3 UK will offer free instant messaging services to its customers as it looks to up the ante in the mobile phone content market. 3 hopes to steal a march on its rivals after carving out a strong position in the mobile music and user-generated content markets.
The mobile operator hopes to increase customer loyalty and attract new users with free instant messaging. It will not charge its users data tariffs to connect to its network to use the application. Prepay users will be restricted to 200 free messages a day. Instant messaging is hugely popular with computer users that use applications from companies like Microsoft, AOL and Yahoo! to conduct online conversations with each other over the internet.
Operators have been slow to offer the service on mobile phones as it could cannibalise revenue from lucrative text messages. Vodafone and Orange do offer instant messaging services but customers have to pay data charges.
Graeme Oxby, 3 UK's marketing director, said users of instant messaging are not accustomed to paying, but that there is significant demand to use mobile phones for the service. He said that since 3's service launched 10 weeks ago, over 100 million instant messages have been sent.
He said the other networks had taken a more "protectionist" view toward instant messaging, fearing for their text revenue. However, he said instant messaging would complement text services. "Texting and instant messaging are very different. You could argue that text and e-mail compete with each other but they do not," Mr Oxby said.
3 UK hopes free instant messaging will bolster its non-voice revenue as customers start to use their phone for more applications.
Bob Fuller, the chief executive of 3 UK, said that excluding voice and text revenue, its data revenue is greater than that of traditional media companies such as Harry Potter owner Bloomsbury Publishing and radio company GCap Media. Bloomsbury reported revenue of £109m in its last financial year whilst GCap recorded sales of £211m.
3 UK has invested heavily in a number of content areas including user-generated content, mobile television and music. It is the second-largest legal digital music provider in the UK, behind Apple's iTunes, and the fourth-largest distributor of Universal Music's product in the world. Sales of music on 3's network account for over 10 per cent of the UK singles chart. It has half a million songs that are available to its users.
Music companies have also found that customers are willing to pay for promotional music videos via 3 UK's network and that new artists can be promoted via the network without the need for radio airplay. Rob Wells, group director, digital, Universal Music, said: "This is a brave new world for us."
Mr Oxby said that 3 UK is also able to promote music content that is specifically made for mobile. He said that the company is filming some concerts with popular artists such as Lily Allen that will only be available on its network.