Vodafone launches 3G services

Vodafone has formally rolled out its 3G mobile communication products and services in Europe and Japan.

Vodafone has formally rolled out its 3G mobile communication products and services in Europe and Japan.

The company forecasts that more than 10 million customers will be using its Vodafone Live portal with 3G services by March 2006.

"Our rough estimate is that the 3G service will be used by 10% of our base within the next 15 months," said Vodafone chief executive Arun Sarin.

After making a massive investment in 3G, including £16.6bn on spectrum licences four years ago, Vodafone is eager to see returns. Competitors like Orange and T-Mobile have taken a more cautious approach with their 3G services, which are expected by the end of the year. Overall, Europe's major mobile phone operators have spent more than £70bn on 3G licences.

Vodafone is presenting 3G as an enhancement to its existing Vodafone Live portal and is promoting 10 new 3G handsets (seven of them exclusive to Vodafone) and services such as video calling, 3D arcade games, mobile TV and music downloads as part of the portal. Sarin said the 3G phones would be able to roam between Vodafone's European markets and Japan.

Vodafone has altered its pricing model for the 3G service, with users charged for individual content purchases rather than according to volume. Browsing will be free or included in a bundle of services.

Vodafone UK chief executive Bill Morrow said 3G pricing would include two basic packages. The £40 a month bundle offers 500 minutes of voice calls, 100 text messages, 50 minutes of video calls and 60p for sending a pre-recorded video message. The £60 a month bundle offer more of the same - 1,000 minutes of voice calls, for example.

According to Ovum analysts John Delaney and Dario Betti, the offer of a prepay option at launch, in addition to the contract tariffs, will help encourage first-time users to the service. They also praised the company's decision to charge users for the content itself, as opposed to the time it takes to find and download the content, which they believe will appeal to users and shake up business models.

Vodafone wants new revenue-sharing deals with its content providers, to "partly offset" the lost traffic revenues, Delaney and Betti said other operators would undoubtedly follow Vodafone's lead.

But they warned that Vodafone's decision to target its coverage area within heavily populated areas could prove risky if its 3G services turned out not to be robust enough to cover such a large segment at launch.

Delaney and  Betti warned that Vodafone risked annoying the customers it could least afford to lose if services weren't accessible.

Sarin brushed off these concerns. "We have been in this business for 20 years and are confident in CDMA, the core technology that is being used here. We're not expecting any roadblocks in being able to power through and provide for our target market."

That market is primarily the consumer market, but Sarin added that there were plenty of 3G services, such as video calling, that the enterprise market would find appealing.

Laura Rohde writes for IDG News Service

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