EE's network still ahead on quality, but Three is gaining ground

News that BT had finally agreed on definitive terms to buy EE for £12.5 billion dominated technology and business news headlines last Thursday and launched a regulatory process that is expected to take at least 12 months.

For sure, the BT deal does not hinge on concerns relating to a reduction in competition on the mobile market--that will be a concern if and when Telefónica and Hutchison Whampoa agree terms on the proposed merger of Three UK with O2 UK. Regulators are expected to focus more on the combined spectrum assets of BT and EE, as well as BT's current role in providing mobile backhaul services via its fibre network.

As well as speculation on what concessions may or may not be required, the merger of the triple-play giant with the UK's leading mobile operator has put competitors under the spotlight, adding pressure to those without a coherent converged strategy. BSkyB has now also said it will launch mobile services next year, while Vodafone UK is preparing a bigger onslaught on the consumer home broadband market.

Three UK remains alone in defending a mobile-only strategy, continuing to question the appetite of UK consumers for so-called quadruple-play services. While some believe that mobile-only is no longer a viable approach and see converged offerings of fixed and mobile services as the way forward, it must not be forgotten that a merger of Three and O2 would create the UK's largest mobile operator by subscribers (31.5 million).

What's more, the Three group has proved itself a canny marketer in the past with a farsighted vision of how much mobile data consumers would actually want. It has always focused on large data packages, and in the UK continues to provide an aggressive "all-you-can-eat" message.

The company is also starting to catch up on EE in terms of its network quality, placing more pressure on its rivals as their attention is diverted to other strategies. According to the latest network tests by RootMetrics carried out in the second half of 2014, while EE won five out six categories outright, it tied for first place with Three UK in network reliability testing.

RootMetrics was in fact clearly impressed by the progress Three UK has made with its 4G network, despite being the last of the four operators to launch the service. The company, which specialises in testing the quality of networks in terms of their performance, said Three's second-place finish in network speed at the UK level was particularly noteworthy, with a consistency in both urban areas and rural spaces that helped it outperform O2 and Vodafone.

"EE might have the lead at the moment, but the race with Three is a close one. Three's continued strong performances make it another strong contender for consumers looking for performance at the UK level," the company said.

The report came a day before EE also unveiled plans to invest a further £1.5 billion between now and 2017, extending its 4G network to more than 99 per cent of the population and 90 per cent of the UK's geography.

While rivals push quad-play onto their subscribers, it will be interesting to see how Three UK will evolve its highly aggressive, mobile data-focused pricing strategy in future. With O2 also added to the mix, the group could provide an interesting counterpoint to the quad-play argument in the battle for UK consumers' hearts, minds--and wallets.--Anne

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