Liberty Global and its Dutch subsidiary UPC Netherlands have wasted no time leaping into the mobile market with a cut price offer based around getting most data from its WiFi network, launched just days after the European Commission has cleared its bid for Ziggo. The news was broken by Telecompaper a Dutch mobile publication.
It has taken some of the ideas from Iliad’s Free, which dramatically changed the French cellular market in 2011, and three years on has 9 million cellular customers, but it has not taken the market right to the floor as Free did. UPC deals are being pushed as SIM only, starting on €12.50 a month, but the first level offers only 100 minutes of speech, and 300 MB of data.
Quite clearly UPC does not want to leave money on the table and is only just undercutting Vodafone and KPN, the two largest players in the market, so it is perhaps learning more from its own Telenet subsidiary in Belgium, which has about 750,000 mobile subscribers there.
It is unclear which cellular network the MVNO is with, but it is likely to be Vodafone, because Ziggo which is being merged with UPC, already has such a deal. The only other player that might offer an MVNO to UPC in the Netherlands is T-Mobile. KPN would flatly refuse such a deal, we suspect.
The Telenet MVNO in Belgium is with MobiStar, a company majority controlled by Orange in France, and like Vodafone in the Netherlands it is the second placed mobile supplier there, virtually neck and neck with the KPN owned Belgium mobile player, Base. The incumbent which is threatened in Belgium is Belgacom.
We assume that the new Dutch service is WiFi First based, even for voice and that it uses Voice over WiFi technology to keep as much of the traffic off the cellular network as possible.
Above that basic €12.50 a month deal it also offers a €20 deal with 400 minutes and 1.5 GB of data and unlimited SMS and an ‘Endless’ plan for €35 with 4 GB and unlimited calls and SMS. Similar pricing models for Vodafone are €15 a month for 500 MB and 300 minutes, and €18 a month for 1 GB and 300 minutes. KPN pricing is far less generous, starting at €17.50 a month for just 250 MB and 150 minutes of voice, and that’s with a full two years contract. Both Vodafone and KPN have just pushed through a 33% price cut for all their SIM only deals, to counter this move by UPC.
We would expect the service to stabilize and be tested and for the help desks to establish that the service works, and then for the marketing to ramp slowly, followed by a further lowering of prices.
UPC wants to sign up entire families and we would expect that there will be further bundles offering family rates and Quad play bundles. The European Commission could rapidly come to regret its decision to allow this merger, especially if it destabilizes KPN further over the next two years, and the local telco ends up in overseas, non-European hands. America Movile has already made one run at buying KPN, before it settled its attentions on Austria Telekom and it’s only a matter of time before the company is acquired.
Liberty Global already has MVNO deals in other parts of its footprint, for instance Switzerland and it is planning one in Ireland.