Carphone Warehouse has a long association with the MVNO market, so news that it has inked a deal with Three should not come as a great surprise. A decade or more ago the retailer had the Fresh prepay brand. Sir Charles Dunstone was at the helm then. He used to say that when the operators were not playing in the prepay market, he would dial up the volume on Fresh’s marketing; and when they were in the mood for PAYG connections, he would let Fresh drift down again to ? nd its own level. In that way he maintained a nice balance in competing with his main suppliers.
That problem doesn’t exist in this new MVNO. Three is not doing connections through Carphone’s stores (and we don’t think this deal signi?es a change of heart there), but an MVNO is a good way for the retailer to do business with Three in less conventional ways. As for Three, it is hungry for connections at the right price, and will be keen to load up its network, which still bears a lighter burden than O2, Vodafone, or even EE.
We understand the deal has come from insights gleaned through Carphone’s Pin Point comparison system, which has highlighted a gap in the market. Exactly what that is remains to be seen. In all probability it will be at the value end of the spectrum, just as Fresh was.
Often a network’s ?rst MVNO deal is a pump primer, and a keen price is offered to make it hard for a potential partner to say no. Ever the opportunist, Carphone may well have smelt a good deal here. However, its enthusiasm is probably also a sign of growing con?dence in the quality of the Three network.
The deal rounds off what has been a good couple of weeks for the MVNO sector. There has been a bit of bad news around (see analysis, page 9), such as the collapse of the Viacloud and Scottish Southern Energy ventures. But with the Post Of?ce, and now Carphone-Three, it seems to be a case of one step back and one step forward.