3, Vodafone and coverage

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The Australian mobile carrier 3 used to have a great business model. It concentrated on providing good coverage at cheap prices in urban areas where most Australian’s live. They were differentiated from the national networks run by the other carriers.

But about two years ago they were acquired by Vodafone. Now, the problems that Vodafone are having have been widely publicised. An example is here. And it appears that 3 is beset by the same problems. Two members of the family King who spend a fair bit of time around the Carlton/Brunswick area say reception there is now woefully poor – as in usually non-existent. So 3 now has poor coverage in what used to be its business heartland – the inner city areas.

In many ways the 3-Vodafone merger is a tragic story – but not an uncommon one. Good businesses with different and effective business models are bought out by a larger rival who destroys the model and the purchased business in the process. I saw that on a number of occasions while Mergers Commissioner at the ACCC. The law however only allows the ACCC to intervene with mergers that will substantially lessen competition – not mergers involving stupid managers.

The 3 story is a personal tragedy for the King family. We have been with 3, and its predecessor Orange, since I got my first mobile phone. It was the Orange phone that had two related numbers so that there was a ‘fixed line number’ as well as a mobile number. If you made calls close to home they were at a fixed line rate. It was an early attempt to have a mobile phone replace fixed-line services. The idea didn’t take off. But it reflected an innovative spirit that I like in my service providers. As a city dweller I also liked 3’s approach. I don’t need national coverage most of the time and on those occasions when I do I am happy to pay for it at the time. Why pay for it all the time?

But the merger with Vodafone has changed that model and undermined service. And as the customers flee to the other two mobile carriers we can simply ponder the death of an innovative mobile carrier.

 

9 Responses to "3, Vodafone and coverage"
  1. We started with Orange too. The 3GIS network isn’t supposed to be decommissioned until next year – so 3’s network coverage should not have changed?? Vodafones get 50% of the 3GIS sites when they are decommissioned – so if you go to vodafone (I will)  you may still be using the same infrastructure.

  2. TPG uses Optus’ network. In metropolitan areas Optus & Vodafone share many 3G sites – so going 3->TPG may result in you using the same infrastructure as you’d be using if you went 3->Vodafone.  It would where I am in inner Sydney. TPG may still offer better price/service.
    What about the hypothesis that 3’s network coverage hasn’t actually changed, but   the association of vodafone&3 plus “vodafail” publicity about poor coverage has produced negative perception about 3 coverage even in educated consumers?

  3. I’d say that the problem is not as bad as you think. The ideas that lead to the creation of Orange/3 still exist so if Vodafone screws up big time, the original business model can be re-implemented under a new name. The Entry of Crazy Johns into the telecommuncations marketprovides some evidence that the market is contestable

  4. I have been with 3 for nearly a decade, once paying $100 a month for 300M.

    Telstra network seems the only viable network at the moment for anyone who wants quality results.  Sadly I’m leaving 3 and going to them, as my Optus Wireless isn’t much better than my 3.

  5. Crazy John is not an alternative as far as network coverage – it uses  Vodafone’s network.  When 3’s (3GIS) sites are split between Vodafone & Telstra next year, your choice of voice networks  will be  Optus, Vodafone or Telstra.  At least Optus & Vodafone networks are diverging with Vodafone rolling out 850mhz.
    Funnily I took a look at the vodafail site and its suggested there some of Vodafone’s problems stems from the 3 corporate culture being adopted at Vodafone after the merger!

  6. The law however only …[forbids] mergers that will substantially lessen competition – not mergers involving stupid managers.

    Yes, and such takeovers are incredibly common – which suggests to me that the stupid managers must have really stupid bankers to give them the money.

    With my modest retirement fund, my rule is to immediately sell shares in any business that announces a substantial takeover bid for someone else – the downside risk is higher than the upside gain.

  7. “It was the Orange phone that had two related numbers so that there was a ‘fixed line number’ as well as a mobile number. If you made calls close to home they were at a fixed line rate. It was an early attempt to have a mobile phone replace fixed-line services. The idea didn’t take off.”
     
    The idea didn’t take off <i>in Australia</i> — in Europe, it’s still going strongly. I had one of these “homezone” contracts here as well, and then again in Germany (where they are still available). Very odd that they’re not available here any more. Perhaps the Europeans just have a more sensible phone market — they still sell you minutes of talk time on your contract, not X-hundred magical company dollars under a misnamed “cap”.

  8. Ironically, because orange/3 roam to Telstra when outside the cities, I get better reception on my 3 mobile when in the coastal Otways rainforest than in the wilds of Glen iris, Carlton or Brunswick!

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