Hutchison 3G, the mobile operator likely to be the first to offer third generation services outside Asia, plans an aggressive pitch to consumers that will threaten its rivals’ margins. The operator, which is controlled by Hong Kong conglomerate Hutchison Whompoa, is considering simple, low-priced, flat-rate voice call charges for its UK launch this year.Written by The Financial Times for PMN Mobile Industry Intelligence.
Hutchison is in a strong position of its own making. As it has already pointed out in no uncertain terms, it has nothing to lose and everything to gain from being a greenfield 3G player. If it feels it can gain market share by undercutting rivals’ voice tariffs, there is no danger of cannibalising an existing business of its own. W-CDMA is more efficient at handling voice than existing GSM systems, so Hutchison should be able to support lower voice pricing over the long term.
The difficulty will lie in keeping the pricing simple when people roam off its 3G network and onto O2’s 2G infrastructure. The benefits of marketing a flat-rate or fixed-price voice service will be all but negated if there are complicated 2G roaming charges for the user to digest – just look at the negative impact this has had in the US.
The real fear among Hutchison’s rivals, however, is the possibility that the newcomer may choose to commoditise voice entirely and rely on data revenues for growth. Could it succeed with a business model which established a flat, say GBP 20, monthly fee for voice and charged data services on a subscription and transfer basis?
Originally published by PMN Mobile Industry Intelligence, the subscription-based analysis and insight platform founded by Marek Pawlowski.