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Tales In Tech History: Three UK

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Three entered a crowded UK market fourteen years ago and carved out a significant niche, despite well entrenched opposition

Three might be the ‘new kid on the block’ in terms of UK mobile operators terms, but the young upstart celebrated its 14th birthday this weekend.

The operator(often marketed with a 3) was launched on 3 March 2003 and it uses its own network to provide 3G and 4G services throughout the country. Indeed by 2004 it was the first network to meet its regulatory requirement of 80 percent population coverage in the UK.

Not a bad start for a new entity fighting to establish itself in a high competitive and crowded British mobile market.

Three Store 2

The Orange Years

Three UK is a subsidiary of a Hong Kong-based conglomerate (Hutchison Whampoa) that also operates shipping ports, besides other interests such as telecommunications, property, hotels, retail and manufacturing, energy and infrastructure.

It should be noted that Three UK was not the first time that Hutchison Whampoa had been a player in the UK mobile scene.

The Hong Kong firm was actually involved right at the start of the UK mobile market back in the 1990s, as it acquired a controlling stake in Microtel Communications in 1991, which had won a licence to develop a personal communications network.

Hutchison renamed Microtel to Orange in 1993, with the catchy marketing term, “the future’s bright, the future’s Orange”. But Hutchison exited the UK mobile market in 1999 when Orange was sold to Mannesmann AG.

Orange briefly came under the ownership of Vodafone (after the former was acquired by Mannesmann), but it was forced by the regulator to sell Orange to France Telecom in 2000.

Orange UK for its part was subsequently merged with Deutsche Telekom’s T-Mobile UK to form a joint venture, namely EE.

Three Store Grafton Street Dublin

Three UK – The Data Champion

But lets get back to Three UK.

Hutchison was keen to return to the UK, and was prepared to dig deep into its financial pockets and invest heavily to break into the market once again. When Three UK was launched in 2003, it positioned itself as the UK’s commercial video mobile network, thanks to the UK’s first 3G network.

But video on mobile devices never really took off, and for many years Three UK was a loss-making venture for Hutchison , as it was fiercely competing against four other established players (Vodafone, BT Cellnet or O2, Orange, and T-Mobile UK or One2One).

It was not helped by the fact that Three in the early days struggled with a relatively unappealing device portfolio.

But it hung in there and invented itself as the operator of choice for cost conscious mobile customers, and even began offering music and video services, as well as free Skype-to-Skype calls to all customers with a compatible handset (customers could use the VoIP service without data charges or top-up fees).

Having established its competitive data plan credentials, Three’s fortunes changed when the Apple iPhone and smartphones in general began to consume what was then expensive mobile data at an alarming rate.

Three however was ready for the challenge, as it already had the ‘all-you-can-eat’ plan designed to give customers “peace of mind” and remove the fear of unexpected data charges.

For years rival UK operators chose not to compete with Three and offer unlimited data tariffs of their own.

Three Connected Britain

O2 Failure

So Three UK carved itself a niche in the UK, and although it is the UK’s smallest mobile operator, it had traditionally been a disruptive force in this country, attempting to differentiate itself from its rivals with offers such as inclusive roaming, unlimited data and no additional fees for 4G.

And Hutchison was not willing to sit back and enjoy its hard won comforts. On 24 March 2015, Hutchison shocked the market when announced it would acquire the UK operations of O2 for £10.25 billion, subject to regulatory approval.

But that regulatory approval was not forthcoming.

Ofcom opposed the deal saying it would be bad for the UK market, and the European Commission (EC) also formally blocked the proposed merger over fears the deal would harm competition and innovation in the retail and wholesale markets.

And then in August last year, Three’s parent company was reported as taking legal action against the European Union over its decision to block the acquisition, especially considering it had already approved the merger of Three and O2 in Ireland for example.

The acquisition block did not stop it from making other acquisitions, but for now Three UK seems to be content to remain a disruptive thorn in the sides of other British mobile operators.

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