Three enters the 5G marathon with ‘free’ 5G

There might not be enough base stations or devices yet, but Three has completed the UK’s 5G portfolio with the connectivity upgrade at no extra cost for existing customers.

It may have lost ground on rivals over the last six months, but that will matter little in the grand scheme of things. Coverage is poor, penetration is low, and smartphones are expensive. With Samsung announcing its 5G series, Apple poised to launch in September and a variety of more affordable devices emerging, Three could be generating 5G momentum at the right time.

“Three’s enviable position in 5G spectrum presents it with a golden opportunity to achieve the scale it craves to challenge larger rivals and spearhead a push into new markets,” said Kester Mann of CCS Insight. “It may never have such a chance to move its business on to the next level.

“A major marketing focus for Three this year will likely be around speed and it is already talking about a 5G service twice as fast as rivals. This could put it on a PR collision course with rival EE, which has drawn heavily on network leadership in its own marketing since being first to launch 4G, back in 2012.”

At the end of February, all four mobile network operators (MNO) in the UK will be up-and-running with a mobile 5G offering. The firm has said it will launch in 65 towns and cities across the nation, with the 5G service being free for any customer who has purchased a compatible device.

This is a very interesting statement to make from Three. O2 and Vodafone have already said 5G connectivity would not be premium on some 4G tariffs, leaving only EE which is charging its customers for the pleasure of the fastest ‘G’ available on the market. What is worth noting is that EE’s Essential 5G Plan does include three swappables, but it does cost an extra £10 a month, and as there is no option to have 5G connectivity alone, it is a premium irrelevant as to what the telco says.

Three has traditionally disrupted the UK connectivity market with either aggressive pricing or data consumption models, and it looks like it will do the same here. O2 and Vodafone have both priced 5G connectivity in the affordable range (£35 and £30 respectively) for unlimited data SIM-only plans, while Three is entering the fray with £22 a month for postpaid plans and £25 for prepaid.

“Today we are celebrating what is possible through 5G with a showcase of our ultra-fast 5G capabilities marking the next step in our 5G journey,” said Three CEO Dave Dyson.

“Three is set up to be the fastest 5G network in the country; Three’s customers will benefit from the vast 5G capacity and speeds that only Three can offer, enabling the best 5G experience possible.”

Dyson is referring the telcos spectrum holding as the 5G advantage here. Three holds 100 MHz of contiguous spectrum in the mid-band frequencies, and some useful licences in the higher frequency bands also. This does offer Three an opportunity to disrupt the market, though it will have to convince customers this is enough to turn around perceptions from the 4G era.

Looking at the latest statistics from Opensignal, Three has the worst availability for 4G connectivity across the UK, the worst video experience, the second-to-worst upload experience, slowest latency and the second-to-worst average download speed. On a positive note, it did have the fastest 3G download speeds.

Three has somewhat of a damaged reputation, which is tolerated by some. Its core audience are data intensive, price conscious, city-centric customers, but if it wants to make any realistic improvements on market share, it will have to look beyond this demographic. And to attract new customers, it will have to improve on its performance in the 4G era.

Three UK in a spot of bother as senior execs head for the exit

With Three’s big bet on Huawei proving to be somewhat of a disaster, two senior technologists are heading towards the exit.

Many have focused on the difficulties faced by BT in light of Huawei’s limited role in the 5G future of the UK, but Three is potentially facing the biggest headache of all. And just as the team begins to pick up the scraps of a decimated deployment strategy, two of its most senior technologists have exited the business.

Phil Sheppard, who was for all intents and purposes the telco’s CTO, and Graham Marsh, the former-Director of Core Technology, have almost 30 years of Three experience between them. Now neither is working at the telco, and despite these two most likely having a significant input into the headache that is the current rollout plan, this is a company which probably needs as much experience in the ranks as possible.

While there will be conspiracy theorists who link these exits with the Huawei decision, this might be somewhat of a dubious link. Graham Marsh has already started his new role, founder at Infinite Potential, while Sheppard’s exit is less than a week after the Supply Chain Review announcement. There might well be a link, but this would be an incredibly cut-throat decision. Sheppard has said on LinkedIn he will be doing consultancy work in the immediate future, as well as taking a few holidays.

Irrelevant as to the background, Three could really use with this experience in the room not working for someone else.

The sticky situation which Three is currently in should not be taken too lightly. Three went big and bold with its 5G deployment plan, deciding to swap out Samsung 4G RAN to ensure backwards compatibility with its sole 5G RAN supplier Huawei. This strategy could have been a game-changer for the city-centric telco, but now it looks like a complete disaster.

The conclusion of the Supply Chain Review last week have certainly been met with mixed reviews. For some, at least there is a decision, a foundation of certainty which can be built on over the coming years as the industry hurtles towards the 5G era. But for others, the 35% network share restrictions on ‘high-risk vendors’ is either too extreme or not extreme enough. There isn’t a huge amount of consensus when it comes to the position on Huawei.

There are now two restrictions which the telcos will have to bear in mind. Firstly, equipment from ‘high-risk vendors’ cannot make up more than 35% of the radio inventory across the network. Secondly, no more than 35% of the total internet traffic across the year can pass through equipment from ‘high-risk vendors’. For a telcos who’s sole 5G RAN supplier is now deemed a ‘high-risk vendor’, this is a monumental migraine.

During its earning call last week, BT outlined the financial impact of the Supply Chain Review decision; £500 million. Part of this will be redefining its deployment strategy, while it will perhaps have to undertake a ‘rip and replace’ project to ensure there is interoperability between 4G and 5G RAN equipment. Three is yet to put a figure on the Huawei conundrum, but the impact here will be much more than financial.

Firstly, you have to consider the ‘rip and replace’ project it has been undertaking for the last six months in an effort to replace Samsung with Huawei as a sole supplier. Some of this work can be left alone, it has a 35% window to work with after all, but depending on progress, some of this work might have to be undone to ensure new supplier equipment performs to the levels desired.

Secondly, there is a major timing penalty placed on Three.

Picking a supplier in the telco industry does not happen overnight. There are numerous bureaucratic hurdles to jump over, commercial negotiations to take place, and trials which need to be navigated. It isn’t as simple as replacing Huawei with Ericsson, let’s say, this is incredibly time intensive.

Three is in a difficult position, and more often than not, whenever this is the case the people who have ‘been there, done that’ are some of the most valuable in the room. Unfortunately for Three, two of its most senior technologists are seeking pastures new.

Some have suggested the exit’s might be linked to the Huawei decision. There might be an element to this, but we suspect it is more a case of coincidence and bad timing. Very bad timing as it works out.

NB: On a personal note, best of luck to Phil. Having interviewed him a few times on camera and events, Phil is a lovely man with a wealth of experience. Whoever hires him next has found themselves an excellent employee!

Fingers pointed towards 3G work for Three network outage

While the full-extent of the network outage has not been unveiled just yet, some are suggesting maintenance on the firms 3G network is the root cause.

Three has confirmed it was a change to the network which was being made overnight on Wednesday [October 16] which caused the outage, but it is being elusive with the specifics. Either it doesn’t know, which we doubt, or it doesn’t want to say.

There does appear to be customers who are struggling to connect to voice, SMS and data services, though the majority of the issues seem to have been settled. Networks appear to be up-and-running, and now the work begins to understand the cause of the outage. Perhaps more importantly, the team will also want to figure out how to ensure this incident does not occur again.

“Following the technical difficulties with our services yesterday, the majority of our customers can now make calls, send texts and use data,” Three said in a statement.

“Our engineers have worked overnight and are continuing to iron out a few remaining issues from a technical perspective. While voice and text have returned to normal, unfortunately a small number of customers may continue to experience intermittent issues with data.

“To help with the process we advise our customers to turn their phones off and on or turn airplane mode on and off, which will in most cases resolve the issue by resetting your phone’s connection to the network.”

Although the ‘turn it off and turn it on again’ request will infuriate a few, it is usually the best way to get things fixed. Three is suggesting the problems are in the past and it will be hoping its reputation has not taken too much of a hit.

Unfortunately for the team, there was a bit of a misguided attempt at humour during the saga. In one tweet, Three suggests O2 had unplugged its 3G network when plugging in its own 5G infrastructure, though a few commentators noted that it might have been a bit funnier if there weren’t customers continuing through the data-less struggle.

Looking at the root cause of the issue, there is still some ambiguity. Some have suggested it might have been teething problems for the new cloud core, being supplied by Nokia, though Three has denied this. Other reports have emerged suggesting maintenance and repairs on 3G infrastructure could be the reason.

The 3G work is an interesting angle, as while Three is attempting to switch-off 3G in pursuit of re-farming valuable spectrum for 4G and 5G, this is still a work in progress.

Interestingly enough, while the process of switching-off 3G networks is one which is gaining popularity, spectrum is a valuable resource after all, it might have a negative impact on the 2G networks which are still running.

Although it might seem unusual to discuss 2G in today’s world, a report from Tech UK suggests the need for 2G services is likely to continue into the 2030s. The services are still being made use of by the elderly, rural users and M2M applications, this will not change in the immediate future. If telcos are switching off 3G, the demand of these areas cannot be offset meaning 2G networks will have to be maintained for the foreseeable future.

“We sometimes focus on technology without fully understanding the impact on services people rely on,” said Tony Lavender, chair of the Spectrum Policy Forum Steering Board.

“Among other things, 2G enables smart metering and the mobile phones used by many vulnerable people in society. We need to think through the alternatives for these services before switching them off.”

While hiccups are rare in the connectivity world, they are certainly not unheard of. Last year, inadequacies from Ericsson resulted in an expired software license crashing O2’s network in the UK and Softbank’s in Japan. At the time of writing, Verizon is also entering the domain of damage control after users faced the connectivity baron land in the North-east and the Mid-west.

What is unclear is what the financial impact of the outage will be. As has been shown with the O2 network outage last year, consumers do not immediately flood towards the exit when services crash for an extended period of time. Three’s network does not crash regularly, therefore customers will likely tolerate this incident, but it might end up costing the firm a few million in compensation.

Three bolsters wholesale ambitions with Pareteum partnership

Three UK has announced a new partnership with Platform-as-a-Service provider Pareteum as it searches for new revenues in the wholesale segment.

The multi-year partnership with Pareteum will see the telco push further into the wholesale world, with the ambition to attract new mobile and IOT services onto the new network. For a company which is almost exclusively known for consumer operations, the growing appetite for connectivity in every aspect and element of today’s society is an attractive prospect to grow revenues.

“We are really excited about the opportunity that this partnership delivers,” said Darren King Head of Wholesale Business Development. “We have significant growth ambition in the IoT and Enterprise Communications markets and Pareteum brings global scale and proven capabilities.”

To provide some context, whole connections currently account for roughly 12% of the traffic which is currently traversing over the Three network. Considering the telco believes capacity on its network could increase by 28X over the coming years, there is an opportunity for Three to bag additional profits.

Across the Three business, there has been a push into new areas. Perhaps the source of these ambitions can be linked back to the connectivity landscape; the smartphone market has exceeded 100% of the UK population and consumers want to see their monthly bills come down, while expecting more from the tariffs. It is becoming increasingly difficult to make money if you are a business which is purely focused on the mobile segment.

While this does not create the most comfortable of pictures for MNOs, the Three management team have set high expectations over the next few years; the business is expected to double in size. This means double the connections on the network, double the number of subscribers, double the annual and double EBITDA.

To meet these expectations enterprise is an area of growth, the UK Broadband team is working hard in the campus network space, fixed-wireless access takes it into the broadband arena, there are already 800,000 subscribers, and King’s efforts here will bolster efforts in the wholesale segment. If Three is to meet the monstrous objectives, all of these ventures will have to be on-point.

And while it is still early days, there is progress being made. There is currently a dedicated team of 40, working alongside other employees in the wider Three business, while numerous partnerships are already in place. In search of growth in the enterprise IOT world, Three Wholesale currently has partnerships in place with the likes of Gamma, ARM, Wireless Logic and AT&T.

However, it is in the consumer MVNO segment which the Pareteum partnership enables. The current relationship with SuperDrug is an excellent example. This is an organization which has ambitions to offer connectivity orientated products to its customers, but it doesn’t have the know-how. Pareteum can provide the platform, Three the network and both can aid with the business.

For Three, the challenge here will be to enter into a market which is already incredibly competitive. It is coming late to the party, though there are certainly some interesting elements to the Three business. The team constantly talks about the advantages of its contiguous spectrum assets and a nationwide footprint of 20 datacentres enable the team to create edge solutions closer to the customer. With low latency soon to become a demand of customers, this could certainly add some muscle to the Three network.

With 5G on the horizon, and the IOT segment continuing to gather steam, connectivity is forcing its way into almost every business model and product design. Three has certainly outlined some bold ambitions, and the only way it can live up to these promises is through the business diversification which is gathering momentum.

Three gives forgotten child 4G some much-needed attention

With 5G networks being switched on left, right and centre, let’s not forget 4G experience is still going to be the major concern of the vast majority of users for a long-time to come.

In its pursuit of a more established ranking in the UK mobile league, Three has announced a number of initiatives to improve the 4G experience for its customers. 5G might dominate the headlines, but 4G is going to dictate the fortunes of the telcos for some time.

“5G is a game changer for Three’s current and future customers. It will bring faster speeds, a better experience and masses of capacity which will benefit our 4G customers as well,” said Three CEO Dave Dyson. “While we are investing heavily in 5G, 4G is still very important for our mobile and home broadband services.

“These upgrades will ensure that our data hungry customers are getting the best possible 4G experience as 5G rolls out.”

The two initiatives announced here will continue to build the 4G experience for customers. Firstly, the introduction of new spectrum and site upgrades. Secondly, the re-farming of 3G spectrum to further bolster the armoury in the fight for 4G supremacy.

6,000 mobile sites, which account for 80% of the traffic which flows across the Three network, will get an upgrade. These upgrades, which will run alongside the 5G deployment initiatives, will include new antennas and new spectrum. Three is claiming the introduction of 1400 MHz spectrum should increase download speeds by 150%, assuming of course you have the right device.

Although the range of compatible devices is quite large, a simpler way to describe it would be any device which has been released in the last 12-18 months. For those who have older devices, Three suggests the download speed gain could be as much as 50%. It’s not necessarily a mind-blowing number in comparison to others which are floating around the mobile domain, but it would certainly make a notable impact on experience.

The second initiative involves the 3G spectrum. All of the telcos are undertaking the process of re-farming 3G spectrum for higher purposes, but Three does seem to be leading the way. As part of the announcement today, Three is suggesting 12,500 sites will see speed improvements of up to 40% as 3G spectrum is handed over to 4G.

Looking at the bigger picture, none of the telcos can forget about 4G. 5G might be much more attractive to the consumer (the bigger, meaner, faster mentality is very strong), but for years to come the 4G networks will continue to define user experience.

Firstly, you have to look at the adoption of 5G tariffs. This will of course depend on the user purchasing an expensive 5G-compatible device, but then also signing-up to a 5G contract. It will take time for this migration to occur, and we suspect it will be years before economies of scale bring down the price of the devices, opening the euphoria up to the mass market.

Secondly, you have to consider how long it will be until the telcos are demonstrate ubiquity for their 5G networks. Not only does this mean upgrading all mobile sites across the country, but it also means network densification initiatives to compensate for shorter spectrum range and mobile radio propagation. The work to ensure the 5G world is everywhere, all the time, is only just beginning.

Both of these factors mean 4G will be just as, or more important than 5G over the next few years. 5G might generate headlines, but 4G will continue to drive revenues.

EE forced to backtrack on 5G data tariffs

It does appear EE has been forced into a rethink on 5G data pricing, as the firm launches an unlimited data offering to keep pace with rivals in the UK.

Like hamburgers at breakfast, the 5G tariffs didn’t look right to start with. The price points were too expensive for today’s cash conscious consumer who expects the world for tuppence. EE might have been first out of the gate to capitalise on the growing 5G euphoria and earn the right to boast about being first, but it has been forced to backtrack a little.

The only issue with being first is that you give everyone else a taste of what is on the table. Even if EE had nailed the proposition and priced it perfectly, it left the door open to be embarrassed by rivals to be undercut. If the aim of the game was to secure post-paid subs and look to long-term ROI, EE left itself exposed to a cheap shot.

That said, it has now seemingly rectified the situation.

When it first launched in May, prices were tiered depending on download limits. Not only did it not look practical, limits would be reached relatively easily, it was expensive. Admittedly the price of 5G devices were factored in, but with rivals presenting options which were easier on the wallet, a new approach was needed.

“If you want an unlimited data plan, you should get it on the UK’s best network, with the coverage and speeds that let you make the most of it,” said Edward Goff, Marketing Director at EE.

“Our new unlimited range offers customers the ultimate smartphone experience in more places across the UK than any other network, all with no speed caps and great swappable benefits like Amazon Prime Video and BT Sport.”

What is worth noting is that the unlimited offer for 5G-SIM only plans is still expensive.

MNO Price
EE £44 a month
Vodafone £30 a month
Three £22 a month
O2 Unknown

Each of the telcos have taken their own approach to data pricing. EE offers 5G SIM-only contracts for £44 a month in the most traditional manner. Vodafone has offered tariffs on speed tiers with the £30 a month tier offering the ‘fastest available speed’, which might vary dependent on where you are. Three is offering 5G connectivity for free for anyone who has an unlimited 4G contract. The £22 a month deal is SIM-only.

O2 is the only one not to release pricing for its 5G data tariffs, being the last to market, though it certainly has taken the opportunity to undermine the promising progress made by rivals.

Although few in the EE offices will be happy to backtrack and have a rethink on the unlimited plans, it does now look to be in a very competitive position. It is the most expensive, but it does have the best network and most consistent, high download speeds. If performance is the measure of success in the consumers eyes, EE is certainly hitting the right notes.

Another factor to consider is the ‘swappables’ element of these deals. For those who sign-up to a 12-month SIM-only deal on 5G for £44 a month, three ‘swappable’ content deals will be included. Each month, customers will be able to elect which bundled content services they desire, ranging from zero-rated video data or music, additional roaming locations, BT Sport or Amazon Prime Video.

The team could probably do with negotiating a few more partnerships as it does look a bit thin on the ground, though it is a reasonable offer.

What we are yet to see from EE is an aggressive push towards the convergence game. Executives have been giving the same presentation at conferences for years, promising a seamless connectivity experience for customers through mobile, broadband and wifi assets, though there doesn’t seem to be much activity on the marketing front to link-up these elements in one conclusive offer.

Either there is something in the pipeline or this is a case of negligence. The combination of EE mobile and BT’s wifi and broadband assets would create a connectivity offering few could dream to compete with. Three and Vodafone are plugging into the convergence game with their own fixed wireless access (FWA) offerings, but EE seems to be lagging here. The opportunity to make noise is there but the team seem to be enjoying the uncomfortable silence.

EE is arguably the market leader in the UK, though thanks to O2’s MVNO relationships it can claim to be the network with the most mobile connections running across it. With the unlimited offer, bundles, biggest and best network coverage and BT’s wifi and broadband assets, EE has an opportunity to nail itself down as the top mobile provider in the UK.

Trying to pick out the winner in the UK’s 5G race is starting to get very difficult.

EE grasses on Three UK for its 5G advertising

Three UK has run an ad campaign claiming its 5G network is the only ‘real’ one. Unsurprisingly other 5G providers are unhappy about this and at least one had complained.

The UK Advertising Standards Authority has been forced to take precious resource away from enforcing gender politics dogma to look into Three’s 5G ad campaign. The ASA confirmed to Telecoms.com that it has received six complaints about an ad by Three claiming to provide the only ‘real’ 5G, with one of them coming from BT.

We contacted EE, which provided the following statement: “Three’s claim to be the only real 5G network is entirely false, and deliberately aimed at misleading consumers. Our customers have been using real 5G since we launched the UK’s first 5G network, back in May.”

And, of course, we also spoke to Three UK, which gave us this statement: “Our advert is to inform consumers that we will offer the fastest 5G network, based on Three having three times as much 5G spectrum as any other operator. We are also the only operator to have 100 MHz of contiguous spectrum. ITU considers this the gold standard for 5G, enabling consumers to take full advantage of what 5G has to offer.”

It all seems to come down this 100 MHz contiguous block of spectrum and the value the ITU places on it in the context of 5G. Here’s a slide from a Nokia presentation titled Minimum Technical Performance Requirements for IMT-2020 radio interface(s) [i.e. 5G] that clearly state “The requirement for bandwidth is at least 100 MHz.” However it also states “The bandwidth may be supported by single or multiple RF carriers.”

Nokia IMT 2020 requirements slide

That caveat would appear to undermine Three’s claim that only its contiguous 100 MHz chunk meets the ITU’s minimum requirements. But when we put that to Three their spokesperson countered that, since carrier aggregation isn’t currently supported by 5G chipsets, that stipulation is irrelevant.

Three reckons this complaint is evidence that its competitors are worried about Three’s strong position in 5G spectrum, which is wonderfully ironic when you consider Three has spent a decade moaning about the opposite imbalance in 4G spectrum. Three is presumably OK with the situation now that things have apparently swung in its favour, so much so it was happy to provide us with a few slides.

The first offers a look at the current UK 5G spectrum situation, following the 3.4 GHz spectrum auction last year. Most of Three’s 5G spectrum is in the 3.6-3.8 GHz band, however, and we’re not sure what the ‘future’ bar signifies, but Three does seem to be at a distinct advantage. So much so that its competitors have apparent been moaning to Ofcom too, as quoted in the second Three slide. The last one represents the results of some Three testing, which is designed to show the unique download speed benefits of having 100 MHz of contiguous 5G spectrum.

Thee 5G slide 1

Thee 5G slide 2

Thee 5G slide 3

To be honest we find it hard enough to keep track of who has what spectrum, and why we should care, so we’re certainly not in a position to critique Three’s claims on a technical level. However they do seem to serve as a plausible defense of any claim it might make to have at least the potential to provide greater 5G download speeds than its competitors.

Where we still have some sympathy with the ASA complaint, however, is with the use of the term ‘real’. If Three had simply gone with ‘fastest’, as it did in the above statement, then EE probably wouldn’t have a leg to stand on. But by instead using the term ‘real’ Three seems to inferring rival 5G services are somehow illegitimate.

It will be down to the ASA to sift through the 5G standard, including the above ITU parameters, to determine whether or not only a 5G service that is able to call upon at least 100 MHz of contiguous qualifies. Since the ASA seems more concerned with thought policing these days we have to question whether it has retained the expertise needed to perform its supposedly core function.

Three goes live with 5G broadband service

UK telco Three has become the latest to join the 5G bonanza with the launch of its 5G Fixed Wireless Access (FWA) service in London.

With plans to launch the service in 25 cities throughout the UK, the FWA proposition looks to be a challenger to traditional broadband services. We have been told the new service will promise speeds of 100 Mbps between the hours of 8pm and 10pm, peak times for streaming in the living room, offering an alternative to fibre broadband for speed hungry customers.

“Three’s 5G is going to revolutionise the home broadband experience,” said Three CEO Dave Dyson. “No more paying for landline rental, no more waiting for engineers, and even a same day delivery option. It really is the straightforward plug and play broadband that customers have been waiting for.

“We’ve taken a simple approach with one single truly unlimited data plan to give customers the opportunity to fully explore 5G and all its exciting possibilities. The ease and immediacy of it all means home broadband using 5G is going to be key to the future of the connected home.”

Looking at the deal offered, there are some interesting elements. Three is promising a ‘plug and play’ experience, meaning customers will no-longer have to wait for an engineer to start the service, while contracts can be taken to new homes if the customer moves. This of course depends on whether Three has launched 5G in the new area, though removing the dependence on physical lines into the home can offer some benefits.

Although this does look like a promising opportunity to disrupt the traditional home broadband market, questions still remain over the long-term viability of FWA as an alternative to the delivery of connectivity over physical infrastructure.

There is a business case for FWA in the remote regions, where the commercial attractiveness of connecting ‘the last mile’ with fibre falls dramatically, though these are not the areas which Three will be targeting to start with.

The launch today is in certain areas of London, while Three is promising to connect 25 towns and cities by the end of the year. These will most likely be the more urbanised areas, this makes commercial sense after all, perhaps targeting regions where fibre penetration is lacking.

As Heavy Reading Analyst Gabriel Brown points out, £35 a month is not overly aggressive pricing, and the 100 Mbps download speeds are very achievable. Users might experience higher speeds during the day, though the proposition might well be more attractive financial and performance wise than many cable services today.

This is where Three could find its appeal. As Brown points out, accessibility to fibre services is a challenge today in the UK. If Three is able to target the regions where Openreach, Virgin Media and the fibre ‘alt-nets’ are missing, there could be a tailored audience for the speedy and reasonably priced 5G FWA service.

Played smartly, Three can drive additional revenues through the business. And while Three does already have 800,000 broadband customers with its 4G FWA service, this could be a notable driver of new revenues for the business. 5G network deployment is going to be an expensive business, therefore sweating the assets in every way possible will be an important factor.

This product opens up a new world for the challenger brand. Over the last few years, subscriber growth in mobile has been relatively flat, though should Three push towards the convergence game, there could be new opportunities to engage new customers with a new message.

Solid if unspectacular results for Three UK as it prepares for the 5G era

Three UK has unveiled its financial results for the first half of 2019, and while it is nothing to shout and scream about, the bigger prizes are coming into view on the horizon.

Revenue might have decreased by 2%, but that is nothing to worry about when you look at the bigger picture. Subscribers are increasing, net promoter score is on the up, margins are remaining consistent and the enterprise business unit is demonstrating steady growth. 5G is on the horizon and Three is in a healthy position to demonstrate growth.

“We’re pleased with the progress we’re making going towards 5G,” said CFO Darren Purkis. “Feel we’re setting up the business well for the launch in the second half of the year.”

This might have been a bit of a tricky period for the Three business to navigate, as while it has a reputation for disrupting the status quo and playing a different ball-game from its rivals, it has been relatively quiet over the last six months. There have been no antagonistic marketing campaigns and little wow factor to report. Three has its eyes set on the 5G era and all announcements have focused on the preparations.

Currently the UK is sitting in the calm before the storm. EE and Vodafone might have launched their 5G networks already, but the marketing A-Bomb has not been dropped yet. We suspect over the next couple of weeks there will be a marketing blitz as Three and O2 prep themselves to launch; you won’t be able to suck a polo without being bombarded with 5G messaging before too long.

Looking at the financial side of the results, Purkis highlighted there was no reason to be concerned about a slight revenue dip. More customers have been migrated to unlimited data tariffs, removing charges for exceeding data bundles, while international calling regulations have changed, and new accounting principles have been applied. Revenue might have dipped, but the margins have remained.

When talking to Three today and over the last couple of months, the tone has been much more reserved than in previous years. This is a company which is prepping for 5G and there will be much more excitable spokespeople and marketing campaigns when the network is up-and-running.

On the network side, the Nokia 5G core is running and the team are migrating customers onto the new network. IT transformation has continued, as CAPEX increased by 23% over the first six months, and the launch of 20 data centres around the country will shift the mobile experience closer to customers. Three has regularly been criticised for having a poor network in comparison to rivals, though few can say it is doing nothing about it.

This is one perception which will have to be addressed if Three is going to be a major force in the 5G world, though all the signs are looking positive.

“Three’s results held few surprises as it reported a solid if unspectacular performance during the first half of the year,” said Kester Mann of CCS Insight. “The number of active customers nudged up just 1%. This glacial growth illustrates a leading reason why Three sees 5G as a catalyst to reinvigorate its brand and achieve the scale it has long for craved.

“Given its strong position in 5G spectrum – a major advantage over rivals – Three was understandably keen to talk up its 5G credentials once again. When it launches later this month, expect it to focus on unlimited data, low prices and disruption in home broadband.”

Purkis highlighted consumer mobile will remain the core focus of the business moving forward, it is known as the brand for data-intensive users after all, though there are other opportunities to be aware of.

In the home, the 5G FWA offering presents a significant threat to the traditional broadband service providers, demonstrated by the 4G FWA offering which the company already offers. Three currently has 830,000 home broadband customers, a number which could very much increase as increased speeds are offered over the new airwaves.

This diversification to the core mobile business was brought about by the acquisition of UK Broadband in 2017, though it has also offering them a glimpse into the world of enterprise business services.

Enterprise business services represents a very small aspect of the overall Three business now, but this is a big opportunity for the team. With UK Broadband as part of the Three family, the team is learning the tricks of the trade, and in September, Mark Stanfield will join as MD for Enterprise Services adding to the momentum. Stanfield’s role will be to set-up a more complete enterprise business function, which will include more attention for the wholesale segment.

Once again, the consumer business will continue to be the core of Three’s activities, but there are opportunities to attract more revenue through enterprise services. Currently the team are focusing on Small Office and Home Office (SOHO) customers, businesses no-larger than nine people, though once a firm foundation has been created here the team will look to engage larger businesses.

Another opportunity which is being evaluated in the UK Broadband business unit is for private campus networks. UK Broadband MD Ros Singleton is leading the charge here, and while the team currently manages a number of different networks already, it is actively engaged in various tender processes to expand the footprint.

The financial results here are nothing to write home about, but this is a business which is in preparation mode for the 5G era. We suspect there will be bigger things to come here as Three has crafted a position and collected assets to mount a considered challenge to its three larger rivals.