Boost Mobile founder Peter Adderton on why telcos need to “shut up and listen” to customers or risk being overrun
Thursday, October 11, 2018/
The Aussie founder of one of the world’s largest telecommunication company says its time for other telcos to “shut up and listen” to what customers have to say, or risk being left in the dust by agile smaller players.
Peter Adderton founded Boost Mobile back in August of 2000 and says he could see from very early on how the carriers in the Australian market were failing to provide consumers with what they wanted when it came to mobile phone plans.
“I was actually running one of the world’s largest marketing agencies at the time, and one of our clients at the time happened to be Optus. This was back in 1999, so long before smartphones,” Addteron tells SmartCompany.
“I could see that the carriers were incapable of talking to segments in the market. They’d just take anyone from the age of five to 65 and bundle them all in on the same plan.”
Adderton could see the future of mobile plans was in customisation and segmentation, drawing an analogy to how soft drinks such as Pepsi were being marketed.
“You look in a drinks fridge, and while there are hundreds of different options in there with different flavours and types, they all do fundamentally the same thing: quench your thirst,” he says.
“Telco businesses weren’t taking that approach. They didn’t understand that some people aren’t going to want the same plans as everyone else.”
From zero to acquisition
Seeing this opportunity, Adderton launched Boost Mobile in Australia but very quickly relocated the business to the US a year or so after launch. He says this was for a number of reasons, but mainly due to his internal drive as a founder to go big and go global wherever possible.
Adderton says his opinion on businesses in Australia is if they work Down Under, they’ll work even better in the US, as it has long been a pioneer across numerous industries, not just telecommunications.
“Everything I’ve ever done I’ve taken to the US, and I’ve always looked to them as a lead indicator of what works in business,” he says.
This approach worked wonders for the Boost brand, and Adderton says the company went from strength to strength quickly, posting revenue numbers which grew to upwards of $300 million in just a matter of years. The founder now proudly says you can’t drive through any US town without seeing Boost marketing.
This is at odds with what was happening with the brand in Australia at the time, with the founder admitting it “lost its way” a bit, requiring the founder to refocus the business and return it to its roots.
Today, Boost is active in Australia running off the Telstra network, and in the US as a subsidiary of Sprint — one of the country’s largest telco providers.
However, Adderton is currently fighting against a major merger of the US’ third and fourth largest carriers, Sprint and T-Mobile, with the deal threatening to throw Boost’s 30 million-odd prepaid customers into jeopardy due to uncertainty regarding if their plans would continue to exist after the deal went ahead.
Currently, the $US26 billion ($36 billion) deal is still before the country’s corporate regulators and may not go ahead, however, Adderton says the deal should not proceed unless Boost is spun out to be a separate company. While Adderton still runs Boost Mobile in Australia, he no longer runs the company in the US.
“They don’t need to merge, competitors can still run side-by-side. It would mean the closure of about 5,000 Boost stores and the loss of thousands of jobs,” he says.
“And not even looking at it from Boost’s perspective, this is a significant issue for the consumer. This is why telcos need to shut up and listen to what customers want and like, and stop being driven by pure competition in the marketplace.”
Coincidentally, two of Australia’s largest telcos are also considering a merger, with Vodafone and TPG announcing a $15 billion merger in August, which is still subject to approval from the Australian Competition and Consumer Commission (ACCC).
Adderton says the merger was logical as he believes Australia could have never supported four major telco networks. He believes TPG was never intending to build a nationwide mobile network, and the company’s announcement to do so was “only ever a game of poker”.
Future of telco industry hinged on innovation
If someone had told the Boost Mobile founder five years ago that US telco giant AT&T was going to own TV producer HBO, he would have said that person was crazy.
But today, Adderton says the realm of content has become the next frontier for telcos, calling it a cultural and technological change which seems to him like an “unnatural fit”.
But while the US telecom companies are leading the pack, Adderton says Australian operators still have a dated view of the space, specifically calling out Optus for its bungled handling of the Fifa 2018 World Cup.
“Exclusivity of content matters to such a small portion of the population, and it’s just annoying for everyone else. If they think someone’s going to change to Optus just because it has the soccer, they’re delusional,” he says.
“Integrated and bundled content for all is the future of where the telco industry will end up, so Australian carriers need to stop doing stupid exclusivity deals. The amount of money Optus spent on the soccer was just crazy.”
This progression in the content space links into telecom companies and their approach to innovation, which Adderton says is “terrible” and puts many of them at risk of being overrun by smaller players.
While telecom companies provide the infrastructure to allow companies such as Airbnb, Netflix and Uber to operate, the companies are lacking in any innovation themselves. The telcos are also reluctant to partner and work with young startups, he says.
The solution? “Put a bunch of young guys in the basement and tell them their job is to bring the company down, to develop something that will topple the business,” Adderton says.
“Because if the telcos don’t, someone else will. Though I know it’s hard to make a big ship turn, they need to open up their networks and they have to be more innovative in the way they do business.”
NBN a “dead dog”
Looking to the future, Adderton not only foresees the death of the physical sim card, he also believes mobile plans will become infinitely more customisable, with telcos offering over two million forms of pre-paid plans rather than just five.
“People want what they want, when they want. If they want to watch Game of Thrones on the way home, they’ll eventually be able to pay five bucks to switch over to 5G for a few hours so they can watch it with blazing fast speeds, but stay on a slower network for less the rest of the time” he says.
“I live for the day when we don’t have just five plans, but two million, each with different rates and services.”
The founder also foresees the death of the NBN in under five years, labelling the troubled high-speed network a “dead dog”, saying 5G will quickly replace it.
“5G in America right now is quickly replacing cable, so I think we’ll start seeing telcos release unlimited 5G plans to try and gear it more towards the everyday consumer,” he says.