By Joel Gibson
If your telco provider offers you an energy plan, or vice versa, should you take the offer?
It is a question we’re going to have to answer for ourselves more and more, as utilities, banks and even airlines are moving to offering multiple products to try and “own” more of their customers.
Big brands have to choose between three options when they want to offer a new product:
- Build it themselves;
- “White-label” it, which means putting your brand on someone else’s product;
- Buy a smaller business that is selling the product already.
The “build it, and they will come” option seems to be the hardest.
It might look relatively simple for a telco to build an energy plan, or vice versa but, in reality, successful businesses have years of hard-won institutional knowledge and experience that is hard to replicate.
As a hypothetical example, some consumers might be more inclined to trust “Telstra Home Loans” if they knew the telco giant was backing them. However, history suggests they might get a better service if Telstra had either bought a tried-and-tested home lender or slapped its brand on one.
Telstra is about to test that theory.
The next big “build it, and they will come” experiment is the looming launch of Telstra Energy.
The telco has said it will start offering electricity to some customers by July, and has hired former Powershop chief executive Ben Burge as head of energy to roll out the new business.
Telstra is pursuing a plan to sell 100 per cent renewable energy to differentiate itself from electricity competitors AGL, Origin Energy and EnergyAustralia – all businesses with investments in fossil fuels.
Commonwealth Bank (CBA) is also moving into green energy but has instead taken the “buy” approach to dipping its toe in the market, investing $20 million in Amber Energy.
When Origin wanted to sell broadband, it started by building it in 2018. However, it teamed up with Aussie Broadband last year and switched to a “white-label” approach.
AGL already offers customers a $15 a month discount on its NBN plans, plus a year’s free Amazon Prime membership (valued at $59). To do so, it bought regional telco Southern Phone in 2019 and has since built-up the business under the AGL brand.
CBA is also making moves in the telco space by acquiring 25 per cent of More Telecom and now offers its customers a 30 per cent discount for their first year of NBN.
Meanwhile, the biggest “white-labeller” in the country is Qantas, which offers everything from insurance (backed by NIB and Auto & General), credit cards (Citigroup), and energy plans (Red Energy). However, using this strategy does not always work.
For example, EnergyAustralia offers customers 10 per cent off its NBN plans but, until recently, it also offered white-labelled Hollard Insurance products via its “On by EnergyAustralia” platform. However, those insurance offers have since ceased.
So, what can the man in the street take away from all these corporate machinations? Simply that if your telco offers you energy or vice versa, it pays to check who is providing the service. That is often who you would be dealing with once you have signed up.
Should you buy NBN from your bank, energy from your telco, or insurance from an airline?
In the end, all that matters is: how does the offer measure up, who is providing the service, and can you get better value for money by switching to a different provider?