This week, Dixons Carphone revealed plans to launch a new Mobile Virtual Network Operator (MVNO) brand in the highly competitive UK market.
MVNO to launch in the spring
The mobile network in the UK is going through some fairly turbulent times at the moment, what with British Telecom set to purchase EE and Three eyeing up O2.
The latest events this week concerns electronics retailer Dixons and mobile network Three, who are said to partner and launch a brand new virtual network in the spring. Whilst it’s nothing new for retailers to launch their own-brand networks (Tesco Mobile on O2’s network and Asda Mobile on EE, for instance), Dixons Carphone (the amalgamation of Dixons and Carphone Warehouse) also wants to get in on the action and avoid the fate of Phones4U.
The company officially confirmed its mobile plans in a press release, saying that the new network “supports our strategic vision to continue to offer customers the widest range of connections, for when they are at home or on-the-go”, according to Graham Stapleton, CEO of Carphone Warehouse UK & Ireland.
Lynda Burton, Director of Wholesale at Three, said: “This is our biggest new customer to date and a great opportunity to be the MVNO partner of a large scale brand with real mobile expertise and insight. Our network capability, recognised as best for smartphone customer satisfaction and reliability, is a great platform and we look forward to supporting the UK’s biggest mobile specialist’s MVNO success.”
The network is said to arrive in the spring, and promises “innovative and highly personal connectivity options” to consumers. What that actually entails however remains to be seen, but it’s thought special packages targeting Internet of Things devices (connected televisions, thermostats, and various other “smart home” gadgets for instance), which makes sense when you consider Dixons’ strength in consumer electronics.
Three is one of the few operators that provides unlimited data and 4G connectivity at no additional cost, so it’s likely but not guaranteed that the new MVNO will offer the same sort of deals.
The Dixons and Three move comes after an eventful couple of weeks in the mobile industry — one that is set for huge change and shakeups in the coming year. BT has already made a bid to acquire EE (which has the largest 4G coverage footprint in the UK) and Sky is said to be forging a partnership with Telefonica, in which O2 will provide Sky access to its wireless network to launch its first mobile telephony service to customers in 2016.
Consolidation seems to be flavour of the month, as Telefonica has been holding exclusive talks with Three to sell O2 to Hutchison Whampoa, Three’s parent company. This merger would make Three and O2’s combined network the largest in the UK, enabling them to offer more complete communications and entertainment options with mobile, TV, broadband and landline services all rolled into one package.
Looking to the future
The MVNO market in the UK was once considered world-leading, but in recent years has been subject to intense competition and consolidation. In 2011 there were 33 MVNOs in the UK which rose to 38 in 2012, but fell sharply in 2013 to just 13 players. They have been hit hard by price wars and regulation both from Ofcom and the EU, and still bear the scars from the last few years’ fallout. The Dixons-Three deal could help to shake things up, and it seems that the operators are starting to realise that MVNOs are an important part of the mobile value chain.
The move signifies that the mobile networks and MVNOs can indeed worth together, but it remains to be seen what lasting impact the new MVNO will have. One thing is certain, that more choice and competition for consumers can only be a good thing, especially when all the consolidation going on with the Big Four networks might actually reduce competition and raise prices.