Hutchison Whampoa has been working hard to ramp up the ‘cool’ appeal of its 3 network, which launched earlier this week, but the Irish face of the company, Dublin-born Stephen Pilkington (pictured), bestows on his role as commercial director a careful and considered approach that appears more sensible than sassy. That said, he is not averse to mixing it up with heavyweight operators he believes are living in a comfort zone.
The detail in 3’s Irish offering not only continues a strategy that has brought the operator some three million 3G customers in the UK, but it also targets what it has identified to be the chinks in the armour of Vodafone and 02.
“To date there has been very little competition and choice in the Irish market that has led to relatively poor value and service for customers,” says Pilkington. “That’s something we’re aiming to change quite radically. Our market research shows 80pc of people would welcome more choice from mobile services and 78pc feel they’re paying too much. We’ve also got feedback from the Consumer Association [of Ireland] on the level of service people are getting. Satisfaction around handset repairs, contact centres and the general level of customer friendliness is quite low. That’s a reflection on the level of competition. The existing operators are not under pressure; they’re quite relaxed.”
The management at 3 thrives on upsetting the cosy markets, some members were around when Hutchison launched Orange, its first foray into Europe as a mobile operator in the Nineties. This was the UK network that introduced per-second billing and bundled tariffs, transforming the way consumers bought their mobile services forever.
Hutchison’s tariffs for 3 are intended to be just as radical. The aim is to be clear and transparent starting with a €25 monthly option that includes 200 voice minutes or 100 voice minutes and 100 text messages or 300 text messages. Customers can make video calls for the same price as voice calls and send video messages for the same price as picture messages. Call charges are fixed regardless of whether the call is to a landline or to a customer on another mobile network.
According to Pilkington, value and service go hand in hand, which is why the company has stressed the importance of its support infrastructure. The company will provide a 24/7 call centre and if a handset develops a fault the company pledges to provide a replacement handset, within three hours in most cases. Alternatively there’s a 14-day money-back guarantee. If a handset is lost, stolen or damaged in the first 12 months, 3 will provide a replacement handset and SIM card for €50. The company is also providing a 24-month warranty on all handsets, beyond the traditional 12-month manufacturer’s warranty.
Perhaps the biggest challenge for Hutchison, highlighted by Eircom’s acquisition of Meteor the day before it launched, is that it’s an unknown brand in Ireland, where Vodafone and 02 are names that are as well established as is the fixed-line incumbent. This doesn’t faze Pilkington who cites further market research that reveals 80pc of Irish customers want more choice. “It represents a great opportunity to come up with something new. Irish people are bored of the old brands. We’ve seen that immediately with the response to our TV advertising. People are dying for something different.”
But how much competition is realistic? Can Ireland sustain four mobile operators? Pilkington says it’s not an unusual number for a country of this size and he expects them to be joined by one or two more entrants as mobile virtual network operators (MVNOs) — providers that piggyback on the infrastructure of existing networks but offer different branded services. Part of 3’s licence conditions state it has to make provision for possible MVNOs to use its infrastructure. At this stage Pilkington says there has been a lot of general talk but no serious discussion with potential players.
The reality is it may make sense for 3 to partner with an MVNO that targets business customers. Hutchison has launched its 3G networks as a consumer offering and shows little serious interest in pursuing business customers. An MVNO in this sector would bring it more revenue but no direct competition.
So with no plans to attack the corporate space, who will be the core 3 customer? “Anyone in their 20s or 30s, or anyone else who aspires to better value and better service and is looking for something new,” says Pilkington, carefully covering as many bases as he can.
By Ian Campbell