Three UK declares war

June 8, 2003

Three UK (3 UK), on Thursday declared a price war that caused a massive panic-attack to established mobile phone operators in the UK.

3 UK, the first 3G operator in the UK, unveiled 2 new highly attractive tariffs that could kick start its sluggish sales by undercutting similar voice calls offers on the market by up to 50%.

Anxious investors, worry that 3 UK's attempt to poach customers from rival networks, dumped shares on Friday morning on 3G license holders Vodafone, mmO2 and Orange- wiping off almost 5% on all three company's share sales.

London City analysts were also worried that all the mobile operators will follow 3 UK's lead in undercutting prices that would lower their profit level in the long run. Sources suggest T-Mobile, one of the smallest customer based operator in the UK might even be forced to launch 3G service early to counter the effect. A source told 3GNewsroom.com, one of the non 3G license holders will launch a marketing campaign to "rubbish 3G" and one of the larger operator will launch advertisements to undermine 3 UK's content service.

The 2 new price plans are aimed at the mid-range users and due to be launched on Monday are called VideoTalk 750 and VideoTalk 500.

VideoTalk 750 offers 750 minutes of voice calls on any networks for £35 per month, 50 text messages and includes £20 worth of selected 3G online content for the first three months.

VideoTalk 500 offers 500 minutes of voice calls on any networks for £25 per month, 25 text messages and includes £10 worth of selected 3G online content for the first three months as well.

Package	Price	Inclusive mins	Average price per min
VideoTalk 750	£35	750	4.7p
VideoTalk 500	£25	500	5p
Voda 800	£70	800	8.8p
Voda 400	£40	400	10p
O2 400	£45	400	11.3p
Orange 700	£80	700	11.4p
T-Mobile 500	£60	500	12p
Orange 400	£50	400	12.5p

Compare to other similar packages on offered in the UK, VideoTalk 500 and VideoTalk 750 offers value for money and really do offer savings of 50% or more on some operators.

Analysts said the new deals are very competitive and can cause a customer shift towards 3 UK. An analyst at ABN Amro descried the move by 3 UK as part of the long predicted 3G tsunami that will change the UK mobile market forever which will benefit all consumers.

But critics said software glitches, handover problems and poor battery life might still affect 3's sales, which stands at 22,000 in the UK since launched in early March.

The reason why 3 UK can offer such temping monthly tariffs is because 3G is a more efficient technology that optimise bandwidth usage and can offer savings on significant part of the systems cost, hence 3 UK can offer cheaper voice calls then current rival 2G operators.

Packages:	VideoTalk 500	VideoTalk 750
Description:	You get 750 voice minutes to any network at any time for £35 per month. For the first three months the package will include a £20 per month allowance for video calling, video messaging and content. 50 text messages per month for the first three months. 3 customers can send and read email and view selected online content free until the end of August 2003.	You get 500 voice minutes to any network at any time for £25 per month. For the first three months the package will include a £10 per month allowance for making video calls, sending video messages and downloading video clips. It will also include 25 text messages per month for the first three months. 3 customers can send and read email and view selected online content free until the end of August 2003.
Aim for:	- Mid-range and casual users. - Students will be suited for the VideoTalk 500 plan
Value for money:	5 out of 5
Comments:	The best value for money tariffs you can get on the market. Hope 3 UK will keep this price war up.

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last updated: January 12, 2004

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Three UK declares war

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