Hutch Wakes Up

Ailing 3G newcomer Hutchison 3G UK Ltd. is showing signs of kicking into life with a huge upturn in subscriber numbers following drastic price cuts earlier this month (see 3 UK Touts Pricing).

The carrier is reported to have experienced a fivefold increase in handset sales after launching a series of aggressive price cuts that undercut rival voice offerings by up to 50 percent -- a move some analysts regarded as a last-ditch attempt to boost flagging sales (see Hutch: Fab, Gear Spike?).

A spokeswoman from the Carphone Warehouse, the U.K.’s largest mobile phone store, says that Hutchison is now selling 15,000 handsets a week, compared to a previous figure of 3,000.

The statistics are a huge improvement on official figures released on March 20 of 10,000 sales overall. The next sales update will be kept under wraps until Hutchison reports results in August.

Hutchison was unable to provide comment by presstime. The company’s only spokesman permitted to actually talk to the media -- Ed Brewster -- had sadly “gone home sick.” [Ed. note: Get well soon, Ed!]

— Justin Springham, Senior Editor, Europe, Unstrung

lrmobile_castro 12/4/2012 | 11:51:03 PM
re: Hutch Wakes Up Indeed Hutch has awoken but sitting at the foot of the bed is a dead data model and last years hole ridden shoes which hutch is wearing to their new position as the el cheapo voice carrier ( the dishwasher of the wireless world). Staying in bed and fast asleep looked better to me. Hutch is providing ample support to those who wish to avoid 3G entirely.

The real message here is consumers just want voice. The other message is 3G can't offer adequate data performance to distinguish itself from 2G. The final message is the retirement of the 3G dream (high arpu from data services)
lrmobile_millomar 12/4/2012 | 11:50:59 PM
re: Hutch Wakes Up Castro's analysis might apply to Cuba but I don't think that it's time to declare Hutch dead yet.

Your assertion that "consumers just want voice" should probably read "consumers can only use voice." If there is no one to communicate with using high rate data (video, MMS etc) then that service will be practically useless. It is only once a service reaches critical mass that usage will take off.

There is an economic rule of thumb that the network externalities increases with the square of the number of users. To a very great extent it is the benefits provided by those network externalities that people buy when they get a communications service. That is way the telephone is so valueable - you can talk directly to just about anyone no matter where they are.

For years after its launch you could have declared SMS dead: "consumers just want voice." You would look pretty stupid saying the same now. And of course no body made money out of SMS in the early years either.

It will take some years for 3G services to take-off. Declaring them dead after 3 months is about as sensible as declaring Cuba a "Worker's Paradise."
spc_canute 12/4/2012 | 11:50:41 PM
re: Hutch Wakes Up

Which ever way you slice it there is much truth in castro's message. What the UK market has said to Hutch is "Your service is overpriced and we aren't paying you a premium for you are offering".

Hutch now understands this and has decided to compete on voice and grab market share by low pricing. This will attract many but I gotta tell you something, Hutch better improve its voice service because those of us who have tried it can only tell you that it is not a great advert for 3G. Low quality calls. Dropped calls everywhere. Customer service that is poorly trained. Go read the message boards to see that this is a common experience. Let us ignore this poor voice service and move on. Hutch may feel that once it grabs voice market share people will be tempted to use its "data services", but its only a bet.

The rule of thumb that millomar refers to is often known as Metcalfe's law. I haven't an issue with Metcalfe's law but we have been here before and the law has been misapplied. Remember WAP? We were told with direct references to Metcalfe's law it would take off when the number of WAP phones vastly increased. Yeah right. Companies business plans insisted they would create fortunes for VC's because of the number of WAP phones. Yeah right again. Many of us now have MMS phones - everyone that I know has one and we can send pics' to each other on each other's networks. But are we? Nope. Will we later on? Maybe - its more complex than the number of MMS phones in the market place.

Castro doesn't declare 3G dead, he does say that "high ARPU from data services is a dying dream". Wall street and the city now understand this well and have accordingly adjusted their views and projections.

lrmobile_castro 12/4/2012 | 11:50:09 PM
re: Hutch Wakes Up I Wish hutch the best because they are a new entrant bringing competition to the market. However, the trends cause concern. Their experience suggests WCDMA is an advanced but expensive voice technology. GSM/EDGE could do just as well with a few improvements and at a lower price point.
tuborg 12/4/2012 | 11:48:30 PM
re: Hutch Wakes Up Comparing SMS revenues/ARPU to 3G is completely wrong. SMS was inheritantly in the network from the outset. There was no huge investment to add SMS to the existng GSM/CDMA networks - no new radio or netwrok infrastructure. Users realized the benefits / uses for SMS and that drove the operators to find new services/charging mechanisms.

3G / EDGE / etc all require a huge investment on the operator. Users are not demanding huge data connections, and as UK shows, there are not huge revenues to be had.
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