A very interesting presentation from Hutchison‘s Barry Roberts-Thomson at the ATUG conference (Now99) last month foreshadowed untimed local calls on the company’s Wireless Local Loop (WLL) service to be launched over its new CDMA system in 2000. This is an excellent move, welcomed by everybody in the industry who would like to see some tangible results of the promised competition. Another interesting detail here is that Hutchison will be able to use numbers that look like landlines – these will not incur the extra fixed-to-mobile call rates.
As you might recall from previous articles, I am a great believer in WLL services, despite their slow start in the market.
Barry also explained some of the strategies that the company will employ. First of all there is the new name ‘Orange’ – this becomes a global brand. As the company’s mobile services in Europe and Asia are already using the name it makes a lot of sense in our rapidly globalising environment.
However, I am not so sure about the company’s assessment that it will be able to keep the CDMA-WLL system separate from the national GSM systems and therefore avoid cannibalisation. They maintain they do not want to rock the boat but I interpret this as an effort to avoid being seen by companies such as Optus and Telstra as major competitors to their national mobile services.
Hutchison has indicated that it is aiming at the second or third line market – an interesting thought, but I am doubtful if this will be the reality when the service is finally launched in 2000. In my opinion a head-on clash will be unavoidable. Competition will drive the various segments into one, and if Hutchison is not going to do it others will – offering seamless services between WLL and national services; bundling the various offerings in nice packages.
The name of the game is the call charge that the customer will have to pay and, with half a dozen players in the market within the next 12-18 months, I find it hard to believe that companies will be able to keep the various services sheltered from each other (and thus charge higher prices).
One advantage that Hutchison has, however, is the architecture of their CDMA network. This is much more suitable for the local loop market than GSM based networks.
The companies who can deliver, with the best price and the most attractive package, will be able to survive in this market. We can already see this happening in markets that operate services like this in the USA, Europe and parts of Asia. BT, for example, launched the world’s first cordless/GSM service based on the world’s first integrated WLL/GSM handset. BT uses the DECT technology for its WLL service, as opposed to the CDMA one employed by Hutchison and others in Australia.
Called Onephone, the service operates as a standard cordless phone when in range of the base station, and as a GSM phone when out of range. The system, comprising a WLL/GSM handset, WLL only handset and integrated charger/base station, sells for £399. Usage also requires a subscription to Cellnet (£20 per month) and a Flexinumber contract (£2.95 per month).
Another strategy indicated by Barry was to address the market of multiple occupants, such as students and other young people sharing apartments, etc. This certainly makes sense, especially with the untimed local call service. With the right data speed the service would also become very attractive for Internet/laptop services.
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