For those who are not familiar with UK mobile market, there're 5 incumbents, which are, sorted by number of subscribers at the end of 2009: O2 (Telefonica) - 21.3m, Vodafone - 19.1m, T-Mobile - 16.7m, Orange - 16.3m, and 3 (Hutchison) - 4.9m. The first 4 are the incumbents since 2G era. The last one has entered the market with 3G only network since 2003.
Number of Connections
In the UK market, operators took turns in leading the market; once it was Vodafone, then Orange, then Vodafone again, then T-Mobile, then O2, then Vodafone one more time, and now it's O2. Orange used to hold number one rank (by subscribers) during 2002-2003. Then, O2 built up its customer base and passed Orange's in early 2005. Now the difference is as large as 5 million subscribers. Counting only the 3G connections, O2 has almost twice the amount of Orange's. How have O2 done this?
Number of Connections
In the UK market, operators took turns in leading the market; once it was Vodafone, then Orange, then Vodafone again, then T-Mobile, then O2, then Vodafone one more time, and now it's O2. Orange used to hold number one rank (by subscribers) during 2002-2003. Then, O2 built up its customer base and passed Orange's in early 2005. Now the difference is as large as 5 million subscribers. Counting only the 3G connections, O2 has almost twice the amount of Orange's. How have O2 done this?
Is it the price factor?
O2 didn't raise their customer base by lowering their prices. The ARPU repored at Q3/2009 (latest information) indicated that the two operators have maintained their ARPU at the same level: O2 - £22.21 and Orange - £21.75. Further more, during the past six years, O2's customers had to pay, on average, £1 more than Orange's customers on their phone bills.
Is it the coverage?
Yes, it's the coverage.. but not that wide coverage that impressed the customers! Ofcom's 3G coverage map issued in July 2009 suggested that the number one operator didn't blanket 3G coverage all over the country. Orange obviously had the bigger 3G footprint compared to O2. Coverage is a crucial factor for successful mobile services. People get frustrated when they are out of the network coverage and cannot make or receive calls. Large coverage is always better than small. But then, why have O2 won customers' hearts?
When it comes to 3G and data services, majority of users seem to locate in big cities and hotspots. Note that 3G penetration in UK now (Q4/2009) is still less than 40%. O2 seemed to intentionally choose to deploy 3G in the big cities and potential hotspots, while Orange blanketed it all over the country. The speed test report suggested that O2 focused their investment more on the signal quality and network capacity, and resulted in a better download speed. O2 might put less money on coverage when 3G is not mature but the money goes to things like marketing campaign, robust signal, bigger backhaul, and etc.
Can we say that hotspot deployment strategy is a winning strategy for O2? What do you think?
When it comes to 3G and data services, majority of users seem to locate in big cities and hotspots. Note that 3G penetration in UK now (Q4/2009) is still less than 40%. O2 seemed to intentionally choose to deploy 3G in the big cities and potential hotspots, while Orange blanketed it all over the country. The speed test report suggested that O2 focused their investment more on the signal quality and network capacity, and resulted in a better download speed. O2 might put less money on coverage when 3G is not mature but the money goes to things like marketing campaign, robust signal, bigger backhaul, and etc.
Can we say that hotspot deployment strategy is a winning strategy for O2? What do you think?
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