Dixons Carphone to launch MVNO over 3’s network

Dixons Carphone has announced it is entering the UK mobile market this spring with an MVNO service, which will run on 3’s network. The new business will also offer internet connectivity to smart devices sold in the retailer’s stores.

Under the agreement with 3, Carphone will sell its own branded mobile tariffs, which it claimed will give customers more flexibility than currently on offer elsewhere. As reported in an article in the Financial Times, subscribers will be able to tailor their own packages according to their changing requirements.

“The announcement of our new network supports our strategic vision to continue to offer customers the widest range of connections, for when they are at home or on-the-go,” Graham Stapleton, CEO of Carphone UK & Ireland said.

Lynda Burton, 3’s Wholesale Director said: “This is our biggest new customer to date and a great opportunity to be the MVNO partner of a large scale brand with real mobile expertise and insight. Our network capability, recognised as best for smartphone customer satisfaction and reliability, is a great platform and we look forward to supporting the UK’s biggest mobile specialist’s MVNO success.”

While Carphone and 3 rejoiced the beginning of their new partnership, operator community sources told Telecoms.com the MVNO deal between the two could put a strain on relationships. This development presents a potential conflict of interests in the light of Dixons Carphone’s existing reseller agreements with Vodafone, O2 and EE. The retailer celebrated an extension to its EE contract only last week. Meanwhile 3 is the only UK operator the firm doesn’t have a reseller agreement with.

Announcing the EE contract extension Stapleton said: “This long term partnership with EE takes us in to the next decade with a joint focus on the amazing potential of connected technology, building on EE’s industry-leading 4G network and growing presence in the home.

“Creating deeper relationships with our network partners reinforces the ongoing importance of providing customers with independent advice and deals that are personalised to their needs,” he concluded, apparently without irony.

With these conflicting interests in mind, Carphone’s MVNO proposition is potentially problematic, and much will depend on how the new MVNO is positioned in the market. However, this is a logical step from the retailer in the sense that the mobile reseller market has been decreasing in size amid the growth of SIM-only subscriptions and operators increasingly direct-to-consumer sales models.

To succeed as a mobile service provider, Carphone must carefully consider how it will package and market its products to differentiate from competition. It will also be interesting to see how exactly it will deliver on the idea of flexible, tailored plans, and whether this will make other UK service providers consider similar deals.