Feel old? You will now: Blighty's mobile network Three is a teenager
A brief history of Li Ka-shing's feisty challenger network
Russell didn’t find a happy ship. According to a confidential staff survey, “employee engagement scores were at an all time low of 43 per cent… the dominant styles at 3UK were the Aggressive/Defensive (red) styles and Avoidance. All of these results were over the 80th percentile, with Power approaching the 90th percentile.”
This is HR speak for saying staff were unhappy and the management were a bunch of shits.
Russell set about fixing the internal culture where management were evasive and made sure everyone else got the blame for problems. One employee called Russell’s rules “basic social hygiene… keep your word, turn up on time, be clear, open, and honest, address staff directly not indirectly.”
Motorola A920, running Symbian UIQ
The business challenge ahead Russell and his revamped team was even harder to solve. 3 was still fifth in the market, and while it may have been great value, the network was both poor and expensive to run. Worst of all, 3 was a money generation scheme for its rivals: paying 10p or more for each call placed with an incumbent mobile operator. The “caller pays” model had been implemented in the UK with very generous rates for the first operators, as our own Bill Ray explained here, to encourage them to build more infrastructure. By the Noughties, they were bringing in billions. MTRs were also a disincentive to experiment with new pricing models, such as all you can eat.
In 2009 the EU recommended MTRs go, giving 3 the confidence to challenge the regulatory environment. 3 created a campaign called “Terminate the Rate”, enlisting unions and BT to put pressure on Ofcom to change the wholesale regulations. Ofcom eventually agreed (pdf) to cut MTRs gradually over the next few years. Rivals took them to a tribunal, demanding the MTRs go up, not down.
Another deal helped save keep 3, still fifth out of five, viable. In December 2007 it announced a joint venture with T-Mobile (fourth out of five) to to share their infrastructure, MBNL. It was the first of its kind but has been much copied since. O2 and Voda would eventually set up a similar arrangement. That paved the way for a significant expansion in capacity. 3 had long wanted to be a data network and go for scale. The iPhone was the cue to do both. 3 introduced a ground-breaking “all you can eat” one plan to go with its data-centric approach. By 2012 it was selling more iPhones than any other network.
Today, 3 – since rebranded Three, rather than using the digit – is rated as the UK’s most reliable operator. EE, with its greater footprint and superior spectrum holdings, can claim to be faster and cover more people.
Three’s plan is to go from the smallest to the biggest – but regulators have baulked at its acquisition of O2, which would give Three forty per cent of the UK market. Although Hutch’s move for Telefonica’s O2 was announced more than a year ago, it still isn’t a done deal. Perfectly happy with Three being a feisty “challenger brand”, innovating from fifth place in the pack, regulators are less happy with it being the biggest. The European Commission began to investigate the merger in October. Ofcom’s chief Sharon White doesn't like it either. Three has made promises about freezing prices, while quietly grandfathering old plans.
From a reporter’s point of view, Three has consistently been the most interesting to write about: from its car-crash launch, to the surprises it springs. Like the Terminate the Rate campaign, or pre-empting EU regulation with its “Feel at Home” deals, which abolished roaming premiums for Three UK subscribers visiting 19 countries, including the USA, France, Spain and Hong Kong. Here's hoping it stays feisty and consumer focussed after it becomes the biggest network. ®