Three UK to Go Big on 5G for Home Broadband
Advancing into fiber and cable territory with a 5G offer will be a difficult maneuver, nevertheless. Companies like BT, Virgin Media Inc. (Nasdaq: VMED) and Vodafone UK are now investing in all-fiber connections that promise speeds any mobile technology will struggle to match. Heavy Reading's Brown admits to feeling a "bit skeptical" about the move. The average Relish customer, he notes, consumes about 80 gigabytes of data each month, while usage in typical fixed-line households tends to be much heavier.
Another challenge with mobile, he says, is providing connectivity for all homes in a zone. "You will only get a certain proportion of users that are serviceable because of line-of-sight conditions," he says. "Traditionally, in broadband marketing, you don't want to just access a proportion of the region -- you want everyone in the postcode -- and that proposition may be a problem for them."
Despite these reservations, he is impressed with Three's latest network strategy. "It is a top-to-bottom refresh after the O2 merger wasn't approved," he says, referring to the deal that was shot down by regulatory authorities on competition grounds. There might also be advantages in using mid-band spectrum for residential broadband services, rather than the extremely high-frequency "millimeter wave" bands that have grabbed all the attention in the US. "3.5GHz is the traditional fixed wireless band and how it works is well understood," he says. (See Telefónica Eyes Alternative Buyers for UK Biz – Report.)
There can be little doubt that line of sight and propagation are much bigger issues for millimeter wave spectrum, simply because signals do not travel as far or penetrate walls as effectively in these higher ranges. If Three can take full advantage of massive MIMO technology and its generous spectrum holdings, it may be able to overcome the challenges it faces on the capacity side. "It might not be a Rolls Royce service, but it will be pretty good," says Brown.
Whether it is good enough for a doubling in the size of Three's business is a hard question to answer, partly because Dyson is deliberately vague about the nature of this growth. "Being twice as big, whether in terms of revenues or margins or customers, will make us more secure and sustainable as a business," is all he will say. There is also no timeframe attached to this plan.
Clearly, there is an opportunity to "upsell" broadband to some of Three's existing mobile customers. This "convergence" ploy is exactly what BT is now focused on after integrating EE, the mobile giant it bought in 2016, with the rest of its business. Three's pricing competitiveness, moreover, is one of its strengths, and could help to lure customers who think BT's broadband is too expensive.
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