Three To Cede 3G Head Start?
By Carlo Longino, Fri Jun 25 19:15:00 GMT 2004

There's an interesting post over at Mobitopia wondering what's going to happen to 3 when rivals' 3G networks launch in the UK.

Martin Little's got first-hand knowledge of 3's operations, as he's been using the network for over a year. He's still waiting for the carrier to offer data connectivity and open Internet access, but it seems more interested in focusing solely on video content and calls. He contends that Orange and Vodafone are going to eat 3's lunch when their 3G nets launch in the country, and he's likely to be proved right.

He first points out that the two other carriers will have far greater 3G coverage, and their own 2G networks to fall back on, as 3's coverage is pretty pitiful and its 2G backup from O2 isn't helpful, leaving black holes in the middle of major cities. That's not the only benefit Orange and Vodafone have because of their size -- they'll be able to leverage their relationships and buying power with device makers, as well as compete on pricing, which has been 3's only real competitive metric thus far.

Martin hits the nail on the head when he points out 3's lack of movement on the data front, but the carrier doesn't appear to care. It seems to be content to go after the value-conscious consumer, only competing on how cheap its calls are -- something that's not going to help it raise its ARPU, and by not catering to the corporate need and desire for high-speed, wide-area connectivity, it doesn't have much to offer the business user. Three did little to attract the early-adopter ground by keeping its users inside a walled garden, not to mention its ungainly handsets.

All this makes me wonder, like others before, just how long 3 can hold out, at least in the UK. The comments from users around the world indicate the autonomy with which 3's operations in various countries act, and some are clearly executing more effectively and with more innovation than others. Martin says he wouldn't be surprised to see mmO2 take over 3's UK operations -- an interesting suggestion, and one I won't disagree with. O2 will be the last carrier to fire up its commercial 3G network this fall, and having sacrificed first-mover advantage, it will have to be the right mover, and taking over 3 might not be a bad idea.

But it's hard to see Hutchison Whampoa pulling the plug on 3 UK anytime soon. I get the impression it will continue to throw money at the carrier for some time, if for no other reason than stubborn pride. The company certainly will have been buoyued by its recent jumps in subscriber figures -- but the real question is if those gains can be sustained when other 3G networks, from bigger and craftier competitors, are up and running.