[3GScottishUser]

From The Sunday Times (10/12/2006):

HUTCHISON WHAMPOA’s increased focus on the UK operations of 3, the conglomerate’s mobile-phone arm, has added to the pressure on Bob Fuller, the chief executive of the loss-making subsidiary.

3 UK badly missed its financial targets this year, causing its Hong Kong-based parent to put back the deadline for its mobile-phone operations to break even. Over the past two months, Hutchison has replaced Andrew Moffat as 3’s chief financial officer, and brought in Kevin Russell from 3 Australia as deputy chief executive.

Canning Fok, Hutchison’s chief executive, has been spending more time than usual in the UK, as has Frank Sixt, the group’s chief financial officer. This is ostensibly to supervise the launch of 3’s X-series — a flat-rate data tariff that is intended to kick-start interest in the mobile internet.

However, Fok and Sixt will also be able to keep a closer watch on the business. Sixt said UK management had initially blamed the large number of deserting customers on poor-quality handsets early customers received.

“That assessment was a bit superficial,” said Sixt. “Our distribution was not going to the right customers at the right cost. We had less quality in the business than we thought we had. I began to think this may require some pretty serious rethinking.”

3 is taking more control over distribution by building up its store chain.

Countering recent speculation, Sixt said: “We’re not keen to sell 3. After we’ve missed a target, we don’t put the ‘for sale’ sign up.”

http://business.timesonline.co.uk/article/0,,8209-2496130,00.html

[Hands0n]

Sixt said UK management had initially blamed the large number of deserting customers on poor-quality handsets early customers received.

“That assessment was a bit superficial,” said Sixt. “Our distribution was not going to the right customers at the right cost. We had less quality in the business than we thought we had. I began to think this may require some pretty serious rethinking.”


Oh for goodness sake, its enough to make one speechless with rage! That old chestnut again. Us lot who bought in right at the beginning of 3's operation in the UK, paid well over the odds for the early 3G handsets, faced their truly dire CS that still exists in its original form to this day and more - all of this makes us the wrong type of customer!!! Could Sixt in particular and 3 at large not be more offensive to us early adopters?

The audacity of this comment to suggest that it is the Customer's fault that 3 had made a complete balls up of Threepay. The way they offloaded the early handsets on Threepay at prices that even the local street tramp could afford. They drew this market upon themselves, it cost them dear, and it was entirely their own fault. You don't leave your house doors and windows open and then blame the burglars for visiting!!

That it is the Customer's fault that 3's distribution chain, their dealers, exploited all of the loopholes in the contracts to bring in custom with zero-fee contracts or ridiculous rebates. That these practises brought the wrong type of customer!

What on earth did they expect? Are these moguls of high finance so truly inept that they could not properly anticipate that they'd only draw in the custom of those who could [probably] not afford a regular mobile contract? That, and who could not afford or be interested in the additional "premium" [for that read highly priced] content that 3 shovel into the ether?

Add to that, the fact that 3 have repeatedly and steadfastly, until recently, refused to offer full Internet access - claimed by Bob Fuller, the genius of understanding what a Customer actually wants, that 3 Customers do not want Internet access!

In my opinion, 3's current woes are entirely down to Fuller and Co. who have refused to understand the market they were entering, and had no interest in delivering what the Customer actually wanted. Who manifestly do not understand the damage that their Mumbai CS have done to their market reputation, and worse have done nothing to repair that damage. Head in the sand is not a strategy for success, and I feel that Sixt and Russell need a period of introspection followed by a period of significant senior management dismissals. You could drag in almost anyone from the street, moreso from any of the forums, who could do a better job at identifying 3's greatest issues than the morons who currently run 3 UK.

Scathingly critical? Yes, and I believe rightly so. 3 is a company that deserves to be a huge success, you can quote me. Their technology is good, their [3G] network coverage is good. They have achived a great deal and bent the market out of shape and rocked it out of its complacent slumbers after decades of being in such a state. For all of these things 3 is to be praised. However, 3 has been ignorant of its Customer's wants and desires, to the point of arrogance. It has , to its cost, ignored the damage that its Mumbai CS has done. Its marketing strategies have been, in the main, futile and inept.

I really hope that Sixt and Russell are able to make sense of what has happened so far, and are able to make swift repair to this company. I wish 3 well, but significant blood must be let first.

[3GScottishUser]

It does'nt take a geniuous to work out what Fuller & Co did from 2003 - 2005. They had a 'hit & hope' strategy.

3 UK piled massive amounts of cash at dealers who dished out phones to customers who (after cashbacks) paid very little and were naturally going to look for a similar deal when the contract ended. They actually created the 'poor quality customers' themselves!! The big winners were the dealers who managed to convince other networks to follow the trend thus creating massive churn for 3!

Pre-Pay, which accounts for more than 50% of the UK market has been a similar disaster. Lots of dubious quality handsets dumped on customers with ridiculous restricions like 30 day top-up validity on Three-Pay! Worse was to come in the shape of 'We-Pay' which simply drew attention to the high cost of calling 3 handsets due to termination rates and the cost of calls rocketed, meanwhile all the others cut prices and offered better value! The early 3G handsets did'nt help the pre-pay market either as they were much poorer than the fashionable GSM kit that they had to compete with.

3's woes have been compounded by their contradictions. The Walled Garden farce for example! They paid huge sums for exclusive content that only a few could watch! Heavy reliance on video to differentiate themselves was another gaffe! And of course there was (and still is) the notorious Indian customer service provision.

Not long ago 3 offerered lots of minutes and texts more than the rest and that was a massive draw. Things are very different nowadays as the others have created new packages and converged serrvices that often beat 3's once 'killer' sales feature.

From what Sixt and Fok are saying (and doing) it looks like they intend to write off the past and start afresh with their own shops and direct distribution. This is fine but sadly for them others have been moving in that direction for quite a while now and the market is more saturated than ever! It's going to be ever more costly to poach customers and there is no great exclusive service on the horizon.

Sixt and Fok have their work cut out and 3 had to go back to go forward in 2006 and the process will take a good few months to complete. Perhaps being close to the UK is a good thing for 3's management as they can more clearly see what they are up against and be in a position to meet anyone who might care to bail them out of what they have got themselves into.