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.