Wednesday, February 20, 2008


In order to set the context for this case study, it is important to bear in mind that mobile phones now have a 60 per cent market penetration in the UK, and usage increased by over 1,500 per cent between 2000 and 2002. The rate of industry growth and product innovation therefore has been — and continues to be — phenomenal.

02 is the holding company for the BT division formally known as Cellnet. It began trading in November 2001 and has 100 per cent ownership of mobile network operators in four countries:

* the UK (BT Cellnet);

* Germany (Viag Interkom);

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* the Netherlands (Telfort Mobiel);

* Ireland (Digifone).

Additionally, 02 has operations on the Isle of Man (Manx Telecom) and a leading European mobile internet portal business, Genie ( 02 was the first company in the world to launch and roll out a commercial GP RS (or `2.5G') network, and has secured third-generation mobile telephony (`3G') licences in the UK, the Netherlands and Germany. The company expects to apply for a 3G licence in Ireland when the application process commences. 02 has approximately 17 million customers and some 15,000 employees, with revenues for the year ended 31 March 2001 of £3.2 billion. Data now represents over 10 per cent of 02 service revenues and, with the recent launch of new devices and services as well as future developments, it is expected to increase to 25 per cent contribution within three years.

In January 2002, 02 announced that it had signed a group-wide agreement with Handspring to distribute and market Handspring's Treo family of compact wireless communicators throughout 02's operating businesses. Handspring is a leading innovator in personal communication and handheld computing. Targeted principally at the mobile professional and SM E markets, Treo is the first integrated Palm OS wireless communicator product to be launched on 02 networks, providing customers with a pocket-sized solution for combined voice and data services. With telephone, organizer, Web and messaging applications combined in a small and lightweight device, Treo will initially take advantage of 02's broad GSM networks, but will upgrade to GPRS upon availability of GPRS software.

The company is now in the process of rebranding its consumer services, which will trade under the 02 banner from spring 2002. An extensive advertising campaign encompassing both digital and traditional channels and rumoured to be costing £150 million is currently at the planning stage. Agency Republic has been appointed to manage the 02 brand across the web, mobile phones and interactive television, and digital advertising is to be fundamental to the rebranding campaign. Traditional advertising has not been forgotten — on the significant date of 2 February 2002 (020202), double-page spreads in the UK quality press kick-started the rebranding exercise.

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