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Vodafone launches new 3G phones, services
By Laura Rohde

Vodafone Group PLC formally rolled out its 3G (third-generation) mobile communication products and services in 12 European countries and Japan on Wednesday.

The company expects 3G to begin gaining mass market acceptance next year, and forecasts over 10 million customers will be using its Vodafone Live portal with 3G services by March 2006 in it subsidiaries. "Our rough estimate is that the 3G service will be used by 10 percent of our base within the next 15 months," said Vodafone Chief Executive Officer (CEO) Arun Sarin in a press conference that was also broadcast over the Web.

Vodafone is seeking to make back its massive investment in 3G, including the £16.6 billion (US$30.8 billion) it spent on spectrum licenses four years ago. Competitors like Orange SA and the mobile arm of Deutsche Telekom AG, T-Mobile International AG, are taking a slightly more cautious approach with the launch of their 3G services, which are expected by the end of the year. Overall, Europe's major mobile phone operators have spent more than €100 billion (US$129 billion) on 3G licenses.

The Newbury, England, company is presenting 3G as an enhancement to its existing Vodafone Live portal, originally launched in October 2002, and is promoting 10 new 3G handsets, seven of which are exclusive to Vodafone, and services such as video calling, 3-D arcade games, mobile TV and music downloads as part of that existing brand.

Seven of the 3G handsets will be available in Japan, with nine available in Europe, Vodafone said. Not all handsets will be available in every country, with about six handsets offered in each of the European countries where the Vodafone Live service is offered: Austria, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden, Switzerland and the U.K.

The 3G phones will be able to roam between Vodafone's European markets and Japan, Sarin said.

Vodafone announced in September that it would begin offering several new 3G mobile phones to customers by the end of the year, including Europe's first 3G 2-megapixel camera phone, from handset makers Samsung Electronics Co. Ltd., Nokia Corp., Sony Ericsson Mobile Communications AB, Sharp Corp., Motorola Inc. and NEC Corp.

Vodafone has altered its pricing model for the 3G service, with users charged for individual content purchases, rather than according to volume as it had previously done, the company said. Additionally, browsing will be free or included in a bundle of services.

Vodafone's pricing for 3G will include two basic packages, said Bill Morrow, chief executive of Vodafone U.K., at the news conference. The £40 a month bundle offers 500 minutes of voice calls, 100 text messages, 50 minutes of video calls and £0.60 for sending each prerecorded video message. The £60 a month bundle increases those offers, for example, offering 1,000 minutes of voice calls.

According to Ovum Ltd. analysts John Delaney and Dario Betti, it is important that Vodafone is also offering a prepay option at launch, in addition to two contract tariffs, as it helps to encourage first-time users to the service. They also praised the company's decision to charge users for the content itself, as opposed to paying for the time it takes to find and download the content, which they believe will appeal to users and have the knock-on effect of causing a shake-up in business models.

Vodafone wants new revenue-sharing deals with its content providers, to "partly offset" the lost traffic revenues, Delaney and Betti said in an e-mail assessment of the Vodafone service, and other operators will undoubtedly follow Vodafone's lead.

But the analysts warned that Vodafone's decision to target its coverage area within heavily populated areas may prove to be risky if its 3G services prove not to be robust enough to cover such a large segment upon launch.

If the services offered by Live 3G are really compelling, then people will want to be able to use them wherever they are, Delaney and Betti said. If the services aren't accessible, then Vodafone risks annoying the customers they can least afford to annoy, the analysts said.

Vodafone's CEO brushed off those concerns on Wednesday. "We have been in this business for 20 years and are confident in CDMA (Code Division Multiple Access), the core technology that is being used here," Sarin said. "We're not expecting any roadblocks in being able to power through and provide for our targeted market."

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

Posted November 10, 2004 03:44 PM | TrackBack (32)