Wake-up call coming from 3

12 Jul 2005

When Hutchison launches its 3 Ireland network, existing operators will find themselves up against an aggressive competitor but not in the business space. 3’s chief operating officer Gareth Jones (pictured) is very clear about where the market lies for the 3G operator.

“The corporate market is not going anywhere and there’s not much money in it,” he says. “It’s mostly about people with data cards sitting at airports; it’s three to four years away from when those products become a market.” By way of evidence he says in the UK retailers are discounting data cards by as much as 70pc.

His opinion flies in the face of a perceived wisdom that early adopters come from the business sector. “Old operators favoured a ‘business customers first’ approach because it was easier to do than a mass-market proposition,” he argues.

A Londoner with a forthright style, Jones has made it his business to dare to be different. In an earlier life, back in 1994, he was part of the Orange management team that launched per-second billing and bundled talk tariffs into the UK for the first time. Orange was the first foray of Hutchison Whampoa, 3’s parent company, into the UK mobile market. It would subsequently sell off its share but not before it had upset the network duopoly of Vodafone and Cellnet (now O2).

Jones relishes the role of disruptive entrant, launching into markets where competing networks live in cosy co-existence. “In the UK, before 3, there were four operators that loved each other. It’s not an unusual landscape,” he says. “Regulators realise that sticking in another competitor will shake the market up.

“Operators in mature markets are trying to turn themselves into banks, putting customers to sleep and making it very difficult for customers to move,” he says. “How do you disturb a market that has been deliberately put to sleep by the operators?”

He answers his own question when he launches into the 3 ethos and the idea of “better value”, not to be confused with “cheap”. You don’t have to talk to Jones for too long before you realise how defensive he is about media accusations that 3 is somehow the cheap cousin of the operators: “It’s about delivering better value. Anyone can cut costs but it doesn’t get you very far. We understand the issues and know what needs to be done but it’s about more than having a ding-dong with the operators on price.”

Hutchison became the first UK operator to launch a 3G service when 3 went live in March 2003. Plagued by handset shortages and technical difficulties, the network received a good deal of stick in the first year. Gradually it has worked through the challenges, cornering an 8pc share of the UK mobile market with three million customers. It claims to be the UK’s fastest-growing network and the largest 3G operator in the world with a global customer base of eight million, a figure than it expects to rise to 10 million by March next year.

Despite 3G’s ability to deliver high-speed multimedia services, the irony is that 3 has grabbed many of its customers with some of the cheapest voice calls on the market, a flat rate offering that extends to calls to other networks.

The 3 network has been an invaluable learning curve for Hutchison, according to Jones, one that is unique to a new entrant. His argument is that the other operators are “Nineties companies”, carrying too much baggage with their legacy networks. “They’re like my granddad at the disco,” he says of their approach to 3G.

3’s content proposition differs from existing Irish operators in offering its customers a ‘walled garden’, a controlled environment rather than open access to the internet. “Some 80pc of what you can do on the internet [with a mobile device] is unusable,” according to Jones. “Our services will work and they’re protected. But it’s not a walled garden because if people tell us what they want we’ll try to put it up there for them.”

3 has affiliated ‘managed’ sites, such a Footballs 365, that are available to its customers. He says there is irrefutable evidence that ‘real people’ only to go to four or five sites and warns that a more open network will only encourage viruses. “They are here and they’ll get worse. You try going back to your operator and telling them you’ve got a ruined €500 PDA. They will want nothing to do with you. The way we do it is a responsible stance from a mobile operator.”

While Jones is reluctant to discuss specifics about content and price plans for its Irish launch he says local news and weather are a must. We can also expect Premiership football clips and a range of what it calls “sushi-style” content, short sharp video clips tailored for the mobile medium.

The launch will also provide Irish consumers with their first taste of handsets from NEC and LG. The Japanese and Korean companies have been key suppliers to Hutchison’s 3 network since it launched in the UK and their phones are expected to figure strongly in its Irish launch portfolio.

The current UK range of 12 handsets includes four from NEC, three from LG and five from Motorola. The teardrop-shaped 7600 is the only phone to feature in the range from market leader Nokia.

The NEC 338 was one of the latest handsets to launch in the UK, a clamshell camera phone with a rotating lens to make the most of 3’s video-calling service. Another clamshell, the 616V, has two built-in zoom cameras and a camera light for low-light shooting conditions. Among the LG range is the LG U8120, a camera clamshell that also boasts a built-in music player. Exactly which models will launch in Ireland — and when — is still to be confirmed.

Hutchison could, however, confirm it had invested more than €200m in its Irish network to date. It has also appointed Stephen Pilkington as the man who will head up the Irish operation, an Irishman and postgraduate of University College Dublin. Pilkington has worked for Hutchison for the past five years and has been managing the Ireland network rollout since July 2003 where he will now take up the position as commercial director. Previously, he had been involved in establishing 3 in Austria and other parts of Europe.

By Ian Campbell