[Article] Eircom plans new assault on mobile market

MadsL

Article from the Sunday Times

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Ireland: Eircom plans new assault on mobile market
by Tom McEnaney



EIRCOM is set for a dramatic re-entry into the mobile phone service in the next 12 months.
The firm has hired McKinsey & Company, an international management consultant, to assess its strategic options and make recommendations. McKinsey has assigned three senior consultants with experience of the telecommunications market to compile the report. It is due to be presented to Eircom by October.

The board is then expected to decide on its strategy relatively quickly and to begin discussions with potential partners by the end of this year.

When Eircom sold Eircell, its mobile phone subsidiary, to Vodafone for €3.5 billion in 2001, it agreed to stay out of the mobile phone market for three years. That non-compete period expires next May. Eircom is keen to launch its mobile service as soon as possible and is aiming to be in position as soon as the non-compete ends.

With mobile phones already weighing down the pockets of seven out of every 10 Irish people, in a market dominated by Vodafone and O2, Eircom’s re-entry is unlikely to be straightforward.

It is understood that the Eircom board, which is chaired by Tony O’Reilly, has already decided in principle to compete aggressively on price.

Industry sources said there were three ways for Eircom to re-enter the mobile market. Hutchison Whampoa, which won a licence to operate a third-generation (3G) mobile service in Ireland, is required to allow competitors, known as mobile virtual network operators (MVNOs), to use its network. Once Hutchison Whampoa launches its service, Eircom could become an MVNO.

O2 and Vodafone are not required to give competitors access to their mobile networks. Industry sources, however, said the telecoms regulator could decide that opening up the two main networks would be one of the best ways to improve competition in the market. Mobile phone charges in Ireland are among the highest in Europe.

The second option open to Eircom would be to acquire Meteor, the third mobile phone operator, which has struggled to make inroads into the market since its launch. Providence Equity Partners and Soros Private Equity Partners, two of the shareholders in Eircom, are also shareholders in Meteor.

Enda Hardiman, an Irish telecoms consultant, said Meteor had made two basic mistakes: it did not have enough sites and aimed at the “bargain basement” end of the market.

Eircom, he added, could leverage off its existing network and aim at higher-spending customers. Hardiman, however, believes that becoming an MVNO is a more attractive option.

“If I were in Phil Nolan’s (the chief executive of Eircom) shoes, I think I’d go the MVNO route.” Hardiman said Eircom might be better advised not to attempt to compete on price as high-spending Irish individuals and companies are not particularly price-sensitive. Instead, he suggested the company should compete on service.

“The level of customer service offered by the existing players is not particularly good and their offering is not particularly imaginative. This is where Eircom could score well.”

Sources said Eircom is more interested in leveraging its brand than its network, as the former would require a relatively low level of investment.

The third option open to Eircom would be to acquire the remaining 3G licence from the telecoms regulator. However, industry sources said the €40m price tag on the licence makes any shopping trip to the regulator’s office extremely unlikely.

One product that Eircom has already test-marketed and is planning to offer is a mobile phone that connects itself to the fixed network once it gets into range of a customer’s home or office. This device would operate in much the same way as a wireless phone when in the office, with calls being charged at the fixed-line rate.

However, once it moves beyond a certain distance of the home or office it operates as a standard mobile phone attracting normal mobile rates.
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MadsL

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The level of customer service offered by the existing players is not particularly good and their offering is not particularly imaginative. This is where Eircom could score well.

Someone should email this 'consultant' and explain exactly how it is that there are thousands of customers who wouldn't touch eircom with his dick. I will tomorrow, but it's too late now to get my spleen up to full force vent.

dahamsta

It would be wonderful if people were to come together to start an educate-the-consumer campaign about this before it even got off the ground.

adam

Mr E

It is understood that the Eircom board, which is chaired by Tony O’Reilly, has already decided in principle to compete aggressively on price.

I suppose theres a first time for everything.....

- Dave.

El_MUERkO

“If I were in Phil Nolan’s (the chief executive of Eircom) shoes, I think I’d go the MVNO route.” Hardiman said Eircom might be better advised not to attempt to compete on price as high-spending Irish individuals and companies are not particularly price-sensitive. Instead, he suggested the company should compete on service.

We are price0-sensitive u c**ts, we get shafted every time we walk out the door and we know it :mad:

/plans revolution

Tazz T

If they buy Meteor I'm switching network.

spongebob

Originally posted by MadsL
Article from the Sunday Times
“The level of customer service offered by the existing players is not particularly good and their offering is not particularly imaginative. This is where Eircom could score well.”

That consultant is a Gobsh1te of the highest order. Imagine trying to train Biddy to explain bundles of minutes to people.......OMFG

I suspect that Eircom will outsource the Customer service to a vanilla call centre, they are totally incapable of managing good customer service if left to their own devices.

As to Meteor.....Eircom have the sites and would get Meteor cheap. I find that Meteor have very good customer service department, they are by far the most pleasant and helpful bunch I have dealt with personally which takes care of that.

Having soreted out the 2G end of things which would be where the money is for the next 2 or 3 years, they can still avail of MVNO status from Hutchison anyway.

My 2c is , Eircom buys Meteor and rebrands Hutchison 3g as Eircom 3 g , then they have to go and buy this here Domain off Adam :D

M

dahamsta

They'd only pick up Meteor cheap if Hutchison have no plans for it though. The price could get inflated rather quickly if there's a bidding war between the two, and of course if Meteor ever actually get their way on sharing O2 and Vodafone's network, that'll push the price up even higher. Interesting times ahead.

Hey Eircom marketing heads? <WHISTLE> You'd better start snapping up them -sucks.com domains quick boys! You can use your proxies in prem group again!

adam

dahamsta

Speaking of MVNO's...

BT climbs into bed with T-Mobile
By Drew Cullen
Posted: 21/07/2003 at 10:20 GMT

BT is to set up as a full-blown mobile virtual network operator (MVNO) on the back of a deal with T-Mobile. The company will go toe-to-toe with the likes of Vodafone and its former subsidiary, mmO2 from next month, The Business, a UK Sunday newspaper, reports.

Last year, BT re-entered the mobile business, buying airtime from its former mobile division, mmO2, to provide services for its corporate customers under the BT brand. So it is unclear if T-Mobile is a complement or a replacement.

But it is easy to see why T-Mobile may have plenty of excess network capacity to flog to BT. In Q1, 2003 net connection figures, helpfully supplied by Virgin Mobile, T-Mobile's net connections were -487,00. Virgin Mobile net connections were up by 253,000; 02 by 98,000, Vodafone 76,000 and Orange, 1,000.

[...]

bk

Interestingly this ties in with the rumour that Eircom want to split into a retail company and a Loopco and then for Eircom retail to become a full services company.

This plan of theirs with a mobile phone that can act as a landline when near a base station would be very popular with business and home users and would probably help stop the erosion of people to the mobile companies.

MadsL

It just occured to me that if eircom are looking to enter the mobile market (again) that someone made the very dumb move to sell/close all the retail stores!?!

sceptre

Originally posted by MadsL
It just occured to me that if eircom are looking to enter the mobile market (again) that someone made the very dumb move to sell/close all the retail stores!?!

Perhaps. At the same time most of the retail stores are rather large for something like this. Getting their phones into places like the Carphone Warehouse would be a start before going the Vodafone/O2 route and buying a chain with stores the size of public toilets.

They could always do the whole thing on the ultra cheap: get phones into non-affiliated chains, get pay-as-you-go phones into Dixons/Easons/Tesco and push the whole ordering process for the rest over the Net and cut out the middle man as much as possible.

The latter would be a new departure for them as they would have to compete very strongly on price to get anywhere in the market - they've always relied on the advantage of a headstart monopoly for almost every venture they've ever taken on. By selling over the Net they would for the first time be dealing with a majority who know what they're buying and why, aren't pushed about the smiley chap with white teeth or the happy girl with big, er, hair in the brightly-coloured phone shop and just want perfect customer service and quick delivery, neither of which are concepts that our phone supply behemoth has ever understood. With a sea-change in attitude like that they may as well go the whole nine yards and offer good CS on 1901 as well.

thegills

As to Meteor.....Eircom have the sites and would get Meteor cheap

They don't really as they sold the sites to eircell way back. They have access to about 110 sites of which maybe 10% are in the 3G license coverage area. They have hundreds of exchanges if they wanted to build their own towers.

My guess is that they will only sweat the assets they have and not look to incest too much CapEx; which amounts to their brand and their fibre. They will most likely offer backhaul to H3G, if ESB don't get in 1st, or else become an MVNO selling products through a 'Tesco's' if they don't become an MVNO themselves.

thegills

seamus

Originally posted by thegills
They don't really as they sold the sites to eircell way back. They have access to about 110 sites of which maybe 10% are in the 3G license coverage area. They have hundreds of exchanges if they wanted to build their own towers.

I think that's what he meant. Eircom have quite a bit of well-spread out property all over the country, in the form of fixed-line exchanges. A large part of the battle in erecting a mast is aquiring the land to put it on. Farmers like to up their prices a bit when they find out that a mobile operator has no other choice but to build in the far corner of their field.

The fixed-line "mobile" phone isn't new, but it's something that either they never wanted here, or that wasn't feasible due to the separation of the companies. I remember BT launching it a few years back. But I'm not sure if they've been able to continue the service since bought out by O2.

oscarBravo

Originally posted by seamus
Eircom have quite a bit of well-spread out property all over the country, in the form of fixed-line exchanges. A large part of the battle in erecting a mast is aquiring the land to put it on. Farmers like to up their prices a bit when they find out that a mobile operator has no other choice but to build in the far corner of their field.

The question is, how suitable are the exchanges as mobile mast sites? My local exchange is snuggled neatly away at the bottom of a large hill.

thegills

Any exchange that was a good mobile site, had a mast built by eircom back when they owned eircell and they had planning exemptions. There was about 110 towers built. Indeed though some of their 1100 exchanges may be useful for 3G pico cells.

Victor

Originally posted by bk
This plan of theirs with a mobile phone that can act as a landline when near a base station would be very popular with business and home users and would probably help stop the erosion of people to the mobile companies.

This is their current digital home phone - I can imagine people loosing home coverage quite "frequently".

Originally posted by thegills
They don't really as they sold the sites to eircell way back.

I thought Vodafone were whinging that they only got the Eircell sites, not anything with Eircom equipment on it.

Originally posted by thegills
My guess is that they will only sweat the assets they have and not look to incest too much CapEx;

Invest?

jesus_thats_gre

As far as I know, Eircom has the contracts to maintain both Meteor's and O2's base stations and all three operators networks. While they may no have direct access to sites, they certainly have the experience to establish a new network... At that, most new UMTS sites are going to be shared between operators as oppossed to each operator having its own base stations sites.

Stonemason

This is a good sign could it be that people are leaving their land lines behind in favour of mobile phones? could it be that Eircom know that wireless and *cough* net through your power sockets is coming? and as we all know about rats and sinking ships i cant help but hope this is a first signs that Eircom are feeling the pinch.What makes me laugh is that the Mobile industy is a pretty cut-throat and Eircom think they will be able to compete.I think they better start working bloody hard at winning back confidence in them from Irish customers else they are going to be handycapped from the start.Personaly i wouldnt touch the if they were half the price of all the other companys.Thats not being spiteful its just i could trust the again.

thegills

As far as I know, Eircom has the contracts to maintain both Meteor's and O2's base stations and all three operators networks

Where did you hear that?
I'm not wholly sure about Meteor but I would be very surprised if O2 used eircom to maintain any part of their network. Nortel look after their GSM kit and switches and Siemens look after their radio network.

I know also that Lucent supplied all Meteors GSM kit and Siemens the radio again.

jesus_thats_gre

I cant remember who told me that to be honest. They do manage alot of the stuff for Meteor, nearly 100% sure of that.

spongebob

Meteor have also stated that they have had initial contacts with potential Virtual Operators aka MVNO 's

Thats how Virgin got a Mobile Service running in the UK, it runs on T-Mobile actually but is advertised and billed as Virgin.

Eircom was one of the potential MVNO clients, they like to waste other peoples time.....they also applied to run the new Telecom Éireann 2 , aka the MSE that will connect the fibre rings into a national network despite already knowing they could not get the contract.....ever. See Here (Word Doc 20k)

jesus_thats_gre

I agree that it is very likely that Eircom will take the same route as that of Virgin mobile. Realistically it makes alot a sense but I dont know if I could trust Eircom's customer service abilities. I can imagine calling them if you have network problems, they would probably just dismiss you and blame the main operator who they are running on.

jesus_thats_gre

My 2c is , Eircom buys Meteor and rebrands Hutchison 3g as Eircom 3 g , then they have to go and buy this here Domain off Adam

I dont think Hutchinson Whampoa would allow Eircom to rebrand their 3 service. They have worked extrememly hard to to establish a brand name and have already launched networks in quite a few countries. I feel that they will continue to launch 3 branded network throughout the world to compete with other worldwide brands in the sector, such as Vodafone, T-Mobile, O2 and Orange.

It is likely that Meteor will become a target for either Hutchinson or Eircom. Reasons... The Universal Mobile Telephone Standard (3G equivelent of GSM) has been developed to provide an evolution of GSM and GPRS networks. A large proportion of the Core Networks components are sourced directly for GSM and GPRS. Thus, by acquiring Meteor, both companies would be able to avoid alot of the bull**** of buildiing a new network and could just make the required upgrades.

There is also 1 3G license left, I am guessing Eircom will go for this, either on their own or partnered with someone else. The fact that Meteor did not bid for a 3G license suggests that they are waiting for something to happen.

It has also been suggested that the ESB will also re-enter the telecoms market. Its going to be interesting to see how it all works out.

JTMan

As I said elsewhere ...

It is obvious that meteor will sell up .. WWI have sold their Icelandic and some other european network that they own in recent months. Added to the fact that their former CEO said they will sell up.

3/Hutchison want no 2G legacy and won't want network issues associated with meteor ... IMO 3 Will not buy Metoer. The smart money is on an Eircon take over in May.

It will be interesting to see how it pans out. Looking far into the future and meteor may eventually end up in the hands of Orange.

jesus_thats_gre

Especially considering it was orange who wanted the license originally.

dahamsta

Originally posted by Fungus
3/Hutchison want no 2G legacy

I didn't think Hutchison would /be able/ to operate without a legacy network. It'll be awful patchy unless they've something to fall back on. Then again, I suppose they've rakes of cash.

adam

JTMan

Originally posted by dahamsta
I didn't think Hutchison would /be able/ to operate without a legacy network. It'll be awful patchy unless they've something to fall back on. Then again, I suppose they've rakes of cash.

adam

I don't think they will be able to operate without using a 2G network either. The point I was trying to make was that Hutchison don't want to OWN a 2G network. They will seek to reach a roaming agreement with either O2 or vodafone. Since they already have a roaming agreement with O2 UK, O2 Ireland would seem a natural extension.

Hutchison have a clear strategy, which does not include 2G acquisitions. I would be shocked if they broke that strategy and acquired Meteor who have no national network.

dahamsta

Ah, I see your point now Fungus. I guess the existing relationship with O2 UK would be a help, but O2 and Vodafone's treatment of Meteor doesn't inspire confidence.

adam

JTMan

Originally posted by dahamsta
Ah, I see your point now Fungus. I guess the existing relationship with O2 UK would be a help, but O2 and Vodafone's treatment of Meteor doesn't inspire confidence.

True but ...

These were the only 2 operators in the UK who both willingly wanted to give Hutchinson roaming.

Also, the Meteor appeal over roaming is now with Comreg (and meteor seem damn confident that it will succeed) and should it succeed then the lightly hood of Hutchinson knocking out a roaming agreement with O2 only increases.

Trust me Hutchinson will use roaming and not an acquisition as their strategy to establish an Irish national network.

bk

Originally posted by jesus_thats_gre
I dont think Hutchinson Whampoa would allow Eircom to rebrand their 3 service.

Hutchinson wouldn't have a choice, a part of their license is that they must allow other companies operate MVNO on their network.

jesus_thats_gre

Hutchinson wouldn't have a choice, a part of their license is that they must allow other companies operate MVNO on their network.

I didn't mean it in that context. I meant rebrand the "3" network as Eircom and not have a 3 network at all.

JTMan

Originally posted by jesus_thats_gre
I meant rebrand the "3" network as Eircom and not have a 3 network at all.

The chances of this happening are zero. Eircom will not buy 3 nor will hutchinson call the network Eircom under any cirucmstance.