Orange boosts MVNOs and phones as delays threaten TMo UK merger

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Orange boosts MVNOs and phones as delays threaten TMo UK merger

By CAROLINE GABRIEL

Published: 13 October, 2009

READ MORE: UK | Orange | T-Mobile | MVNO | Regulation

The merger of the UK arms of Orange and T-Mobile could be delayed or even prevented by new regulatory hurdles. The UK Office of Fair Trading is expected to call for a probe of the joint venture proposal by UK authorities and the EU Competition Commission.

The JV would create a market leader with 37% share. This is not unprecedented in Europe, where several countries have cellcos with over 40% share, but even if a probe did not block the deal, it would certainly delay it and could force the partners to divest some spectrum to avoid breaking government caps. The call for a review has arisen from the belated agreement of a deal with all five UK cellcos on 3G licensing, as part of the government's plan to use wireless to achieve universal broadband.

After much wrangling, the UK government and the five cellcos have agreed a spectrum cap system, which should be unveiled this week. Neither Vodafone nor O2 will be forced to give up any frequencies, but the deal says a "regulatory remedy" is needed to prevent the Orange-TMo venture owning too much spectrum. Previously, regulator Ofcom had wanted Vodafone and O2 to transfer some of their low frequency GSM spectrum, which can be refarmed for rural 3G coverage, to their rivals.

As it waits for the outcome of the JV plan, Orange is pursuing new revenue streams and is following 3 and O2 into more aggressive MVNO strategies. Like 3, it has signed an MVNO aggregator to help it launch new virtual operators on its network quickly and cheaply, increasing Orange's presence in niches that it does not tap easily with its own brand and service offerings.

It will work with Transatel and says this will enable it to launch an MVNO in the space of six weeks, and that it could theoretically accommodate about 20 new partners a year. It particularly wants to pitch the system at small and medium enterprises and resellers, which in turn could go after specialized client bases.

Orange UK's VP of new business wholesale and strategy, Marc Overton, told MobileNews: "Our overarching ambition at Orange is to become the network partner of choice for new and existing MVNOs. This partnership has been driven by market demand, as companies are increasingly realizing that offering telecoms services to their customers creates additional profitable growth and increased loyalty." Transatel already offers its service to operators in France and Belgium.

But of course the flagship smartphones are the tactics that receive most public attention, and Orange UK has become the world's first carrier to ship the Motorola Android-based Dext, which will soon come to T-Mobile USA as the Cliq. Meanwhile, O2 is putting hefty efforts behind its upcoming Palm Pre, which will be on sale in Germany this week and the UK shortly afterwards. So effective is the build-up, says one consumer research firm, that the UK launch of the Pre could outshine that of the original iPhone in 2007 (though we remember the disappointment that followed intense anticipation at US launch carrier Sprint). TNS interviewed 1,000 UK adults and found 26% would "definitely or probably" buy the Pre, better than the score of 16% that the iPhone gained in a similar survey two years ago.