3/12/2008 11:57:00 AM
3’s rock and hard place
Just when you thought it was safe to go back into the contract market, 3 is celebrating its fifth birthday by bringing prices down. Great news for consumers. Terrible for rival networks. It evokes memories of 3’s former COO Gareth Jones being brought into the company after a slow launch and appearing to say: ‘Sod all this technology malarkey. What people really want is cheap minutes and texts.’ His Video, Talk and Text tariff left the market in a state of bewilderment as consumers lapped up the cheap deals. 3 went from a high-end technology brand to a value-brand almost in an instant. A return to the esoteric X-Series posed 3’s continual dilemma: credibility but no real customer numbers, or be a value brand with a big subscriber base but a high churn rate.
This dilemma has underpinned the company’s prospects to move towards breaking even, and consequently look for a sale. Under Kevin Russell’s tenure, 3 has become a far more solid operation, but it is undeniably still stuck as the smallest player struggling to compete in a tough market and consequently generate the profits. Its new cheap tariffs will have the desired effect. Customers will come flocking with the temptation of cutting their mobile bills Ð especially at a time of belt-tightening.
It will antagonise the likes of Orange and Vodafone who cut their prices after T-Mobile launched Flext, but have since been hoping prices had hit the floor. 3 is now going back to a strategy of taking smaller revenues from its customers, while aiming to grow its base. The two things that will be interesting to see now is whether 3 can keep hold of all the customers it attracts and whether the rivals will match 3’s deals.