Wednesday, February 4, 2015

3 UK CEO: Consumer Demand for Quad Play Still Uncertain

 David Dyson, the CEO of mobile operator 3 UK, told the Financial Times this week that it is still not clear whether consumers actually want quad play services in the U.K. The operator’s parent company, Hutchison Whampoa, is currently in talks to buy Telefónica’s UK operator O2. Purported consumer demand for converged services was one of the arguments put forward by fixed operator BT when it announced its intention to acquire EE, the country’s number-one MNO. Dyson said that although there does not seem to be much demand for quad play now, customers could be encouraged to adopt it in the future if operators are willing to discount individual parts of the converged packages. “It depends how hard companies push it,” he said.

We have written frequently here about growing demand for multiple play packages in many markets around the world and about the mergers between mobile operators and cable providers driven by that demand. Dyson’s statement is certainly a contrarian one, given the general perception in the industry, but he is doing more than just talking. His company is betting on the future of pure mobile service over converged service by moving to acquire another MNO, O2, rather than a fixed operator. EE and BT are pursuing the opposite strategy, following the more conventional wisdom. Cable provider Sky is taking the same approach, interestingly by doing a deal with Telefónica, to offer quad plays using O2’s U.K. network, starting in 2016. 3 UK, on the other hand, not only intends to buy O2 but to keep all of 3’s and O2’s cellular towers in operation after the merger instead of eliminating some to cut costs. This move indicates that 3 views mobile coverage as the most important factor in getting and retaining business. Whether Dyson is right about customer preferences remains to be seen—as do the outcomes of regulatory scrutiny of both the 3–O2 deal and the BT–EE deal.

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week or to contact the Tarifica Research department:

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