All change for 02 generation as telecom brand turns Three

Farewell, then, to O2. Over the coming months it is becoming Three. "As an O2 customer, the only changes you will see is the Three logo replacing the O2 logo across the retail stores, website, bills and on your phone," its text read.

We’ve been through 2G and 3G together, O2 and me. We’re just not destined for 4G. Were those supposed to be oxygen bubbles in its logo? I was never quite sure. As a journalist I won’t miss the brand – putting its “2” into subscript, for the sake of molecular accuracy, was a pain each time. But as a consumer I might feel nostalgic, if only because I’m from the generation that first became emotionally attached to their mobiles during the days of the duopoly.

Those were simpler times, not necessarily cheaper ones. There were no "Millennials", just the millennium. O2 had only one serious rival in the mighty Vodafone, though they were both called something else at first. Everybody who had a mobile phone was either an "087" (them) or an "086" (us), and the choice had consequences, not least because the way rates were structured meant phone relationships between an "087" person and an "086" were more expensive than same-prefix relationships.

For those on a budget, mixed-prefix relationships floundered. But everybody knew where everybody else’s loyalties lay, because number portability was but a regulator’s dream. We were “ready to go”, they were primed to collect. Average- revenue-per-user statistics, those all- important Arpus, were shooting up, “1 message received” at a time.

One of its best years was 2002. It had already ditched the Esat Digifone name, then the plain Digifone one went and O2 was born. That was when Eircell became Vodafone, too. Glossy television advertisements followed. They both spent millions on their campaigns, and it worked. Meteor who? In 2003, 02 and Vodafone had a combined mobile market share of 96 per cent. And they made money off us. In 2004, O2 admitted margins in Ireland were 37.9 per cent, compared with 28.5 per cent in the UK and 18.6 per cent in Germany. We were in its thrall.

Quaint interface

But there were already signs that the market was evolving. Forecasters warned that these newfangled things “wireless hotspots” would undermine 3G revenues. There was an interim, pre-smartphone stage when people began organising their social lives via

Facebook

, using a quaint interface known as a web browser. Home broadband was in the ascendant.

Yes, the mobile industry of the mid-noughties was adept at marketing – competitions, discounts, tickets, sports sponsorships, music sponsorships – but when it came to investing in network infrastructure it wasn’t quite as nimble.

By 2006, the year O2 Ireland was bought by Spanish group Telefónica, mobile industry Arpus were falling, hovering at about €45 a month. At the last count, in the third quarter of 2014, they were €25 a month.

O2 gleaned new cash off the higher- priced smartphone subscription packages, but even they couldn’t offset the wider decline. In one respect they hastened it. In 2012 it was estimated that the volume of messages sent on chat apps overtook the volume of SMS texts for the first time. Now a single service, Facebook’s WhatsApp, is said to be more popular than the humble SMS.

But 02-soon-to-be-Three already knows this. And, to be fair, that €25 a month mobile companies pick up off the average Irish user is €25 more each month than anyone ever pays to WhatsApp or Snapchat or Twitter. So while mobile profits may have taken a tumble, the business model retains one thing that lots of companies would kill for: paying customers. That's why when Telefónica sought to offload O2's Irish arm in 2013, Hutchison Whampoa's Three Ireland was obliged to pay a price tag high enough to fend off interest from Eircom and Liberty Global.

Those companies, the owners of the two biggest broadband networks in Ireland, would have made rather different buyers. Remarkably, Liberty Global, which owns UPC, may yet end up the subject of a bid by 02's cash-rich old friend Vodafone. Either way, a mobile telecoms provider without a fixed broadband network, and vice versa, seems odder by the day.

"Everything else will be business as usual," assured the text from O2. But what is business as usual? The chances are consumers will have changed their habits no sooner than the cost of the rebrand has been counted. So thanks for staying in touch, Three-used-to-be-called-O2. But, really, we'll be the ones keeping you posted.