Tele2 gearing up 3G

[3g-g]

It seems like Tele2 are making headway throughout Europe either in a MVNO formation or rolling out their own networks where possible. They're actively sourcing their own licences where possible and utilising their MVNO where a new network is not possible. Taken from the Budapest Business Journal I've put the relevant Q&A's below.

Q: Tele2 and HTCC separately bid unsuccessfully for a 3G mobile license late last year. That could have led to Tele2 introducing standard 2G mobile services. Why was your bid rejected?

A: Our biggest problem was that there were no guarantees offered to the newcomer that it would be able to use national roaming. Without this the license was too risky economically, and hence less valuable from an economic standpoint.

Naturally, throughout the duration of the license we would have built a network, but to start up with no guarantees that you could really start up the operation, while paying a huge upfront fee, is economic nonsense.

We raised this question during the consultation period, but it didn’t go through in the tender.

Q: When do you next expect the opportunity to offer mobile telephony in Hungary? Will it be possible to enter as a mobile virtual network operator (MVNO)? If so, when? Does the regulatory environment permit it?

A: In Europe, there is no MVNO legislation as such. Where it exists is in a commercial agreement between operators. It’s in Tele2’s interests to make it happen, but it really depends on a lot of factors, and I can’t predict when it will happen.

If you look at the growth path of Tele2 in many countries, we always start with fixed-line and generate
a solid customer base, which we can then address with different products, like dial-up, ADSL [internet] and mobile later on. While we’re still building up the basis, we can start to look at offering additional products.

Q: What’s Tele2’s strategy in mobile infrastructure development?

A: It depends on the country.

In Russia, we have 11 licenses spread all over the country, and there we have our own [regional] network. In Sweden, we have our own network and host an MVNO, as well as being an MVNO ourselves. In Luxembourg, we have our own network, while in Austria we are an MVNO.

We were granted a GSM/UMTS license in Croatia last year, and are now building our network. Wherever it makes economic sense, we investigate the possibility of having our own infrastructure.

Q: Meaning wherever there is a lack of competitors? How does Hungary size up?

A: In Hungary, the fixed telephony market is in a mature stage, and before Tele2 entered the market there was no visible competition in the residential segment.

I don’t want to sound big-headed, but if Tele2 hadn’t entered this market last year, Matáv could have done anything. Why wouldn’t they have? If there’s no competition, then the prices stay the same.

Q: But there has been some competition in the corporate segment.

A: That affects a tiny amount of people – but, of course, a large amount of revenue. But Tele2 is in no way interested in the big corporate users.

Q: Do you see competition from your old employer, UPC, in telephony?

A: Looking at UPC’s market, they have a limited footprint. Tele2 has much larger market potential with every available fixed line.

In the short term, I think we can coexist on the market. Long-term, voice over IP is a technology that people are putting big hopes in.

There are some barriers to change in the customer’s mind. I strongly believe that all technologies will live together, but with changing market shares. I don’t agree with those who say fixed-line telephony will not exist in ten years. There will be new forms of technology that we haven’t even dreamed of yet, which will peacefully coexist.

People will always want to call cheaper, and Tele2 is there to satisfy this need. We never aim to be the highest technology company; we aim for the cheapest per-minute fee. For the customer, it doesn’t matter what’s behind the handset.

[Hands0n]

Interesting article. It brings on the question of whether or not the UK can stand an more GSM/UMTS operators - yet more masts etc. The future has to be MVNO in the UK, I would believe. That would allow the incumbent five to receive revenue, it would further competition for the various market segments (very interesting is Tele2's unambiguous statement that they are not interested in corporate markets). There is huge scope for the Asda approach to selling call minutes (stack 'em high, sell 'em cheap) which Tele2, and others, can do as an MVNO here.

As an aside question - how many mobile ops do you think the UK population can usefully manage with before there needs to be some degree of implosion of the supplier market (i.e. by merger and acquisition). Straw poll your friends and associates to see how many mobile ops they can name or know of - I've tried it and consistently I get the answer "Four" and they name the big four, with only relatively few saying "Five" and including H3 in their count. None say Tesco, Fresh, Easymobile etc.... although these are undoubtedly selling (How? word of mouth?).