X-Series: is 3 shooting itself in the foot?

We shone the Spotlight last month on 3’s announcement of its web-plus offering – flat-rate internet access, preinstalled Skype and two IM packages, Slingbox (TV pictures on your mobile) and Orb (access your PC files). The pricing has now been announced, and it’s worth revisiting the X-Series offer to analyse just what it means for the market.
3 seems to be filling our pages this month, what with the corporate shenanigans and its nudges to Ofcom about how the other networks aren’t meeting their coverage targets. But away from the headlines, 3 UK has come up with what looks like the very best flat-rate mobile internet package currently available. Apart from the odd name, the X-Series ought to be the easiest sell a 3 dealer will ever make.
The X-Series was announced in November but pricing wasn’t confirmed until last month. Customers will choose their standard price plan and then plug in either X-Series Silver or X-Series Gold on top of their standard text and voice packages. There are two bundles on offer:

X-Series Silver
• adds £5 per month to an existing voice/text contract
• unlimited Skype calls to and from Skype PC users, and to any other Skype 3 mobile user (and there will be no international roaming voice call charges when using Skype on 3’s networks overseas)
• unlimited instant messages via Windows Live Messenger or Yahoo! Messenger to another X-Series handset or a PC
• unlimited internet access
• minimum six-month contract

X-Series Gold
• adds £10 per month to an existing voice/text contract
• all X-Series Silver features
• unlimited access to PC files via Orb
• unlimited access to home TV via Slingbox (minimum 12-month contract: existing customers who already have a Slingbox can use it, otherwise a Slingbox is available from 3 at the reduced price of £99)

X-Series handsets
The X-Series will be available with a choice of only two handsets, though they’re both pretty good – the Nokia N73 (with a 512MB memory card included) and the Sony Ericsson W950i (which has 4GB memory built in anyway). 3 says it will add more options this year.

On the X-Series Silver package the minimum voice and text contract available is £20 for the first six months rising to £35 thereafter.
On the Gold package it’s £25, going to £40 after six months.
There are three ways to send email using X-Series. You can use Yahoo! Mail directly through the Y! Go service, or you can use the web browser to log into a webmail service like Googlemail or Hotmail.
You can also set up and use the Mobile Mail application, .
Each of those is free and unlimited with X-Series. But the 3Mail service which is provided on 3 handsets isn’t free; charges will apply when using that mail service, just as they did before X-Series was launched.
3 says it will give “serious thought” as to whether 3mail should continue as a paid service for X-Series customers in the future.
Fair usage
The X-Series is subject to ‘fair usage’ restriction, though as with T-Mobile’s flat rate mobile internet tariffs the network says it will take appropriate measures on a case-by-case basis where unfair use is suspected. Which is a roundabout way of saying that 3 recognises the need for flexibility. The X-Series documentation offers this guide to fair use levels:
• 5,000 Skype to Skype minutes per month
• 10,000 messages per month on Windows Live Messenger
• 1GB per month for web browsing
• 80 hours a month total for Orb and Slingbox with X-Series Gold
X-Series vs Web’n’Walk
T-Mobile’s offering is basically about using the web, with a browser and Google ready to go. The X-Series includes a load more applications, preinstalled and ready to go – so the user doesn’t have to do anything to set up Skype, eBay, Google, Yahoo, MSN, Slingbox and Orb.
And Web’n’Walk isn’t a 3G call plan. X-Series is, and in fact we think it’s the first flat-rate 3G tariff in the world.
Looking forward
It’s clear that the all-you-can-eat mobile is unsustainable in the long term if it becomes too successful. When the (largely) unlimited usage includes a bandwidth hog like Slingbox’s video place-shifting, transmitting TV signals from a set top box in the user’s home to their mobile phone, the network could in theory become overloaded quite easily. The fair usage policy may cut in to take out the heavier users, but that happens after the traffic has flowed (or crawled, if the service does become a victim of its own success).
The immediate answer is that it’s early days yet. Overloading is unlikely to be an issue for some time: there’s a lot of capacity on all 3G networks at the moment. And while we’re in market development mode, it’s almost worth 3 UK treating the X-Series as a loss leader to build a decent user community. Some way down the line it should be possible to encourage the flat-rate users to pay their way by buying extra services, particularly the next-generation offerings that will follow on from IM and maybe Orb.
The other danger is the hit on voice revenues if you encourage people to bypass the network and use Skype over the internet. The price looks good, especially if you have to have a mobile anyhow, and Skype means there are savings to be made on much of your phone bill.
Not everyone has Skype, of course, though that could well change in the next few years (and there are 136m Skype users out there today). By then though 3 may well have continued its impressive diversification away from voice. Right now 3 UK has the highest non-voice ARPU levels in the world, thanks to a raft of 3G services such as mobile TV, music downloads and user-generated content.
Some people reckon 3 is shooting itself in the foot with X-Series, others suggest that flat-rate internet reduces the network to the status of a transmission pipe and little else. We disagree: we hate the name, but X-Series is so attractive to its market – high-spending nerds, entertainment junkies, probably small businesses too – that it could give 3 pole position in the ARPU stakes over the next few years.
There’s a good blog about X-Series from developers and other senior folk – lots of questions answered and opinions expressed. Go to http://xseries.three.com/blog/