[3GScottishUser]

From Brandrepublic (29/11/2005):

LONDON - Gareth Jones, chief operating officer of 3 UK and one of the senior executives credited with the 3G phone network's revival, is leaving the company.

It is understood that Jones, who joined the Hutchison Whampoa-owned company two years ago, does not have another job to go to. According to sources, his departure comes during a restructure of the UK operation.

Jones, a former Orange sales director, was drafted in by chief executive Bob Fuller in May 2003 to reverse the poor performance of the company, which had struggled to make an impact following its launch that March.

The pair moved 3's £40m ad account from TBWA\London to WCRS and then embarked on an expensive strategy of massively undercutting rivals on voice calls to sell its 3G phones. 3's extensive TV advertising included obscure brand ads developed by Jones and his brand team.

Last month 3, which is the UK's fastest-growing mobile operator, having signed up 3.2m customers in less than three years, unveiled plans to become a mobile media company. It is seeking a media agency to sell advertising on its network.

3 declined to comment on Jones' departure.

http://www.brandrepublic.com/bulletins/br/article/530062/3-networks-brand-chief-makes-shock-departure/

[Ben]

It sounds very much like we might be about to see Three change direction! Perhaps Jones doesn't fit well with the proposed media company image. Still, such a high level departure would suggest serious and real change.

I didn't realise that Jones joined two months after launch... I hope Three's presence doesn't recede back to those post-launch levels!

[3GScottishUser]

Well lower commission levels and the end of the 1/2 price line rental deals is on the cards according to the press. We can all speculate but it's not been a happy story at 3 UK lately with dealers sacked, prices increased and the pre-pay product lying in ruins. Jones was an Orange veteran, from the days of Hutchison's ownership. Throwing handsets at the market and giving away lots of minutes and texts for little income has resulted in them attracting customers that are least likely to spend on premium services and most likely to churn wnhen their initial offer expires. The strategy has been a contradiction form it's inception.

It looks like Mr Jones is the first major casualty at 3 UK but I expect there will be more to follow. With the majors now rallying behind 3G and the cashback and reduced line rental offer genie out of the bottle, it's hard to imagine how HWL will now make anything of this venture. I still predict a trade sale in 2006.

[Hands0n]

A change in the top level management cannot be a bad thing. Providing that they install people who actually know how to make one of these mobile network operator things work. Also that they are unfettered and allowed to go about their business without any interference from higher up the greasy pole where in that rarified atmosphere the practicalities of running such an organisation are probably a foreign concept not visible on an Excel spreadsheet!

But who can/will they choose? Who is available with such credentials? Who, already installed in one of the Big Four would take a leap of faith into 3? Who indeed.

What will a mobile network operator that becomes a mobile media company look like? Will it sell to the buying public? 3 need to be much clearer to the punters what this really means to them. For sure, much of their current 3Mln subscriber success is purely down to the tariffs. Forget content, they are capturing customer business by the tariffs alone. Those same customers are then buying content in bundles or a' la carte. But that is secondary to the primary use of the mobile handset, vis a vis making voice calls and sending text messages.

So, the big question becomes "Precisely what kind of customer does 3 Mobile Media ["which is the UK's fastest-growing mobile operator"] really want?". Because if I'm simply not good enough then I and my fellow 3.2Mln customers will go to a mobile network operator that does want our [traditional] business, humdrum as it may be to 3's executive directors.

[3GScottishUser]

Exactly. Agreed.

The 'Mobile Media Company' labelling is nothing more than spin. As a mobile telco 3 has bombed, can't make money and have ploughed billions into a network infrastructure and organisation that just dd'nt manage to deliver the basics let alone the premium content.

What we are witnessing now is a shift in emphisis to confuse, in the hope that the public (and investors) will forget the previous disaster and gamble on 3's vision of the future.

Should we believe them?

My views are generally always based on previous performance and that also weighs heavy on the city.

Did BT try and sell it'self as a 'media network' when it's business switched from voice telephony to Internet provison. It did'nt need to, the market already understands the trends. The same should apply to 3 UK and its sister companies if it really applies, I suspect.

[Ben]

I think this is what they have in mind:

http://www.theregister.co.uk/2005/11/29/3_tv/


3 Italia has become Europe's first mobile operator to own a national digital TV licence after it acquired Italian broadcaster Channel 7.

The Italy-based 3G operator - majority owned by Hutchison Whampoa - is looking to develop pay TV and interactive services for its mobile video network using DVB-H (Digital Video Broadcasting: Handheld) technology. Services are due to begin in the second half of 2006, the company said in a statement. [more]

Magically they've also "found a window in its diary - Q1 2006 - for the possible IPO of 3 Italia" - hoping to bolster their IPO on the back of the acquisition, without doubt.

[Hands0n]

I'd not go as far as to suggest that 3 have actually "bombed" but for sure they need much more customer base to establish a good financial liquidity. You'll know that I am a great fan of the "Stack 'em high, sell 'em cheap" method of doing business. For the longest of times the incumbent mobile ops have behaved like a cartel inasmuch as there is little-to-no price difference in their various offerings. In fact, their tariffs are so obscure as to be as clear as mud to all but the most studious tariff-watcher.

It is only since 3 have been around that we have seen some attractive bundling and tariffing from the "big four", with Vodafone seemingly in the lead and T-Mobile trailing away like a petulant school boy with bottom lip curled for good effect "Don'wanna".

With 3 out of the way [if they truly bomb] the "four" will only resume their old tricks until either named and shamed or regulated into behaving themselves. They and their other PTT mates around Europe have already drawn the full attention of the EU regulators who at the moment are wearing kid gloves as they investigate further.

I dont take much into previous performance in the IT world, things change far too rapidly. And network roll-outs are always prone to extreme difficulty, which subsequently turn into state of the art functionality. Witness One2One and Orange start-ups, how very dire were their network and handset offerings in their first few years of operation. Now one of those two is a standard bearer!

But I am truly concerned at 3's "Mobile Media Company" imagining. I think it is utter folly and that the public simply will not understand what it has turned into. You have to have a very identifiable identity or the punters will walk. I remember well the rescued Norton Motorcycle company which later on bought large-scale into furniture (!!!!!) in the name of diversity. The shareholders and customers fled in droves and Norton disappeared in a cloud of obscurity, never to be seen since nor ever again I fear.

Could 3 go the same way as Norton did? Well, without a viable customer base it most certainly could. And that is the terrible risk that they face by changing their image quite so drastically. Would I buy a mobile phone from that other "Media Company" the good old BBC? Would I eckerslike!

[3GScottishUser]

With the genie out of the bottle and very aggressive MVNO's on the scene it's highly unlikely that competition would be diminished, I suspect.

OFCOM have inherited the 5 network UK situation, but it's only where there are 4 networks that 3 have found an inroad. Being 5th (and in the UK 3 is actually 6th behind MVNO Virgin) with the overheads involved etc amd the commercial pressure from 5 others determined to protect their turf it now seems a 'mission impossible'.