Danuta: ‘Four operators is enough’

15 Sep 2004

Danuta Gray (pictured), in her forthright Yorkshire style, is sounding off about the mobile business in Ireland. The target of her ire? Over regulation. “I just don’t think it’s good for business,” she says. “If a regulator tries to micro-manage an organisation by getting down to the level of determining customer service charters when we know we are doing more than they are asking of us at the moment, I don’t think that gets the consumer any further.”

She pauses for breath: “Secondly, we believe it is a competitive marketplace already. Mobile phone penetration is 89pc, and the usage levels here prove that people have adopted mobile technology to a much greater degree than you’ll see in many other European countries. I absolutely believe competition works here.”

The question of whether or not Ireland is a competitive mobile market should be answered once and for all in the next few months. The number three player, Meteor, resurgent after securing a national roaming deal with O2, is hell-bent on making further share gains through aggressive pricing. A fourth mobile network, Hutchison Whampoa-owned 3, could be up and running in just three months’ time armed with a 3G licence and a boatload of cash from its multinational owner.

Continuing on her competition theme, Gray points out: “There are soon going to be four operators in the market. That’s a significant degree of competition for a population of this size.”

Gray has studied 3’s likely entry strategy and sees two likely alternatives. Either 3 will position itself as a provider of cutting-edge services and go after the high-spending early adopter or else offer very keen tariff packages to build a customer base. “I’m not sure which entry strategy it will adopt; it will be interesting to see which,” she says.

Even before the arrival of 3 in the marketplace, however, O2 is feeling the heat from competition. In the quarter to the end of June, O2 added just 4,500 new customers, compared with 17,000 for Vodafone and nearly 23,000 for Meteor. In the same quarter, moreover, its pre-pay customer base fell 2,600. On the latter score, Gray says she is “unconcerned” about what she sees as a temporary dip and that the prepay base will rise again in the months leading up to Christmas. She is also satisfied that O2 has retained its 40pc overall market share in the past year, despite Meteor’s improving performance.

What’s more, she points out, her company has seen a very welcome rise in data usage. At 21.8pc of service revenue, data share in Ireland is now the highest within the O2 group.

One of the factors driving this, she says, is the BlackBerry. The handheld email communicators have been selling in the thousands, says Gray. “For me, the BlackBerry is one of the best examples of something you can turn on and use virtually without the handbook and that’s a model for all these other new services that we launch — mobile gaming, picture messaging, music downloads and so on.”

Faced with 3’s imminent arrival, Gray says that most important strategic issue facing O2 is how to “build a distinctive position in the market” — in other words, how to put some daylight between itself and the competition. “3 is coming. We have to make sure we give our customers the best possible experience so that we retain them … At the same time, we must be able to attract new customers to the network, so we have to stand for something different,” she points out. “What you promise in terms of the advertising and what you deliver have to be consistent — I absolutely believe that.”

This is perhaps why she remains less than gung-ho about 3G and non-committal about the timing of any 3G services. “It is still relatively early days for 3G,” she comments. “We had some 3G services on trial with our business customers earlier in the year but there are still aspects of the technology that we would like to iron out. Until we’re happy there are certain handover technologies that work seamlessly for customers then it’s not going to be ready for the mass market.” For the most part, 3G services will, she maintains, be the same as current 2.5G services, only faster.

Looking further into the future, Gray points out that 3G is only part of the mobile communications journey and not the destination. The technology will graduate to higher speeds within three years. But even then it will still be slower than other wireless technologies currently being trialled by fast-growing broadband providers such as Digiweb and Irish Broadband. Gray insists that “our core is 3G” but says that she and her team are currently exploring to what extent other wireless technologies could be complementary to it. “Basically, we’re looking at whether it makes sense in certain geographies to go for a mix and match of technologies, rather than just pure 3G.”

O2 may achieve this, she says, either by entering roaming agreements with other telcos or deploying these technologies itself. Gray reveals that O2 has been trialling some of these technologies and says it is conceivable that new services could be available based on these non-3G wireless technologies within four to six months.

Gray has shown before that she is more than willing to support any wireless technology that she believes will strengthen the business. Over the past 18 months, O2 has spent more than €2m creating 21 Wi-Fi hotspots around the country. She concedes that some hotspots have failed to perform but that revenues from a number of others, mainly business hotels, are doubling every month. She adds that O2 has no plans to invest in more hotspots of its own but will be looking to extend its coverage through roaming agreements with bigger hotspot operators.

After more than three years at the helm at O2 Ireland, Gray could be forgiven for alighting the rollercoaster that is the Irish mobile market and making her next career move. But nothing could be further from her thoughts. “I very much enjoy the role. It’s a great business and we’ve got lots of challenges ahead. As far as I’m concerned, I’m here to stay for quite some time.”

By Brian Skelly