Carphone Warehouse could dial up a fresh mobile price war

Carphone Warehouse’s imminent deal to enter the Irish mobile market using 3’s network has the potential to inject some real competitive fizz into the sector, in a way that UPC’s similar arrangement with 3 does not.

UPC will, of course, offer its mobile services to everybody, but its real focus will be on upselling to its existing base of television and broadband customers.

If you fall outside UPC’s mainly urban cable footprint, chances are it won’t move heaven and earth to sign you up as a mobile user.

Carphone Warehouse will very likely take a different tack. Expect it to launch its service with a bang in an effort to sign up as many customers as it can, as quickly as possible.

Both UPC and Carphone have signed MVNO (mobile virtual network operator) deals with 3.

With a normal MVNO, the brand pays the network owner per customer as it signs them up. Both UPC and Carphone, however, have signed fixed-price arrangements with 3, at Europe’s behest.

Carphone will pay 3 the same price for access to 15 per cent of its network, no matter how many customers it has signed up.

Logically, this incentivises it to stack ’em high and sell ’em cheap to lower the unit cost of its MVNO.

If it chooses to use its ready-made British MVNO brand, Talkmobile, it will arrive at the starting line ready for the fight.

Talkmobile has been aggressively targeting the lower value end of the postpaid market for the past 18 months in Britain, with some success.

Carphone has a ready-made Irish distribution network in the shape of its 90-plus retail stores, its impending tie-up with retailer Dixons, and its concessions deal with Harvey Norman. It is a serious challenger for the incumbents.

It will be interesting to see if market number-one Vodafone turns up for an earnings-eating price war. It is only a hair's breadth from losing its status as market leader to the combined O2-3.