Differentation strategy

Telecos face a struggle differentiating their offerings to consumers because connectivity is fundamentally a commodity. Many (especially in the US) have responded by creating confusopolies, a short-term solution to the problem that, like the creation of excessive profits, is being corrected in the market by the emergence of price plans that obviate excessive confusion. However, trying to differentiate voice offerings by coupling them with another equally commoditised connectivity service is no solution at all - hence my puzzlement at the recent Vodafone/BT tie-up (Forbes). Like Virgin's mythical quad-play, this is just multiple commodities bundled together and all it can really achieve is differentiation on price or perhaps a confusopoly that is harder for competitors to unravel. Telecos need to take a leaf out of the financial services book, where essentially identical products are successfully differentiated on the basis of demographic contrivance (Sheila's Wheels, Diamond women's car insurance) or better still a reputation for customer service (HSBC's First Direct). Differentiation that competitors can replicate almost immediately bears little relation to a business strategy.