Quam

The Rise and Rapid Fall of Germany’s Fifth Mobile Network

Let’s step back in time to a fascinating chapter of the German mobile landscape. I by myself had the pleasure to be right in the middle of the German telecom industry and can remember every detail of this fascinating story. Eleven years ago, a new contender called Quam burst onto the scene, only to disappear just as quickly. Think of it as a curious lesson in how even seemingly well-funded telecom ventures can misfire if the timing and strategy aren’t quite right.

A Fifth Network Operator Enters the Fray

November 22, 2001 marked a pivotal day: Quam became Germany’s fifth network operator, joining giants like Telekom, Vodafone, E-Plus, and o2. At the time, UMTS (3G) licenses were the hot ticket, and Quam was among those that secured one. But since UMTS wasn’t yet commercially viable, Quam launched as a MVNO (Mobile Virtual Network Operator), riding on E-Plus’s base stations while handling the backend network tech on its own.

So far, so good, except for one glaring problem: Germany’s largest operators, Telekom and Vodafone, delayed the interconnection of their networks with Quam’s. This meant Quam users could place calls across the country, but many incoming calls from customers on other networks simply didn’t go through. Quam was not pleased, halting new sales in protest. Shop staff were directed to offer potential customers a coffee, but ironically, no phone contracts. The media quickly labeled Quam as “Germany’s most expensive cappuccino bar.”

When Free Phones and Free Monthly Fees Weren’t Enough

By early 2002, Quam attempted a comeback with aggressive promotions. Some customers walked away with effectively cost-free two-year contracts, complete with a bonus handset. Demand exceeded expectations, and Quam found itself unable to keep pace. Not only did it frustrate prospective customers, but Quam’s owners, Telefónica (today’s o2) and Finland’s Sonera, decided by late July to pull the plug on marketing efforts for new subscribers, stating they’d only return to the spotlight once their own UMTS network went live.

Cut-Rate SMS: In June 2002, Quam made a splash by slashing text message fees. In several tariffs, the SMS rate dropped from 19 cents to just 9 cents, while prepaid customers saw their cost reduced to 15 cents. This was a big deal at the time. Other carriers had hiked SMS prices relentlessly, benefiting from massive profit margins on texts. Quam’s move, however, wasn’t enough to rescue them from mounting troubles.

Shutting Down in Record Time

Despite freebies, cheap SMS, and a flashy presence in major German cities, Quam’s performance lagged. After pouring millions into marketing, it had only amassed around 200,000 subscribers in half a year — a fraction of what the established networks boasted. On November 15, 2002, Quam officially switched off its virtual network. They advised their remaining customers to switch to Telekom, albeit without preserving existing Quam tariff conditions.

No Number Portability: Salt in the wound for Quam’s loyal user base was that they couldn’t even keep their phone numbers. Quam declined to enable number portability, even though this right had become mandatory in Germany two weeks earlier. The telecom regulator pointed out that Quam should comply with the new rules, but with Quam essentially vanishing, users would likely have to go to court if they wanted their old mobile number back.

A Memory Frozen in Time

Interestingly, as of this writing in 2012, the Quam website still exists. It simply states that network operations ended in November 2002. For telecom historians, or anyone intrigued by the fast-changing German mobile market, this is a prime example of how a new entrant with big ambitions can falter if conditions aren’t right or if relationships with incumbent operators sour.

Lessons Learned:

1. Interconnection Challenges:
   Even if you’re well-financed, being shut out by bigger players can cripple your growth.
2. Enticing Promotions:
   Incredible offers (like free monthly fees and free phones) might draw crowds but can also overwhelm you operationally.
3. Regulatory Minefields:
   Mandatory rules on network interconnects and number portability can hamper upstarts if incumbents drag their feet.

Quam’s short-lived existence remains a cautionary tale, reminding us how complex the mobile industry can be, especially when new technology (like UMTS) meets established giants who may not welcome fresh competition with open arms.

What are your thoughts? Did you catch any of Quam’s promotions back in the day, or maybe even sign up? Let me know in the comments below. I’d love to hear your memories and perspectives on this intriguing piece of mobile history!

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