CallPlus boss admits turnaround dragged

CallPlus chief executive Mark Callander admits it has taken longer than he expected to turn around the chequered reputation the firm gained a few years ago.

Many of the negative perceptions resulted from customer service woes and a disliked cold-calling marketing campaign run from a call centre in India that it hired to try and attract new customers.

But CallPlus has weathered the fall-out to become the country's third largest telco by dint of Vodafone's takeover of TelstraClear and its own long-standing recipe of providing "value"-based calling and broadband plans.

Better known as Slingshot to the vast majority of its 150,000 residential customers, the company claims about 10 per cent of the consumer broadband market and has unbundled 160 phone exchanges.

CallPlus made a conscious decision four or five years ago to reposition itself, Callander says. "It takes a long time to change the perception of a brand. But if you go to online forums like Geekzone you see reasonably positive comments, whereas three or four years ago it wouldn't have been great."

The old perceptions sometimes linger in the media, but not in customer surveys and in CallPlus' churn figures, he says.

That doesn't mean CallPlus has completely stopped courting controversy. A television campaign which compared New Zealand broadband unfavourably with Hungary and which played on East European stereotypes has gone viral - in Hungary - where it has attracted 150,000 views on YouTube. "We had a few interesting responses from the Hungarian community who felt the ads portrayed them in a negative light," Callander says. "It wasn't all negative [but] we took the feedback on board and have changed the ad out out now."

Callander believes CallPlus would need to double its market share to fully benefit from "economies of scale" in the industry.

The challenge, he says, is that internet providers have only three big levers to pull - price, data caps and service - while most are effectively shut out from "half the market" because of the economics of unbundling Chorus' roadside cabinets.

Callander believes Telecom's 49 per cent share of the broadband market shouldn't fall much below a natural floor, which he puts at about 45 per cent, and CallPlus is now starting to pull on different levers. Callander says CallPlus helped trigger the upward spiral in data caps but he also makes capital out of the fact its 160 call centre staff are all based in New Zealand, in Auckland. He boasts customers can get through to a customer service rep in a "couple of minutes".

In a bid to expand its market, CallPlus launched a new low-cost brand, Flip, in August which sells a phone line with 5 gigabytes of broadband data for $49.95 a month.

Callander says Flip has signed up several thousand customers and appears to be reaching parts of the market other internet providers had not. About 70 per of Flip customers had not had broadband before, versus Slingshot's normal ratio of about 10 per cent, he says. "We'd figured it would be about 30 per cent."

At the other end of the spectrum, Slingshot has now supplied ultrafast broadband connections to its first 10 residential customers and CallPlus provides broadband to about 30 per cent of schools, Callander says.

Christchurch-based rival Snap Internet, now believed to be the fifth largest internet provider behind Orcon, yesterday launched a 1 terabyte plan costing $145 a month, with a phone line included.

The monthly data cap is equivalent to the storage capacity of about 20 Bluray disks or the entire hard drive capacity on most new mid-range computers.

Marketing manager James Koers said customers who were signing up to Snap's ultrafast broadband (UFB) plans and those using the latest copper-based technology, VDSL, were demanding larger data caps. The number of customers Snap had connected to the fibre-based UFB network was now in the "low hundreds" he said.

Koers said people would need to be watching a lot of streaming video to eat through 1Tb of data. People sharing flats and homes with teenagers tended to have the largest demand.