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Mon, Nov 15, 2004 - Page 12 News List

Make it or break it time for Europe's mobile phone firms

3G SERVICES Vodafone became the first to offer mass market UMTS including video calling, mobile TV -- and its rivals are watching closely


It's crunch time for Europe's mobile telephone giants. After spending billions of euros on third-generation (3G) licenses, they now hope to persuade millions of customers to make the switch to the new 3G services with high-speed Internet access and video and music downloads.

British mobile telephone behemoth Vodafone on Wednesday became the first of Europe's major players to launch mass-market 3G services, hoping to steal a march on its rivals ahead of the crucial Christmas period.

Vodafone said it was targeting over 10 million customers by March 2006 across the group for 3G services, officially known as Universal Mobile Telecommunications Systems (UMTS).

"It's a big step forward in terms of the scale and the scope of what Vodafone is launching," said John Delaney, a telecoms analyst at the Ovum consulting firm.

Hutchison 3G was the first company to launch 3G services in Europe in March last year. But the launch of its brand 3, timed to coincide with the date 03/03/2003, proved something of a bust owing to a shortage of handsets.

Vodafone opted to wait until it had a full range of advanced UMTS services including video calling, mobile television and track downloading before it rolled out the product, noted Delaney.

"Vodafone is majoring on the things that make UMTS distinctive in the consumer market. They are putting an awful lot of money behind it," he said.

Vodafone live! with 3G will be available in 12 European countries and Japan. The range of 10 new 3G handsets will offer services including video calling, full track music download, 3D games and mobile television.

The phones will have faster download speeds and improved quality of sound and images, with a two mega pixel camera and stereo speakers.

The other major operators will be keeping a close watch on the initial reception to the British group's products.

French operator Orange plans to introduce the new 3G handsets later this year, while British rival mmO2 hopes to launch 3G in the first quarter of next year.

Vodafone's partner in France, SFR, also introduced 3G last week, offering the Vodafone live! services.

"If Vodafone can't make UMTS work, nobody can," Delaney said. "It's a big test. It's kind of the first shot to get consumers to wake up and use UMTS services."

"Now expectations are very low. People don't belive in 3G yet, as they see the service being launched and the handsets in the shop, people will start to become more excited," said Robert Grindle, an analyst at Dresdner Kleinwort Wasserstein

"The market is very reluctant to believe in an uncertain future," he said.

Vodafone's basic 3G package offers 500 voice minutes, 100 text messages and 50 video calling minutes, as well as unlimited film, news and sport video clips, for 40 per month. For 60 per month, subscribers can add on a further 500 minutes.

Songs cost 1.50 pounds to download, almost twice what Apple Computer's leading iTunes services charges.

In addition to the premium that Vodafone is charging, the initial uptake of the music service could be hobbled by the group's relatively small library. Vodafone will have just 3,000 songs (from MTV, Warner Music and Sony BMG) on offer, compared to 700,000 for iTunes.

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