The Business Interview: Kevin Russell, 3

"Regulatory obstacles are stacked against new entrants to the market."

1. 3 says it is building the UK's most "advanced mobile network". What makes it the most advanced?

We have the biggest 3G network in the UK - we've just passed our 10,000 site mark and by the end of this year we'll be close to 13,000. That will give us 98.5 per cent outdoor population coverage.

We are in the middle of a massive network improvement programme. This includes boosting the links between our sites and our core network. We are also upgrading or replacing our older equipment to increase speeds. These changes will improve overall customer experience, delivering higher data speeds, improved coverage and better voice quality. They will also ensure we continue to have the best 3G network in the UK.

Data usage has grown phenomenally in the past two years and we have to be able to keep pace with the demand created by smartphone and mobile broadband users. To give you some idea of the amount of data flowing through our network each and everyday, it already amounts to around 20 times the information held in the British Library.

2. What is 3's interest in the Terminate the Rate campaign? How is that progressing?

We were a founder partner in the Terminate the Rate Campaign, which we helped found along with the GMB Union, BT, NUS, Moneysupermarket, Carers UK and the Federation of Small Businesses. More than 130,000 people have already signed up to the campaign. We have over 260 MPs calling for change along with 65 other organizations from charities, through businesses, unions and local councils who have now joined as campaign partners. Ofcom is looking at the future of MTRs right now, so it's a good time to make yourself heard.

Mobile termination rates are a hidden charge that artificially inflate the cost of phone calls to mobile phones and are a real barrier to lower call charges. They cost UK landline consumers around £750m a year in calls to mobiles. They are outdated, a rip-off and they also stop us from reducing our prices because they act as an artificial price floor.

We want mobile termination rates to be reduced to reflect what it actually costs to terminate a call, which is less than a penny a minute. Without MTRs, 3 would be able to offer deals like £35 a month for 'all-you-can-eat' unlimited calls to standard landlines and calls and texts to UK mobiles. We would also include unlimited use of internet communications services, such as Skype and Windows Live Messenger -- something we already offer now because data is not restrained by termination charges.

3. What is the biggest challenge facing 3 today?

Externally it's regulation that hampers true competition, and in particular the need for a more even distribution of the radio spectrum frequencies used by the UK's mobile network operators.

Internally, it is about how we continue to improve both the performance and capacity of our network, and about how we go about further improving the experience our customers have with us. This involves helping consumers understand the benefits of the mobile internet in general, and in particular the ways in which we support our customers to enhance their experience of the mobile internet.

4. What is the biggest challenge facing the mobile phone/telecom industry today? How is the industry coping with the economic current climate?

The industry has built itself around complex-pricing of voice minutes and texts and is struggling to adapt to the internet world. We've structured our business around the way we see mobile evolving: it's about bringing the benefit and value of the internet to people on the move. If the economic situation means people are focusing on value and new ways of communicating then we are well-placed to help.

5. What do you think has been the biggest technological advance for the industry in the last five years?

Higher data speeds brought about by HSPA or High Speed Packet Access -- this has made mobile broadband a reality for all in the past two years. The iPhone, along with every other smartphone, could not work at the speeds they do without this.

6. What impact has the recession had on 3? How well placed is the company to weather the downturn, and why?

We made a call to do some restructuring two to three years-ago to put us into the next stage of our development and that has meant we were in a good position when the recession hit.

We have noticed that where people have less money, they have moderated their behaviour to fit better within their current tariff regime.

Again, though, the Government can help consumers further by changing the current mobile termination rates when the next pricing structure comes into effect in 2011. There's a golden opportunity over the next year to create a consumer friendly pricing regime, which will give consumers better deals, and make mobile network operators think more about how they integrate data bundles and traditional voice and text calling packages.

7. What makes 3 distinct as a business?

3 has a network purpose-built to carry data. That puts us in an excellent position as the future is about the internet on mobiles. We have seen this in the take off of dongle sales and people accessing the internet on smartphones. Instead of blocking free internet calling, we've embraced it and made it more relevant by mobilising it. This month we reached the billionth free minute on our network using our Skype on 3 service.

3's role has been to expand the reach of the internet to those not reached by fixed-line. People are excluded for many reasons -- not just geographical. Our pay as you go mobile broadband has put personal internet access in the hands of many people that could not access fixed broadband at home due to cost, credit-issues or living in temporary accommodation. The challenge now is to extend this further both in rural areas and adding capacity in cities. We're serious about this -- but to make this happen we need the national asset that is radio spectrum made available in a competitive way.

8. What has been your personal biggest challenge so far, or your proudest achievement?

Getting 3 UK onto a sustainable footing as a business in spite of the number of regulatory obstacles that are stacked against new entrants to the market.

9. What next for 3?

We have to ensure our business is fit to grow and that our assets are in the right place so that everything works effectively with a bigger customer base made up of people using data-hungry devices.

There's a huge piece of work going on to help focus the business on the customer, listening more, simplifying our processes and responding better when we drop the ball. We've made progress but there is a lot more to do.

We need to keep bringing innovative products and price plans to consumers, so our aim of mobile broadband for everyone becomes a reality.

We think of ourselves as the challenger and the impact of a challenger should make things better for every one that uses a mobile, starting with our customers. With the prospect of a merger between T-Mobile and Orange and fewer choices in the UK the need for the challenger is greater than ever.