Where next for Vodafone and 3?

Where next for Vodafone and 3?

Summary: So where did Vodafone and Hutchison go wrong and will they fare any better as a combined entity? Telstra's Deena Shiff, Internode's Simon Hackett and analyst Paul Budde discuss the issue in this week's Twisted Wire podcast.

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There's been industry speculation that Vodafone might pull out of the Australian market. Clearly that's not the case with the proposed merger with 3 Mobile, which is subject to approval by the ACCC and the Foreign Investment Review Board.

In Australia, Vodafone never matched its success in Europe and 3 has been a financial drain for Hutchison. So where did these two companies go wrong and will they fare any better as a combined entity?

Will they need a fixed line component to grow revenues and retain their customer base? Can they really compete against the strength of Telstra's Next G network?

Press the "play" symbol below to listen to the podcast.

In this week's show Phil Dobbie talks to:

  • Industry analyst Paul Budde
  • Deena Shiff, group managing director, Telstra Business
  • Simon Hackett, managing director of Internode

Be sure to give your views in the comments section below.

Phil Dobbie is a broadcaster and businessman with more than 15 years commercial experience across the telecommunications, internet, tourism, advertising and radio industries. Dobbie also provides a daily podcast for our sister site BNET.com. Join him for BTalk Australia, where he provides a lively and insightful view on business issues, adding his blend of irony and humour to the discussions.

Topics: Telcos, Government, Government AU, Mobility, Telstra

About

Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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Talkback

23 comments
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  • Vodafone Hutch Merger

    Good article Phil. I've been pondering the implications of the merger and this was helpful
    anonymous
  • Where next for Vodaphone and 3

    Firstly Paul Budde really needs to stop himself from saying "yer" every 5 seconds, as it detracks badly from what he is trying to say..
    Very good article tho.
    nextG is Mobile phone tech not Wirelless Broadband.
    NextG does suffer from the same problems for the very reason it is mobile tech NOT wirelless Broadband tech
    anonymous
  • Competition

    I agree that in this circumstance this is probably good for competition. It creates 3 similarly sized competitors instead of 2 larger and 2 smaller, giving VHA the chance to push the industry.

    But I have to wonder - in general, what makes people think that competition is necessary at the service level but unnecessary at the infrastructure level? Competition is the incentive to improve systems, update technology, or lose marketshare and profits.

    In a future Australia with no infrastructure competition, inefficiency will breed too easily - of course it'll only be the infrastructure itself on which so much relies that will grow more inefficient and costly, it's okay though because the sales people will be highly competitive. And this is supposed to be a good thing?

    ps. Put this on iTunes. It was good, I'd like to listen to future interviews. :)
    anonymous
  • hold on

    dont forget Buddes' first language is Dutch; self verification ("yes?") is common with hearing impaired and second language speakers.

    for the record i thought Deena was much nore hesitating and umming and ahhing, Budde is much more natural and has a lot more to say, without seeming like hes trying to remember the appropriate company line to trot out....
    anonymous
  • VHA ...

    so all that is needed is a VHA optus roaming deal?

    well, 3 (hutch) use 3GIS network with Telstra (if there is any Telstra 3G2100 custs left). 3 roam onto Telstra 2G when no 3GIS coverage. Soon 3 will roam onto NextG (but only to the optus 3G900 footprint). Then since 3 is now VHA, voda could roam onto 3GIS, Telstra 2G, NextG, and have their own 2G and 3G2100 built in JV with optus..... incest!

    would have been nice Phil if u touched on that mess!
    anonymous
  • Podcast?

    A podcast is not a podcast if you cannot subscribe to it! Where's the RSS for the audio?
    anonymous
  • Actual internet on mobiles

    Thanks very much Phil, it was actually quite interesting.
    I was thinking as I listened to it, that 3 provides good value wireless broadband, so (assuming the merger goes ahead etc) if the new company can provide their mobile service, but with the kind of downloads that 3 provides with their wireless BB on a mobile phone. It's just something I'd like to see, because of the atrocious download limits and pricing that we currently have on mobile phones. I mean 3 have some decent offers, but not the coverage, and hopefully this merger will fix that.
    I recognise that wireless BB and actual mobile BB are different things, but if they could offer something like this, then it (hopefully) would push the other telcos into offering something a little more substantial than 150MB per month, or whatever the current offer is.

    Anyway, that's just what I'd like to see, and it'll be interesting to see what the new voda/3 company does in this area.
    anonymous
  • Umm, ahh, umm!

    Oh yes, that Telstra woman was so painful to listen to. Gee, you see 5 year olds on the news who can string a sentence together with greater clarity than her.
    anonymous
  • Dyslexics can't rightly criticise those from non english speaking backgrounds

    There's no "PH" In vodafone moron. Before you criticise someone for their lack of english skills, check your brand name spelling
    anonymous
  • Download vs Stream

    Great topics but without the download option I'm not listening. Whats the problem?
    anonymous
  • Great program Phil

    Paul Budde's mangled language is one thing, but his mangled grasp of facts is always greater cause for concern. He claims Voda entered the Australian mobile market at the same time as Optus (1992) and failed to realise the opportunity available by reselling analogue (AMPS). My recollection is that Vodafone was given a mobile licence by the Federal Govt on the condition it would be digital... with the guarantee AMPS would be shut down before 2000. Happy to stand corrected - I don't claim to be an expert. Paul Budde does! When he can't get the basics right, who cares about his opinions?
    anonymous
  • Podcast?!

    How is this a podcast? There's no podcast feed, only a text blog with streamed audio embedded. If you want to be taken seriously, how about providing an audio download feed (aka a podcast!)?
    anonymous
  • Podcast

    Michael, I'd hate to think I'm not being taken seriously. The ZDNet guys are working on the feed. In the meantime, if you're desperate, I think you should be able to view source, find the mp3 address, open it in your browser and save as from the file menu.
    anonymous
  • Download

    We're working on that now :)

    Cheers,

    Renai LeMay
    News Editor
    ZDNet.com.au
    anonymous
  • Vodafone sucks! that's why

    I used to be with vodafone and never had full signal, IN THE MIDDLE OF THE CBD I WASN'T ABLE TO MAKE CALLS vodafones reception was that bad. I'm with optus now and full signal wherever i go so the phone wasn't at fault. but vodafone's network really blows and that's why i dont think they have done well here
    anonymous
  • Crap

    My experience with both 3 and Voda have been complete crap both on a personal side and an enterprise side, that's why the are failing compared to the big two.

    They modify they handsets they sell, i had 3 replacements of the same model handset with 3 and they all had the same probs, got a generic handset of the same model and none of those issues. I have hear of this many times before with both 3 and Voda.

    Account management is disgraceful with both companies aswell.

    As much as I complain again Telstra, these two companies make Telstra look like saints
    anonymous
  • All assistance given

    I agree with your comment regarding Vodafone customer assistance. I'm am warning you now, don't bother trying to use their on-line assistance! Vodafone's motto is seemingly, "All assistance given short of actual help". At the moment, the Vodafone coverage is less than 68% of the Au population, and much of that is not 3G. 3 simply duplicates some of the areas in which Vodafone operates and so together there is no increase in coverage. As well, Vodafone breached promises to their customers about expansion of their network, especially regional customers. They were supposed to have worked completed by Nov 2008, but the latest suggestion is July 2009. I joined Vodafone to support competition, but as soon as my contract expire, I'm out . . . and I will never use them again.
    anonymous
  • Paul Budde's Grasp of the Facts

    I agree that the self-proclaimed communications experts, Paul Budde does often have difficulty grasping facts, he is correct on the circumstances of Optus and Vodafone's entry to the Australian market. Each paid the government of the day a bucket of money for a licence to build and operate a GSM network. The payoff was the government's forced closure of the AMPS network which, by the way, came with all of the angst of the closure of Telstra's CDMA network last year. The intention behind closing the AMPS network was to attempt to shake Telstra's customers loose in the hope that some would migrate to Optus and Vodafone.

    Whether Vodafone's decision not to resell AMPS in the early days led to its position as the number 3 mobile operator is questionable. All this happened more than 15 years ago and with the average person changing handsets every couple of years and with Mobile Number Portability having been established for half that time, any loss of market share in the initial days would have diluted to nothing. What we see now is simply a natural market breakup based on perceived value, price, and service.

    Paul Budde's understanding here of the economic realities of companies needing to have a commercial return on their investment contrasts sharply with his lack of concern for the same thing when it is Telstra in the hot seat.
    anonymous
  • Well, done

    Well done, Phil. It was an informative and balanced piece. David Braue - take note.
    anonymous
  • The "Expert" couldn't be more wrong

    For an "expert" Mr Budde seems to get his facts very wrong... Hutch never had a GPRS network, Hutch launced a CDMA network under the Orange brand as a forerunner to its 3G W-CDMA network. It closed it and transferred the customers across to the 3 network when the 3G network had the capacity. Mr Budde also talks about Hutch getting the early adopters but then basically getting over run by the others and that the business model was flawed. I guess this podcast was recorded before Hutch released its 2008 results last thursday as it clearly showed Hutch now in profit territory still with the highest ARPU in the industry. Happy for the "expert" to have an opinion, it would be more credible if the facts supporting it were understood first.
    anonymous