Questions & Answers

The focus this month is the impending merger of T-Mobile and Orange in the UK. Firstly, from the operator sector perspective, how do you see this merger affecting the marketplace? There is no doubt that this is one of the biggest shakeups seen in this sector since the 3G licenses were auctioned, but just how big an affect on the operators’ will it have, both those being merged and those being usurped by the new, massive company? Is it a good thing, from the point of the short term, looking at the recession, and in the long term for what it will mean for the UK mobile market in terms of competition?

Jon Doughty, Rocket Science director:

It’s a good thing for the mobile market, as it will serve to change the dynamic of the airtime market, and ensure that it remains fresh, and doesn’t stagnate.

While probably very little will change in the next 12 to 18 months, having this on the horizon ensures that everyone has to be driving performance, to either retain what they already have, or to be able to challenge for new opportunities.

It’s probably much more beneficial that it was Orange who tied up with T-Mobile, rather than either O2 or Vodafone, as either of these could have potentially taking such a significant position, others may have found it hard to challenge.

This creates a very different landscape, which in turn you would hope ensures that

the incumbent leaders of the market now have to review their two, three and five year plans for the UK, and drive hard to re-establish them against a much stronger competitor then before.

Eitan Linker, emoze CEO:

It will be interesting in the short term to see how the new merged company handles relationships with network sharers and MVNOs.

For instance, T-Mobile has signed a network share deal with 3 and an MNVO with Virgin, whilst Orange has similar deals with Vodafone and Ikea respectively. Surely many of these agreements are now obsolete? Does this give the MVNOs grounds to seek more favourable terms with the new merge giant, or even break their contracts and seek better offers with Vodafone, Orange, or even 3?

Interestingly, in the media this merger has been billed as offering customers increased value in the longer term. However, both parent companies’ of T-Mobile and Orange view the UK market as less profitable than other markets, both having below target ARPU.

We may find that, although there will be undoubted cost savings, these are likely to be used to increase company profitability, rather than being exclusively passed onto the customer.

Looking at it from this perspective, it makes good business sense for both companies in the longer term, irrespective of the recession, as when all said and done these cost savings will only start to appear long after the recession has faded. In terms of competition, this will have a number of knock-on effects.

For consumers we can expect a short term fight for customers over the next couple of years, with prices falling accordingly. As many market analysts have stated, it remains to be seen if this a deal in the consumer’s long term interests.

As for the new giant itself, I believe that ultimately the T-Mobile brand may be dropped or focused exclusively on providing airtime to lower income groups.

From a personal point of view, it will be interesting to see how emoze’s existing deal with Orange – emoze is available in the downloads folder of Orange – is rolled out as part of the larger group. Obviously we could potentially be either a bigger loser or winner from this deal. That said, with mobile data packages increasingly being seen as essential part of customer contracts, the long term prognosis for emoze looks decidedly rosy.

Linker, emoze:

The biggest difficulty will come in trying to keep a good dialogue open with customers who are bound to be unsure about the short and medium term propositions of the merged company. In this period we may see a significant advantage handed to competitors such as Vodafone and O2, who now effectively have an 18 month head start on T-Mobile-Orange, as during this period the merged company will be concentrating on integrating its services.

But in terms of the prognosis for independent dealers themselves, this surely has to be a good thing. There is no way the newly merged giant will continue to operate two stores on each high street, which inevitably means there will be some consolidation of stores and ultimately less competition for the independents.

For federated partner stores, this could well be bad news as store closures and consolidations mean job losses. Also looking at it from the longer term perspective, less mobile networks will mean fewer profits from connection charges, which is likely to put more pressure on the already strained dealers.

As for operating as two distinct brands for the next 18 months, I don’t believe there is another way to organise this merger, as T-Mobile-Orange needs to astutely judge the consumer reaction before deciding on its long term company marketing strategy, and this can not be done over night

If done correctly the new company’s UK launch could be a great success in a London Olympic year; what more memorable event is there? If it’s done poorly, it may well get lost in a potentially overbearingly noisy marketing environment.

Doughty, Rocket Science:

The biggest challenge most are likely to face is which networks to partner with moving forward. In both distribution and the dealer community, there has been a tendency recently for them to become more and more aligned with certain networks, and the question this will raise for some is whether they have made the right choices, and aligned with the right partner, with such a significant change in the market dynamics.

How independent the brands remain over the 18 months, we’ll have to wait and see. Admittedly, I wouldn’t expect to see dramatic changes in the short term, but I would presume it’s likely that the timeline is allowing for a degree of buffer, and that changes are likely to start happening before the 18 months deadline.

As for the Olympics, while it is London-based in 2012, the branding and messaging of the event is a global one, and of the areas still probably under review is how best to maximise both Orange and T-Mobile’s global messaging within a single country’s merged business, therefore I’m sure it’s still one of the many things that they want to be sure they get 100% correct before going live.

Jon French, HTC UK and Ireland country manager::

Christmas is an exciting time of year for us as a handset manufacturer, as it is for our operator partners. The period traditionally presents a great opportunity to attract new users and subscribers.

However, in the current economic climate we are aware that consumers have less money to spend and therefore must make the decision between going for a low cost handset, spending a little more with a view to a longer term investment, or not upgrading at all.

Consequently, devices must offer more to convince consumers that they are a worthwhile investment. HTC has recently released two devices we hope will make it onto consumers’ Christmas wish lists.

This Christmas, Android-based handsets promise to offer consumers greater choice in this increasingly application-centric market. Rather than applications, HTC’s latest Android offerings, the HTC Hero and HTC Tattoo, put the user at

the centre of the mobile experience, allowing them to tailor the device to individual tastes and usage.

Fundamentally, at HTC we believe that no one size fits all when it comes to mobile phone which is why we remain committed to delivering a broad portfolio of products which span both the Android and the more established Windows Phone platforms. However, this Christmas will give the industry its best indication of consumer confidence and Android’s growing influence.

Andy Tow, Avenir Telecom managing director::

We’re currently hearing some great feedback from our dealers about Samsung’s burgeoning Omnia range.

While the BlackBerry and iPhone brands are certain to grow even further over quarter four and across 2010, we think the Omnia will provide a compelling alternative. There’s a clearly defined stream of products under the Omnia banner, Samsung’s family name for Windows Phone 6.5-based handsets. And the entire range is built on a firm business proposition of enabling and growing productivity, whilst reducing total cost of ownership in areas such as apps, unified comms, asset management and corporate IM.

The touchscreen will be familiar to iPhone users, but clever ideas such as the Task Switcher, an enhanced idle screen and work and play modes, take the device one stage further for business users.

Samsung delivers some impressive hardware specs, too. The Omnia II, for example, has a s lightly larger screen than the the iPhone and it has an impressive battery life, too: 1500mAh, or 10 hours talk.

Mark Loughran, Nokia’s UK managing director:

This Christmas it’s all about smartphones and beyond as new devices and services change how people connect with one another. Consumers want intelligent mobile devices that enhance their lives through exciting and intuitive applications.

There are a number of great devices and services coming from Nokia between now and Christmas including the Nokia Booklet 3G, which provides consumers with an innovative and flexible way to communicate and connect on the move. Other new top handsets that we’ll see include the Nokia N900, Nokia N97 mini and Nokia X6.

The high performance Nokia N900 is our new Maemo device. The Nokia N97 mini is a smaller version of the successful Nokia N97, with handy features including a tilting touch display, QWERTY keyboard and customisable homescreen. Nokia continues its success in music with the Nokia X6, the first device in the Xseries range.