3UK

3 slashes MiFi costs, as vendor warns of poor sales volumes

Paul Rasmussen — Wed, 04 Nov 2009 11:26:39 -0500

Hailed for its innovation at launch, the UK operator 3 has now announced big price cuts to its MiFi (mobile Wi-Fi) offering. The MiFi package, which enables users to share their mobile broadband between multiple devices by creating a personal Wi-Fi network, has been reduced in price by around 33 per cent for one month contracts as well as pay as you go.

This move comes as Novatel, one of the pioneers of MiFi devices, saw its share price crash by nearly 30 per cent when it warned that MiFi sales were likely to be flat or slightly down in Q4, compared to Q3.

Some industry analysts have previously warned that the MiFi device was too expensive and was vulnerable to threats from manufacturing giants such as Huawei. Also, Marvell, which makes the MiFi chipset, has already shown it integrated into a handset, suggesting that the market for dedicated personal WLAN products could be a short lived one, before the capability is incorporated into other units.

Regardless of the likelihood of Chinese vendors entering the market, Novatel's old rival Sierra Wireless recently announced plans to expand into the personal Wi-Fi sector. This promoted Nick Agostino of Research Capital, to comment: "With slower uptake and increasing competition in this category from Huawei and soon Sierra, our concerns for the longevity of the category are raised, as well as near term implications for Novatel."

For more on this story:
Rethink Wireless

3UK says data exceeds 90% of network traffic

Paul Rasmussen — Fri, 30 Oct 2009 14:29:58 -0400

Having been forced to adopt an innovative approach to the mobile market by its lack of size, the CEO of 3UK, Kevin Russell, claims that data now accounted for 94 per cent of all traffic across its network, compared with three or four years ago when it was around 15-20 per cent.

Being the No. 5 operator in the UK, 3 has taken a radically different route to gaining subscribers by actively promoting data services, such as mobile VoIP, that have been shunned or blocked by the other much larger incumbents. According to Russell, the rapid increase in data traffic has been due to the growth in internet services such as Skype and MSN. "For example, the number of Skype minutes being used has increased by 6,600 per cent since 2006, from 90,000 to 600 million minutes."

Despite the upheavals that have already occurred within the industry, Russell believes that there will be ‘more changes in the next five years than we have seen in the previous 15'. "There will be a tsunami like wave of change coming, which the whole industry will have to adapt to."

For more on this story:
Mobile Today

UK ripe for mobile network consolidation – page 2

Keith Mallinson — Tue, 29 Sep 2009 17:13:32 -0400

Significant problems remain with two issues: control and branding. With partners' desire for equality, there is by definition no controlling shareholder. In absence of this, the JV agreement will stipulate, among other things, dividend policy with 90 percent to be distributed to shareholders. That will avoid the pickle that Vodafone is in with no cash flow from its 45 percent stake in Verizon Wireless in the U.S., but it is a recipe for management gridlock. Instead, agility is required. It is difficult to predict what the future holds and how the interests of the shareholders might diverge. Deferring the decision for 18 months on whether or not and how to consolidate brands reveals the JV is already having difficulties with the weightiest of decisions.

The competition authorities in the UK and Europe might attach some strings or at least undertake a thorough review prior to approving the JV. There is so much infrastructure sharing in the UK that competition might be affected. T-Mobile shares its 3G network with 3UK. Orange announced RAN sharing with Vodafone, although it seems only mast sharing has occurred. Instead, Vodafone and O2 are sharing infrastructure. These arrangements, including the provisions for folding them up, are the kinds of things the antitrust authorities will likely review. If the JV is allowed, it would be difficult to justify denying H3G, with around 7.5 percent market share, the right to be acquired by Vodafone or O2. This, however, would limit the market to just three network-based competitors.

The proposed new JV stirs memories of the sorry tale when FT and DT combined their international fixed service offerings to corporate customers in the mid 1990s. That old JV was named GlobalOne. DT and FT even arranged cross-shareholdings to consummate its partnership. It was actually a bit more complicated because Sprint also joined with a $3 billion investment by FT and DT. Within five years from start to finish the failed partnership was dismantled. Thankfully the strategic logic is much better this time in UK mobile.

The new mobile JV's integration will be a walk in the park in comparison to T-Mobile's rumoured desire to acquire Sprint in the US. Sprint is still floundering with the legacy of disparate mobile network technologies, brands, marketing strategies and organizational clashes with its acquisition of Nextel in 2005. Its diversification into WiMAX with Clearwire makes matters worse. Sprint Nextel is suffering massive customer losses while market leaders Verizon and AT&T are still enjoying significant additions. With its severely depressed stock price and market capitalization at only around $11 billion Sprint Nextel might go for a song; but there's no quick or easy fix, with or without T-Mobile USA.

Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007.

All change in UK mobile market

Ian Channing — Wed, 09 Sep 2009 12:08:24 -0400

After months of speculation over possible suitors, the fate of T-Mobile UK has been settled. Deutsche Telekom, owner of the struggling UK mobile operator, is forming a 50-50 joint venture with France Telecom subsidiary Orange UK. The new JV will be the largest mobile operator in the UK with a total customer base in excess of 28 million, equating to around 37 per cent of the UK mobile market.

The deal completely changes the dynamics of the UK mobile market, forcing current leader Telefonica O2 and Vodafone into second and third place with minnow 3UK bringing up the rear. The new entity had combined revenues of approximately £7.7 billion in 2008. Existing branding will continue for the next eighteen months whilst the two companies develop and agree on a new corporate brand.

The two parent companies are committed to the joint venture for three years, after which one of them can buy the other out.

On the financial side, Deutsche Telekom is putting T-Mobile UK into the JV on a cash-free, debt-free basis, adding in T-Mobile UK's 50 percent holding in its 3G network joint venture with Hutchison and with gross tax losses carried forward of at least £1.5 billion. France Telecom is putting in the whole of Orange UK including £1.25 billion of intra-group net debt in order to equalise the value of the contributions to the joint venture. Orange UK's fixed assets are part of the deal.

The intention is to realise savings of £445 million a year from 2014 onwards but there will need to be expenditure of up to £800 million in the intervening period, mainly caused by the decommissioning of cellsites, rationalisation of retail outlets and streamlining of operations. However, there will be significant economies in capital expenditure through network integration and unification as well a joint 3G coverage expansion. The two companies believe there is the potential to save up to £620 million in capex on a cumulative basis in the period up to 2014.

Currently T-Mobile UK has around 10,000 2G base stations with Orange having some 13,000. The two companies also have around 7,000 3G base stations each. The plan is to upgrade all the 2G sites to support 3G, a process which T-Mobile has already begun, with the long term aim of the JV having between 14,000 and 16,000 multiple use base stations.

Deutsche Telekom and France Telecom will spend the next two months carrying out due diligence with the intention of presenting the new company to UK regulator Ofcom and the European Commission at the end of October.

It is not expected that Ofcom will raise any objections although as this situation has never previously occurred in the UK the approval process may take as long as six months. There is also the possibility that Ofcom may impose some stringent conditions, possibly requiring a commitment to expanding rural broadband coverage. Concerns have been expressed that the deal will reduce consumer choice and perhaps increase prices but the consensus is that the UK market was over-competitive and a reduction in the number of players is likely to be good for customers in the longer term.

T-Mobile UK's MVNO deal with Virgin Mobile is already at an end as the latter has evoked the ‘new ownership' clause in the contract. The Radio Access Network sharing agreement between T-Mobile and 3UK is unaffected and is likely to continue under the new company.

For more on this story go to The Register and Cellular News

3 prepares to launch Wi-Fi femtocell

Paul Rasmussen — Wed, 02 Sep 2009 13:43:00 -0400

Never afraid to pursue the unusual, 3UK will launch its mobile Wi-Fi device next week, that it claims will make mobile Internet surfing affordable. The device, labelled MiFi, replicates some of the features of a femtocell by enabling Wi-Fi devices, such as laptops, to connect to 3G networks without the need of a dongle.

The pocket-sized MiFi device, which firstly requires a 3UK SIM card to connect to the 3G network, emits a Wi-Fi signal and can connect a handful of Wi-Fi devices to the cellular backhaul network. Unlike dongles, no software is required for Wi-Fi devices to make the connection to the 3G network

The company claims the pricing of the MiFi device and data tariff has been positioned to attract users wanting to create their own Wi-Fi hotspot to enable a variety of Wi-Fi devices to be connected. The first plan is the 'Broadband 5Gb 1 month', a one month contract which includes 5Gb of data at a cost of £15 a month, while the wireless modem will cost an additional £69.99.

For those willing to pay an upfront charge of £99.99, then the 'Ready to Go' kit includes the MiFi wireless modem and 3Gb worth of data that can be used over a three month period. Once this data has been used up, the modem can still be used on a Pay As You Go basis.

Marc Allera, sales & marketing director at 3UK, said that the MiFi concept was the future of Internet access on the move. "We're bringing it to customers at price points that make it accessible and affordable."

For more on this story:
Telecoms.com and 3G and this Release

3, INQ and Spotify draw closer

Paul Rasmussen — Fri, 21 Aug 2009 13:50:45 -0400

The music streaming service Spotify has taken a further step into the mobile arena having agreed to accept additional financing from the owners of 3, Hutchison Whampoa. 3UK is already in negotiations with Spotify about prebundling the service on its mobiles.

While the level of investment from Hutchison Whampoa has not been disclosed, Spotify has already raised between US$ 30 million and US$50 million from other backers including music labels. However, the new money has been enough for Hutchison Whampoa to gain a seat on Spotify's board of directors, which will be filled by Frank Meehan, the CEO of INQ Mobile, which is also owned by Hong Kong-based Hutchison Whampoa.

According to Meehan, his move is intended to intensify Spotify's position in the mobile space, after Spotify developed a yet-to-be approved application for the iPhone. "I will be taking a full board position and will be very focused in helping Spotify become a success in mobile."

This appointment has also triggered speculation that Spotify could convince other operators to carry the INQ handset once the music service has been proven with 3, although the company has announced plans to support Nokia's S60 platform and Android.

For more on this story:
The Guardian

3UK and Spotify close to mobile music service agreement

Paul Rasmussen — Fri, 07 Aug 2009 12:12:21 -0400

The UK's smallest, but most innovative, mobile operator - 3, is close to agreeing a deal to distribute Spotify's streaming music service to the operator's 4.4 million subscribers. If the negotiations are successful, then 3 could be seen as again out manoeuvring its much larger (and slower moving) UK competitors, and gaining Spotify's free music service to use as a customer acquisition and loyalty tool.

According to insiders, 3 is considering a variety of potential deployments for Spotify, including pre-loading the app onto new handsets and making it available to download for 3's existing subscribers.

The UK operator has a track-record of working closely with digital service providers, and perhaps recognises that it might be troublesome for Spotify to establish a partnership with another operator because of their existing commercial agreements with other music service providers, such as O2 and Apple. Ongoing speculation has surrounded Spotify's submission of its iPhone app to Apple last month, with some observers predicting it would be blocked because of fears it will cannibalise iTunes' sales of digital downloads.

An indication of Spotify's mobile music intentions became apparent in March this year when it initiated a campaign to look for mobile apps developers for the iPhone, S60 and Google Android platform.

For more on this story:
NMA

T-Mobile UK: D Telekom seeks asset swap as against sale

Paul Rasmussen — Fri, 03 Jul 2009 12:10:17 -0400

As Europe's major mobile operators refuse to comment on any formal interest in acquiring T-Mobile UK, the owner of this troubled company, Deutsche Telekom (DT), has wrong-footed potential bidders by leaking information that a swap for a comparable mobile operator in central or eastern Europe is now the preferred route.

Insiders claim DT's CEO, René Obermann, is keen to avoid a sale of its UK subsidiary, given the doubts that this would spark over the company's ambitions to remain a global player. Early speculation has placed Vodafone Turkey as a possible candidate, albeit that Vodafone has invested heavily and failed to achieve a satisfactory return in this country. However, such a move would nicely complement Greece's OTE, which DT acquired recently.

While O2 Telefonica and Vodafone are reported as being keen to negotiate with DT--with FT Orange slipping off the leader board, analysts are beginning to question the value of what T-Mobile UK has to offer. While the company has around 16 million customers, it is largely made up of an unstable base of prepaid consumers who can switch carriers easily to chase the cheapest or best value plans. T-Mobile also generates around 45 per cent of its cash flow from its MNVO deal with Virgin Mobile, a deal that could easily evaporate if a new owner ruffled Virgin's sensitive feathers.

However, a merger with its network sharing partner in the UK, 3UK, has apparently been squashed by DT. Perhaps the logical sense of this deal stumbled when DT indicated that it was looking for a minimum of €3 billion for its UK subsidiary.

One suggestion for the intense interest by O2, Vodafone and Orange in bidding for T-Mobile UK is to spoil the ambitions of the others. This could lead to the winner overpaying while the losers then complain bitterly to the regulator in an effort to confuse and delay the acquisition. The ‘losers' could then attack the unsettled T-Mobile subscriber base with attractive offers and packages.

For more on this story:
The Guardian and Financial Times

Rumour Mill: T-Mobile UK not for sale (again!)

Ian Channing — Wed, 17 Jun 2009 12:08:44 -0400

Deutsche Telekom has once again been forced to deny rumours that it is negotiating the sale of its troubled UK operation T-Mobile.

Since the beginning of the year there has been considerable speculation the German telecoms giant was trying to dump T-Mobile UK, with Orange, 3UK and an assortment of MVNOs and Middle Eastern ‘white knights' being nominated as buyers at different times. DT chief executive Rene Obermann fuelled the rumour mill by outlining plans to take the UK business forward whilst simultaneously talking of the need for consolidation in the overcrowded UK mobile market.

There is little doubt T-Mobile is a drain on its parent, which had to take a EUR1.8 billion writedown on the UK operation in the first quarter of 2009.

For more on this story:
- go to Total Telecom and The Wall Street Journal

INQ plans more handsets, and looks beyond 3UK

Paul Rasmussen — Wed, 10 Jun 2009 14:47:35 -0400

Following the success of its Skype handset, INQ has announced it plans to release three new phones in 2009 and is in talks with several operators on distributing its social mobile handsets by 2010. The company maintains its sub-£150 handsets have proven their ability to boost data revenues among younger Facebook users.

According to INQ's CEO, Frank Meehan, the company is already negotiating with other UK operators and by 2010 plans to sell phones on operators other than 3UK--albeit that INQ is owned by 3's parent company, Hutchison Whampoa. Meehan claims Windows Live Messenger usage is around four times greater than on other 3G phones on the 3UK network, with around 50 per cent of INQ1 customers accessing the service every month. Skype is used by 19 per cent of the INQ1 base.

The company said it also plans to broaden its handset range in 2010 and intends to expand into Asia, the Middle East and Latin America. Meehan added: "We are doing well--the Skype phones and INQ device have sold 700,000 so far. The next Skype phone will do well based on that."

For more on this story:
Mobile Today