After recently catching up with Dave Dyson, CEO of Three UK, CCS Insight's Kester Mann reflects on the operator's 5G announcement.
Three UK announced it will switch on its mobile 5G network in 66 locations by the end of February 2020.
The news marks a welcome, if overdue, update from the operator, which had delayed its original plans to go live in 25 towns and cities before the end of 2019.
As previously indicated, Three's 5G service will be available to all customers, including those on pay-as-you-go plans, for no extra cost. Unlimited 5G SIM deals will start at a punchy £20 per month and five supporting smartphones are already on sale. The move builds on Three's launch of a 5G fixed wireless service in London in August 2019.
Last week, I met CEO Dave Dyson (pictured below), who gave me a detailed insight into Three's strategy. He remains confident that its strong spectrum holding will eventually enable the operator to become a leader in 5G. In 2019, rival operators stole most of the 5G limelight, but the CEO appears to be no less optimistic.
When we last met, he described how 5G could be the long-awaited catalyst to achieve the scale it needs to challenge Three's larger rivals and spearhead a push into new markets (see Three Sees Bright Future Thanks to 5G).
But, for the time being, I expect a major part of Three's 5G positioning to be based on better speeds. Indeed, its press release today talks of a service twice as fast as those of rivals.
This could put it on a PR collision course with EE, which has drawn heavily on network leadership in its own marketing since being first to launch 4G in the UK, back in 2012. Still, Three has plenty of ground to make up: last week, RootMetrics placed the operator last for network speed in its ranking of UK providers for the second half of 2019.
Beyond better connectivity, Three's mobile 5G launch appears to offer consumers little that's original or innovative. This is slightly disappointing as EE, Vodafone and O2 all included at least some new content or technology to complement their launch, such as gaming or virtual reality.
Mr Dyson said that the main reason for this is that Three is still completing a radical overhaul of its IT systems. It's a significant project that, once complete, will enable it to introduce new products and services far quicker and improve customer experience across all channels.
I'd put a bet on Three focusing strongly on mobile gaming in 2020. It has already partnered with Activision — the company behind Call of Duty: Modern Warfare — for its 5G fixed wireless service and has been demonstrating 5G cloud-based gaming at its flagship Oxford Street store for some time.
Three's new 5G locations don't yet include access to fixed wireless access. However, Mr Dyson remains upbeat about the long-term prospects for the broadband replacement service, even if other UK providers are stepping up their investment in fixed-line infrastructure.
Although he was coy about adoption, he said that early customers are enjoying good performance with speeds in excess of 200 Mbps. As expected, students and people living in rental accommodation are among the early adopters.
Alongside 5G, a leading goal for Three in 2020 is to beef up its marketing efforts and improve awareness of its brand and affinity for it. It's an important target as the operator still suffers from a negative perception toward its network. It hopes 5G will help overcome this.
In an important step to achieving this goal, in January Three signed a shirt sponsorship deal with Chelsea Football Club. This seemed like a real statement of intent for a company that has considerably underspent rivals in marketing and advertising in the past.
Inevitably, the government's recent supply chain review, which limits the involvement of so-called high-risk suppliers, featured prominently in our discussion.
This was a crucial ruling for Three, which has been swapping out Samsung equipment for Huawei in the radio access part of its 4G network.
Although the decision means Three will incur additional costs, the CEO welcomed the long-awaited guidance that gives it confidence to invest in the next stages of its 5G network deployment. Over the next two years, Three plans to upgrade the 40% of its sites that currently carry 80% of its traffic.
To comply with the government's caps, Three has already begun the process of sourcing new providers. Interestingly, as well as talking to "the usual suspects", it said it would consider a role for smaller, less-traditional partners. This indicates a push toward the use of open radio access network technology, which is expected to see good growth over the next 18 to 24 months and already has the backing of operators such as Telefonica and Vodafone.
5G devices still few
Three is the last UK operator to introduce a 5G service for smartphones, but I doubt this will mean much in the long run. Penetration of 5G devices remains low, partly owing to their very high prices and the lack of a compatible iPhone. But this will change in 2020, firing the starting gun for the real battle to sign up subscribers.
In 2019, Three made a lot of noise about its 5G credentials, yet failed to match its own hype. Now it's time to live up to its potential.