Is 3 UK moving toward a bit-pipe model?


Kevin Russel, CEO of 3 UK, which has taken the open access model to heart by opening up its network to any application, has reset the company's business objectives by stating there will be less emphasis on developing mobile content and a greater focus on promoting mobile email, VoIP and IM services.

The Hutchison Whampoa-owned carrier made the headlines in 2006 when it announced the X-Series offering, a service that, among other things, included an 'all you can eat' data plan and came with Skype pre-installed on the subscribers' terminals. In October, 3 introduced the Skypephone that features a dedicated Skype button.

Since introducing a USB dongle, 3 says that data throughput on its HSDPA network increased sevenfold from October '07 to February '08, and mobile broadband would be a focus area. "But there are some bandwagons 3 is not big enough to jump on", Russell added. "We need to be a more focused company and not get distracted by services such as mobile TV." He also noted the company would continue to follow an own-brand handsets strategy, as this enabled it to offer more disruptive services such as Skype.

3's strategy should be watched carefully as many operators will embark on an open access model as they move into the 4G world. Is this the bit-pipe warning that Vodafone CEO Arun Sarin mentioned during his keynote at CTIA earlier this month? 3 isn't offering its own email, VoIP and IM services. It's allowing partners like Skype, Yahoo!, Microsoft and Google offer these services, possibly pushing 3 toward that bit-pipe model (for some reason the industry likes to use the phrase bit pipe instead of dumb pipe). 3's business model could ultimately turn into one where it is subsidizing devices, carrying data traffic and dealing with customer service.

3, however, says it would rather get a head start over larger competitors with email, VoIP and IM services than get distracted with developing content services. Meanwhile, many operators are talking about becoming "smart" pipes, a term I heard at FierceMarkets' 4G conference during the CTIA show. Sprint is embarking on such a strategy with its WiMAX network. It means operators leverage their assets, acting as both a content and access provider by controlling the customer experience. Third parties may be able to develop applications for the network, but the operator also partners with content providers to create optimized services. It also means the operator can charge based on function, not bits, and prioritize traffic on their networks.

It will be interesting to see how operators approach this open access world. We could very well see a no one-size fits all answer to this and everyone still making money.--Lynnette

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