Orange Bundles 3G Wireless and Broadband in the UK

Europe : Orange yesterday announced that its UK mobile customers could benefit from a discounted broadband service from Wanadoo.

New subscribers can get up to 2Mb per month for £9.99. The offer is also open to existing subscribers provided they sign a new mobile contract with Orange. The Wanadoo service is called Wireless & Talk, and it is the first product announcement since France Telecom unveiled its NexT convergence strategy (EuroView Daily Comment, 29 June 2005).

This offer has been launched together with a further promotion giving a 50% discount on Orange's 3G service for the first six months of a 12-month contract. Comment: This is a form of bundling, but customers are still purchasing two separate services with separate charges. However, Orange is offering a discount to customers that sign up for both services. The broadband deal is good value at 2Mb per month, and customers also receive a VoIP service as a second line, although they are still required to pay the BT line rental.

The 3G promotion is representative of many European mobile operators. Take-up has been relatively slow, Orange UK reported under 100,000 3G subs at the end of June 2005. The operators have found that they are having to run promotions on the line rental or offer aggressive handset subsidies to get customers using 3G services.

So is this promotion to sell Orange mobile services or broadband services? Well, it is likely to be attractive to some consumers looking for a new mobile phone offer when combined with the 3G promotion. But more importantly Orange's existing 14.5m UK mobile customers can sign up for the service, provided they have less than 3 months remaining on their existing contract. By signing up for the discounted broadband service, Orange/Wanadoo not only gets a new broadband customer but also locks in the mobile customer too - thus this offer acts as a mobile retention strategy as well as appealing to new broadband customers.

One interesting point is that this promotion cannot be repeated in France, where FT is dominant in both sectors and therefore is bound by regulation, which means it cannot discount or bundle services.

This product is the first small step in Orange's convergence strategy. Next Wanadoo will be branded Orange and expect to see the first Orange FMC product, along the lines of BT Fusion, in France by early next year.

This article is an extract taken from Ovum's EuroView Daily Comment service. Providing our expert's views and opinion of the important news and events in European IT & Telecoms, this daily email bulletin is a component of Ovum's EuroView advisory service.