Hutchison has hired Orange’s former chief operating officer to run its UK 3G operation.
Hutchison 3G, a joint venture between Hong Kong’s Hutchison Whampoa and Canada’s TIW, is the only greenfield operator to be awarded a UK 3G mobile license. It will have a difficult task in gaining market share. The market is already relatively developed, with over 50% penetration, and by the time 3G services launch, this will be over 60%. To succeed, H3G must be able to build a strong brand as quickly as possible, which requires people like Dr Tucker with the vision to promote the operation.
H3G will benefit in the long term from having more available spectrum than any operator except Vodafone. Although analysts expect the extra capacity will not be required to provide customer services for up to ten years, it does mean the company can offset some of its costs by acting as a wholesale wireless carrier for operators like Virgin Mobile. However, its long run strategy must be based around building its own brand and offering value-added services, if it is to recoup the enormous cost of building a 3G network.
To succeed, H3G will have to take more risks than the incumbent operators. However, it doesn’t have a customer base to lose, and has everything to gain. Like Dr Tucker’s Orange in the late 90s, H3G will have to pioneer innovative new applications and services. Its main aim must be to differentiate itself. The UK phone market is already one where people are happy to switch operators if they perceive an advantage, and H3G’s launch can only increase price competition. However, if it is to make significant returns, the company must create reasons for switching beyond just being cheaper.
If Hutchison (which originally founded Orange, before selling out to Mannesmann in 1999) and Dr Tucker can repeat their earlier branding success, then H3G will be able to mount a serious challenge to the existing UK mobile operators.
