The deal will let Hutchison customers use their phones outside major cities: a bonus, to say the least. Hutchison plans to be the first 3G operator to launch in the UK. Hutchison’s chances of success in the competitive UK market will be much stronger if it meets this deadline. But that depends on handset manufacturers’ ability to make roaming work by next September.
New entrant UK mobile operator, Hutchison 3G, has agreed to lease 2G network capacity from mmO2.
New entrant UK mobile operator, Hutchison 3G has agreed to lease network facilities from former BT subsidiary, mmO2. The deal, for tens of millions of pounds, will allow Hutchison 3G users to roam on mmO2 (LSE:OOM.L)’s GSM network.
When 3G services are first launched in the UK, operators’ networks will have limited coverage, centered on large cities and urban areas. Hutchison will initially cover just 20% of the UK population. Although 3G is being hyped as delivering high-speed data services, it’s important to remember 3G handsets will also be used as conventional phones. Spending hundreds of pounds on a phone you can only use in big cities isn’t hugely tempting.
Hutchison’s 3G rivals in the UK already have conventional GSM networks that cover the country. But as a new entrant, Hutchison needs to rent capacity off an existing operator. This makes the mmO2 deal a vital move. When the service is launched, users will be able to make and receive calls throughout the UK.
This move advances Hutchison’s chances of being the first UK mobile operator to launch 3G services. It plans to begin in September 2002, while other operators will wait until 2003. However, this schedule could still run into problems.
In Japan, NTT DoCoMo’s 3G subscribers currently need two handsets for roaming, because dual-mode 2G and 3G handsets do not yet work properly. NEC and Matsushita will have launched dual-mode PDC/W-CDMA devices in Japan by next September, but Hutchison will be the first major operator to use dual-mode GSM/W-CDMA handsets.
Hutchison does not have the image, network, or customer base of the other UK operators. But it does have a strong team, including many of the people who created Orange (PAR:ORA.PA), and the rights to strong content. If it manages to be first to market with a reliable product, it could do well. Following this vital deal with mmO2, its fate now seems to hinge on NEC and Matsushita’s dual-mode handset prowess.