Earlier this year, mobile phone retailer Carphone Warehouse announced it was launching an Irish MVNO in 2015.  This will involve some delicate tradeoffs ahead for Carphone Warehouse.

A Carphone Warehouse store on Grafton St., Dublin

Carphone Warehouse, an independent retailer of mobile phones and service contracts, has 92 shops around Ireland, selling mobile phones and contracts for all of the large mobile network operators in Ireland – Eircom, Vodafone, O2 and Three.

When the takeover of O2 Ireland by Three was approved by the European Commission, certain conditions were set – in particular that to offset the reduction in competition in the Irish market caused by the removal of one player, O3 (as some industry wags have started to call the new merged entity) must enable two new MVNOs on its network.  We now know that these will be UPC and Carphone Warehouse, both launching in 2015.

As the biggest independent retailer of mobile phone contracts in the state, Carphone Warehouse has built a Irish strong business with sales of over €100M in 2013.  However, that business was built on two pillars: a reputation for impartiality with the Irish consumer, and a market power that encouraged the mobile networks to do business with it.  Now one of those pillars is under threat, as the other networks wonder whether their independent channel will remain so – or whether it will prioritise sales of its sister company over that of its competitors.

Talkmobile UK Christmas campaign

Now, Carphone Warehouse has run a MVNO called Talkmobile in the UK since 2007 , so it has experience of balancing the needs of the two businesses.  But nevertheless, the Irish networks will be watching Carphone Warehouse’s retail division closely for any sign of favouring their own child on the playing field.  Christmas 2015 will be a crucial test for the networks.  Will Carphone Warehouse’s stores deliver the traditional sales bonanza for the big mobile networks – or will the home MVNO (dare we call it Talkmobile.ie?) win out?

For the Irish consumer it is important that the new MVNOs succeed, as competition in the Irish mobile market has been weakened by the reduction in number of big players from four to three.  UPC’s mobile offering will likely only make sense to the consumer as part of a quad-play bundle, which puts the onus on a successful Carphone Warehouse MVNO to incrase competitiveness.  Judging by the market position of the UK MVNO and the comments of Carphone’s Ireland CEO in this Silicon Republic interview, the MVNO will focus on the value end of the market – good news for Irish consumers.  It will be a fine line to walk: be successful, but not at the expense of the lucrative retail business.

Quad-play is the buzzword of the moment in Irish telecoms – and with good reason.  What’s it all about?

In the old days, traditional telcos offered landline services and newfangled mobile companies offered their mobile services.  Even when the fixed network owned a mobile network, these were run as separate entities (usually sharing nothing except a mutual loathing and an ultimate owner).  TV wasn’t mentioned in the same breath as telecoms.

Then we started to hear about triple-play: companies offering landline (PSTN) phone lines, fixed internet and mobile telecoms – all on the same bill.  Telcos started buying smaller players in order to offer triple-play.  Converged services (as they were known, then) were slow to catch on, partly because the services weren’t very compelling and partly because of the internal challenges that many European telcos faced in integrating the systems and cultures of their two arms.  Many who did not own both a fixed and a mobile operator became a bit-player in the other marketplace through an MVNO on mobile or reselling the landline services.  Uptake was slow.  Nobody working in a telco wanted to be on a triple-play project.

Then three things happened:

• Some TV companies started offering fast broadband based on superior infrastructure (e.g. Virgin in UK, UPC in Ireland). Word started to get around customers.  Market share ensued.
• Mobile markets hit saturation. Where was the growth going to come from?
• The industry learned that the more services that the customer bought, the lower their churn rate.

Suddenly, the telcos wanted triple-play and even quad-play.  It suits everyone.  The mobile operators get to grow again, the fixed telcos get to arrest the decline of landline penetration in favour of mobile calls and mobile broadband (landline penetration rose in the last COMREG quarterly report!), and the cable / satellite TV companies get to actually take advantage of the decline of TV in favour of the internet.  So now we have Vodafone buying Kabel Deutschland and planning a big shift in favour of ‘multi-screen’ aka quad-play, BT spending more than a billion euro to hoover up the rights to Champions League football, Sky aggressively marketing their broadband…

And in Ireland?  Well, since their TV launch Eircom have the full deck, Sky are missing the mobile service, Vodafone are just lacking a TV offering, thanks to their investment in Perlico & BT Ireland, and O2 / Three stay focussed on mobile.  UPC have three, and could easily set up a MVNO.  How might Vodafone realise their stated strategy in Ireland?  The near future should be interesting.

And is this a good thing?  Well, yes and no. Yes, because it will become easier to buy all these products from one supplier, which may help simplify our lives – and there are discounts to attract us to these bundled offers. And no, because if quad-play becomes the norm, there will in effect be fewer vendors offering the suites of products that customers expect.  The new concept of ‘service portability’ (discussed at length at a recent conference) threatens to reduce barriers to switching your quad-play offering to another supplier – but honestly, it’s hard to see it succeed in Ireland.  Let’s see.