Martin Courtney
Martin Courtney

Will Santa spread 3G joy?

3G voice and data services will be heavily promoted this Christmas

Written by Martin Courtney

The launch of Vodafone's 3G mobile voice and data services last week was a milestone in the development of the UK's cellular industry, though Vodafone's rivals at 3 might disagree.

Vodafone is the first incumbent operator to launch 3G voice services. T-Mobile, Orange and O2 are set to follow in the next six months or so. Newcomer 3 has been offering 3G voice and video (but no data) services for a couple of years, but started from scratch with no existing customer base, and so may remain a small player in the mobile multimedia revolution that is likely over the next few years.

Some financial analysts speculate that if 3G services fail to attract the volume of subscribers predicted, Vodafone and the others could face ruin, but this seems highly unlikely given Vodafone's cash reserves and its unrivalled ability to undercut its rivals with lower-cost handsets and contract sales.

If subscribers fail to materialise it would indicate that a whole industry - including the big handset makers with their hefty market research budgets - has spectacularly misjudged customer attitudes to mobile phones and services.

I have no doubts that 3G services will prove successful, though business users who specifically require HTML internet browsing, email and high-speed file transfers will not be the main customers. The real money is in attracting mass consumer interest.

Corporate communications managers might not be happy about issuing 3G handsets that promote the use of picture messaging, video downloads and other non-mission-critical applications that will inevitably add to the strain on company networks. On the other hand, many companies may baulk at the idea of paying for a data-only solution, when they can have a multifunctional 3G handset that performs the same task and more besides.

As the incumbent operators pile in, 3 appears content to carve itself a niche at the low end of the market. The company is now offering pay-as-you-go 3G services with voice and video messaging minutes for £45 including VAT, though the minimum £15 top-up cards are expensive.

I suspect 3's offer will prove attractive to the teenage market, or the parents who buy phones for their offspring, but potential customers should take a close look at the exact features and functions available before taking the plunge.

Vodafone has not yet published tariffs for its 3G voice service, but I would be surprised if it undercuts 3. If it does, 3's low-end strategy will probably be unsustainable.

It will be interesting to see how many handsets each of the mobile operators sells this Christmas. Providing, of course, they have enough handsets to meet demand - but that's another story.

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