.”

In August TenTel unveiled plans to create more than 40 jobs, after being awarded a £170,000 Regional Selective Assistance grant.

Scottish Enterprise said the funding was “set to generate exponential growth by accelerating market penetration”.

Sadly for the Borders, the business spawned in Selkirk has not been able to grow there but moved last month to Shawfair in Edinburgh.

McKechnie explains: “In the Borders we compete with other businesses and in some areas unemployment is quite low. I love the Borders and live there myself but when you are trying to grow at a rate of three or four employees a month you can’t do it.” The firm was scanning 100 applications to fill one post and even people applying within the region “couldn’t get into work on time because of the public bus network”.

A third of TenTel’s employees still live in the Borders –  only thanks to the recently-launched train service. “We waited until the train was live to make our move,” says the MD, a former sales and marketing director in a ScottishPower subsidiary and strategy director at Office Depot.

He says the firm met its targets of a £9m turnover and 20,000 customers in year one, and is aiming for another 50,000 customers in the current year.

But he admits: “We thought we could get to 50 people in the first year of trading, and we got to 35. It took us more time, but I am pleased we took that time to put in place the processes that separate us from the competition.”

Three-quarters of TenTel customers are referred by letting agents in the rental market, who can boost their commission while offering a better service. TenTel requires no contract, which is ideal for people in shorter-term lets, and critically it invests in providing a live phone and broadband service for tenants and home-movers as they walk in the door. The big providers make you wait 15 to 21 days, according to Ofcom.

McKechnie says: “You move home and generally you will find your telecoms and broadband is not live, why is that? None of the big providers will do it, they already have millions of customers, they will wait until you get in the property and then they will start the process – as far as they are concerned, if they happen to be delaying you for a month there is not much you can do about it because you have already signed up to a long-term contract.”

He adds: “It doesn’t matter how efficient you are in the rest of your move, you will still get to the property and find you are not live. It just doesn’t need to be the case.”

TenTel invests £100 in every customer before they go live, proactively managing “around 40 touch points” and avoiding customers ever having to phone up to ask for an update, McKechnie says.

But he adds: “We are not recouping that in pricing, we are measured in the market-place and have a price guarantee against the others....though arguably the ‘big four’ should have the heads up on us because of their volumes and they can drive down costs. We don’t have big brand name so we need to do something that is of value to the customer.”

The big players are marketing machines which use “a lot of smoke and mirrors” to make it appear that broadband is getting cheaper – even when it isn’t, McKechnie says.

But don’t most people want the ‘bundled’ services now on offer?

“The fastest-growing TV product is Freeview, so 10m customers don’t want to be connected to a bundled contract. But the £50 a month TV package comes with ‘free’ telephone and broadband - it’s not free, it’s disguised.”

The same telecoms infrastructure is used by all providers, which means “in terms of quality of product it doesn’t much matter if you are a small independent like us or BT, what does matter is how important to you is that customer’s niggle”, McKechnie insists.

For the two million phone users who are not interested in broadband or premium TV, it means the same product at higher cost. “If you are taking an extra £24 a year off two million customers, that’s a lot of free cash.”

McKechnie concludes: “I don’t think TenTel is for everyone, it can’t be, lots of people love their sport...but there is a market of nine or ten million tenants in the UK, who should not be forced into long-term contracts and who should be given the red carpet treatment – not absolutely woeful customer service.”