Student population shaping up to be next battleground among VoIP providers

The beginning of every school year presents an opportunity for telecom providers to target a new segment of the market, a large portion of which is paying for phone service for the first time in their lives. In recent years, this period has seen increased marketing activity by wireless operators trying to grab college and university students away from the wireline companies, and now it could be safe to expect a similar maneuver from VoIP providers. But levels of excitement over this segment by VoIP carriers has been mixed. When contacted for comment, a spokesperson from Primus Telecommunications Canada Inc. said the company doesn’t currently have an eye on the back-to-school market and is not undertaking any special offerings or marketing activities for students. Vonage Canada, on the other hand, is pushing hard to capture students and touting the cost advantages of VoIP to cash-strapped Canadian students who they hope to count as subscribers for years to come. Iain Grant, an analyst at the SeaBoard Group, sums up the difference in attitude towards this consumer segment. "The back-to-school market is an important one for the VoIP providers," he says. "But not as important as it ought to be." While the continued rollout of VoIP to all markets will most likely progress with time, Vonage didn’t want to wait until 2006 to begin enticing students to use their service. "Students represent an excellent market segment for because they typically combine a number of key attributes that make our value proposition even more attractive to them than some other market segments," says Joe Parent, VP marketing and business development at Vonage Canada. "For instance, there is a much higher proportion of high-speed Internet penetration among students than with the general population. Secondly, students are much more accepting and aggressive adopters of new technologies. Third, they can benefit more from many of our features like unlimited calling, portability, and secure web access to control features." Vonage’s current marketing activities stand as proof of their commitment to the student segment. Agreements with their retail partners include a London Drugs franchise where a Vonage adapter is provided with every Apple computer purchased, and The Source by Circuit City is giving away a free Vtech phone with every Vonage service sold. Both initiatives are specifically for the back-to-school season. Also, a year of Premium Unlimited Vonage service is going to each of the seven winners of Future Shop/Best Buy’s ‘Ultimate Dorm’ contest that is running across Canada. Even more specific to their goal, Vonage has an agreement with the University of Western Ontario to promote its services at many of the school’s sporting events, and their product will be available at Western’s Campus Recreation Centre throughout the year. On top of this, the company is creating an on-campus kiosk presence at many universities across Canada and has partnered with an East Coast organization to promote its services to a number of schools in Atlantic Canada, with advertisements for those campaigns due out in the very near future. Finally, the Intern Army from the radio station EDGE102.1 will be visiting more than 20 campuses in the Greater Toronto Area to promote the Vonage service by giving students the opportunity to make free phone calls. Parent says the reasons for all of these activities are to obtain new subscribers, educate the market and create brand awareness. The scope of their marketing efforts should help them reach the latter two goals, but that doesn’t necessarily mean they’ll achieve the first. To understand the student VoIP market, says Grant, you must segment it into three groups: university/college students in dorms; university/college students off-campus; and high school students. And just because there is a need for VoIP service among students, they may not be able to access it. "In the university and college segment there is a significant need for both connectivity – and often connectivity with places (like homes) that are away from the campus or locale of the student – and a need for economy," says Grant. "Without the economy element, wireless would be the major connectivity option, but in Canada our wireless long-distance services are expensive when compared to VoIP. Student budgets are not elastic. This is a fixed-income, fixed-expenditure crowd." This aspect combines with the necessity of having high-speed Internet access in the student domicile, making an IP-based phone an even more logical choice. However, Grant continues: "Most university residences have already done deals with one provider and students are required, should they want high-speed access, to use the services from the existing provider. They get a Bell phone with their Sympatico DSL service. They pay for both." The fixed income that once made VoIP a logical choice now prevents the student from subscribing to it because they can’t afford to pay for multiple phone services. Because of this, says Grant, "We forecast a combo expenditure of wireless (so that students can interact with their friends, and so their parents can call them), and computer-based services such as Skype, and IM voice chat services." The more realistic post-secondary student market then are those who live off campus, and can share the cost of VoIP and Internet service. Grant also mentions high school students as a potential target to add an IP-based phone to their family broadband connection as a way to lessen the load on the home phone and save money over adding a second landline. But it’s in the off-campus market where the long-distance savings of a VoIP line come into play. According to Parent, and the Vonage web site, the Premium Unlimited plan – the one students would be most likely to use – costs only $39.99 a month for the service, unlimited long distance and calling features. "The savings can easily pay for the cost of a high-speed Internet connection," says Parent. Beyond the savings, VoIP service presents options that are attractive to students, and a potential that is very appealing to carriers. Students with VoIP can plug their adapter into just about any Internet connection they can find, meaning they can always make calls on one plan regardless if they are at a friend’s house, at their parents’, or even on vacation. Plus, VoIP makes moving or transferring to another school that much easier. Continues Parent: "Every time a student moves, they not only have to change their phone number, but they have to pay expensive service charges to the telephone companies to connect, disconnect, reconnect their service. With a Vonage service, they need never change phone numbers again, ever. They can chose the number or numbers they want when they first sign up – or port an existing number if they wish – and that number will follow them for as long as they wish. Imagine having the same phone number throughout university, through graduation, your first job, your first home, until your kids go off to college or university and beyond." It’s when VoIP providers imagine a group of teenagers ordering phone service for the first time in their lives and never switching from their carrier that they truly see the importance of the student market.

Student population shaping up to be next battleground among VoIP providers

News | 09/16/2005 4:00 am EDT

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