First Utility, considered to be the largest independent challenger to the UK’s ‘Big Six’ energy suppliers, serving 900,000 gas and electricity customers, plans to “undercut the broadband rates offered by the four largest telecoms giants to target the 15 million broadband customers who pay a higher monthly rate for ‘out-of-contract’ rates.”
Ed Kamm, First Utility’s UK managing director, told The Telegraph that it was the same strategy used by the company when it entered the retail energy market in 2008 to offer lower rates than the standard variable tariffs which are still used by 16 million “sticky” gas and electricity customers.
“The parallels between the energy and telecoms markets are striking, with large swathes of households paying far too much for both services. We’ve been successful in unsettling the Big Six in energy and our next target is the Big Four in broadband,” he said.
“This next phase of our business development will see us adding more diversified services to our portfolio while continuing to grow our domestic energy customer base. Broadband is the first step and is a natural extension of the business.”
First Utility aims to become a multi-utility, looking bid to bundling services to gain an competitive edge in the market.
“We relish the opportunity to compete and we don’t shy away from a challenge. It’s who we are as a brand. We fight the difficult fight,” said Mr Kamm.
The Telgraph notes that the one-stop-shop approach has already been adopted by smaller, niche players including rival energy challenger brand Ovo Energy, which has also launched a broadband offering.
Toby Siddall, a managing director with Accenture, predicted last year that the market would be “ripe” for a surge in multi-utility offerings.
“Whether it’s utilities or energy companies branching into telecoms and broadband, or whether it’s the entertainment and telecoms companies looking to go the other way … we will see a more intense battle for the key ‘value-adding’ relationships in a connected home,” he said.
Image credit: First Utility