krug3r
07-06-2003, 11:39
[SOURCE = ThisIsMoney]
MOBILE phone call costs have been dramatically slashed in the first exchanges of a new price war.
A decision today by 3, Britain's newest network operator, to reduce by 70% the charges for voice calls using the latest generation of mobiles is expected to spark cost-cutting that will suck in major players such as Vodafone, mmo2, Orange and Virgin.
Bradley McMaster, telecoms analyst for bankers ABN Amro, said the price cutting would inevitably spread to all networks, affecting millions of phone customers - not just those who have bought new video phones. McMaster said: 'They are very much using the cost of voice calls as the primary weapon of competition.'
The tariffs introduced by 3, called VideoTalk 500 and VideoTalk 750, offer customers three times as many voice minutes for the same monthly fee as comparable packages on other networks.
Customers have so far been deterred by the price of 3's handsets, which allow video phonecalls and downloading of football highlights and soft porn - but cost £199 even at a special promotional price. However, heavy phone users have worked out that 3's £60-a-month unlimited call package can work out far cheaper per minute than competitors' tariffs.
The company - set up by Hutchison 3G, which arrived in the UK only three months ago - hopes the new tariffs will fill the gap between its current £60 rate and simple pay-as-you-go plans and will attract more data-user customers to the network.
Shares in Vodafone, Orange and mm02 have fallen sharply since news of Hutchison's cheaper tariffs emerged. Its price cuts amount to almost a 70% discount on the average per-minute tariff for mobile calls among all operators, according to analysts.
Although 3 is understood to be selling about 600 handsets a day, its competitors face the prospect of watching its market share grow dramatically if they do not match its cost cuts.
Until today's move, its relatively small sales - so far just 25,000 - had made the operator's target of achieving a million customers by the end of the year look tough.
But Bob Fuller, who became the new chief executive of Hutchison 3G last month, said he was 'building the business to be able to support' this target.
Fuller insisted his rivals were wrong to dismiss the company so early on. 'We are getting customers and we are getting them on the revenues we expected,' he said. Hutchison paid £ 4.4bn for a licence to provide third-generation mobile phone services in the UK but after a disastrous launch it has replaced its senior management.[SOURCE = ThisIsMoney] [SOURCE = ThisIsMoney]
MOBILE phone call costs have been dramatically slashed in the first exchanges of a new price war.
A decision today by 3, Britain's newest network operator, to reduce by 70% the charges for voice calls using the latest generation of mobiles is expected to spark cost-cutting that will suck in major players such as Vodafone, mmo2, Orange and Virgin.
Bradley McMaster, telecoms analyst for bankers ABN Amro, said the price cutting would inevitably spread to all networks, affecting millions of phone customers - not just those who have bought new video phones. McMaster said: 'They are very much using the cost of voice calls as the primary weapon of competition.'
The tariffs introduced by 3, called VideoTalk 500 and VideoTalk 750, offer customers three times as many voice minutes for the same monthly fee as comparable packages on other networks.
Customers have so far been deterred by the price of 3's handsets, which allow video phonecalls and downloading of football highlights and soft porn - but cost £199 even at a special promotional price. However, heavy phone users have worked out that 3's £60-a-month unlimited call package can work out far cheaper per minute than competitors' tariffs.
The company - set up by Hutchison 3G, which arrived in the UK only three months ago - hopes the new tariffs will fill the gap between its current £60 rate and simple pay-as-you-go plans and will attract more data-user customers to the network.
Shares in Vodafone, Orange and mm02 have fallen sharply since news of Hutchison's cheaper tariffs emerged. Its price cuts amount to almost a 70% discount on the average per-minute tariff for mobile calls among all operators, according to analysts.
Although 3 is understood to be selling about 600 handsets a day, its competitors face the prospect of watching its market share grow dramatically if they do not match its cost cuts.
Until today's move, its relatively small sales - so far just 25,000 - had made the operator's target of achieving a million customers by the end of the year look tough.
But Bob Fuller, who became the new chief executive of Hutchison 3G last month, said he was 'building the business to be able to support' this target.
Fuller insisted his rivals were wrong to dismiss the company so early on. 'We are getting customers and we are getting them on the revenues we expected,' he said. Hutchison paid £ 4.4bn for a licence to provide third-generation mobile phone services in the UK but after a disastrous launch it has replaced its senior management.[SOURCE = ThisIsMoney] [SOURCE = ThisIsMoney]