Analysts welcome 3's flat-rate broadband

Analysts welcome 3's flat-rate broadband

Summary: Mobile operator's decision to fully embrace flat-fee mobile internet access is widely welcomed, but some doubts remain

TOPICS: Networking

Analysts have reacted positively to mobile network 3's announcement on Thursday that it is adopting a flat-rate mobile internet model and teaming up with a host of web giants.

From December the operator, owned by Hong Kong's Hutchison Whampoa, will be offering the full internet experience on its X-series handsets — initially the Nokia N73 and Sony Ericsson W950i.

Partners providing an optimised mobile experience include Skype (for VoIP calls), Microsoft (instant messaging), eBay (real-time bidding), Google and Yahoo (search and other web services), Orb Networks (accessing digital content from the user's home PC) and Sling Media (relaying programming from the user's home television — but reliant on separately purchasing a Slingbox).

It looks like 3 is starting where T-Mobile's pretty decent Web'n'Walk leaves off.

Dean Bubley, Disruptive Analysis

"People want choice, so… we're taking down the walls around the big walled garden," said 3's group finance director, Frank Sixt, at Thursday's launch event, before revealing that the Nokia and Sony Ericsson devices were just the first X-series phones. Subsequent waves in the series will each carry new functionality, the second coming next year.

Perhaps the most surprising element of 3's announcement was the news that Skype — which has been working in partnership with the operator for months — will have its free service included in the flat-rate package. This will essentially allow free calls between X-series phones, and between the phones and PCs around the world. Other services, such as Skype chat and the premium SkypeIn and SkypeOut functions, will be introduced to 3 at some point next year — potentially cannibalising a large portion of 3's voice revenue. 3, said Skype co-founder Niklas Zennstrom, is "not afraid of disrupting their own market".

"To date the mobile internet has been a bust," said Joe Costello of Orb Media, who compared previous mobile web solutions to dial-up technology. Like broadband, 3's service involves a flat data fee, although there will initially be an additional fee for customers making use of the Orb or Sling functionality, as this involves higher-bandwidth video.

Analyst Dean Bubley pointed out that 3's package "looks like it is starting where T-Mobile's pretty decent Web'n'Walk leaves off". T-Mobile's pricing structure offers a low-priced, all-you-can-eat data package, but then adds further charges for use of instant messaging and VoIP and bans high-bandwidth usage such as video streaming.

"3 has recognised that there is a sizeable market of ADSL/cable-educated people who want a good quality pipe, with a couple of optimisations to take account of handset form factor. Not trying to do something idiotic like creating an own-brand IM is a sign of real-world Internet-savvy maturity that many operators would do well to embrace," blogged Bubley on Thursday. "At last, a mobile telco which embraces the idea of delivering end-user value through providing abundance and embracing third party services," enthused analyst James Enck of Daiwa Securities.

Similar views were echoed by Ovum's John Delaney, who wrote: "Everything about the internet that worries the mobile operators is here. Flat-rate data tariffs remove the link between service usage and end-user revenues. VoIP undermines mobile voice revenues. Instant messaging offers text messaging at a fraction of the price of SMS. The big portal brands are far more powerfully associated with internet services than the operators' brands. Open internet access means you never have to see the operator's portal again, if you don't want to."

However, Delaney noted that 3 could "end up having its role reduced simply to providing internet access"...

Topic: Networking

David Meyer

About David Meyer

David Meyer is a freelance technology journalist. He fell into journalism when he realised his musical career wouldn't pay the bills. David's main focus is on communications, as well as internet technologies, regulation and mobile devices.

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  • This isn't the first time...

    T-mobile have had a flat rate scheme for "broadband" on mobiles for nearly a year now... so this is hardly the first time its happened
  • Ah, but...

    That's true to an extent, however T-Mobile's approach has been to say "ok, you can do this and this - but if you want to use instant messaging you need to pay an extra fee, and if you want to use VoIP then you need to pay another fee". What 3 are doing is to more or less pack everything (with the exception of Slingbox and Orb functionality - the most high-bandwidth stuff) into the basic flat rate - i.e. make it more like what you'd expect from broadband.
    David Meyer
  • T-Mobile allows everything if you pay enough

    "T-Mobile's pricing structure offers a low-priced, all-you-can-eat data package, but then adds further charges for use of instant messaging and VoIP and bans high-bandwidth usage such as video streaming."

    Not quite right. Current T-Mobile Web'n'Walk price plans (cost pcm):

  • Roberto Maietta

    As I mentioned on this forum some time ago, telco's are engaged in gouging, through variety of means.

    The artificial walls they've put up are being slowly eroded by tech-savvy users in the first case, and I cant help but feel its just a question of time before these early adopters give way to more mainstream users adopting the "bypassing technologies".

    The usage of technologies like Skype, unquestionably will bite into their revenues. But, what do you expect, when their charges are so high? So they need to grow their revenue base another way, as this article seems to be suggesting.

    I cant wait for the day when we have flat rate charges, even when you're overseas. This is certainly a long way off, and I dont see this happening any time soon, I have to say, for quite a variety of reasons. But, its something to look forward to.

    If the telcos actually put aside their gouging, and get together to create an environment thats truly "fixed price", then you'll see the whole mobile internet space explode, with new, more functional handsets, as manufacturers struggle to keep pace with the demand from now-free consumers.

    I suspect its in the interests of manufacturers and telcos to go down this road, as the current mobile internet space has been, correctly, described as "a bust".
  • What the new breed of customer wants!!

    The big networks are very slow at assessing and adapting to the rapidly changing needs of the customer of today. What is basically required of them is to provide a big ISP service that will allow computers, PDAs, gaming consoles, and VoIP type phones to seamlessly connect, both nationally and eventually world wide.
    Done properly, with sufficient bandwidth and connectivity available, using a home hub/router, this would before long replace the landline phone as we now know it.
    It would mean that a device would work (almost) anywhere just as mobile phones do now but without the problems.
    Revenue would be gained from a monthly subscription (a la ISPs) and a charge for using more than a bandwidth allowance.
    That is my vision of the comms future.
  • The sky is falling

    My view of the telco future is bleak, unless they change.

    I think that in the not-too-distant future, rather than mobile phones, there will be a lot more work in wi-fi style networks, which allow VoIP systems like Skype.

    In fact, depending on whether or not governments choose to enable or be roadblocks, you will eventually have a satellite service with decent bandwidth as an interim, and then finally a mesh environment with no centralised control at all.

    It is the lack of control that scares government and business, which will potentially put a temporary stop to the mesh implementation ( where each node can talk directly to the node nearest, without the need for a hierarchical control mechanism ).

    Frankly, I'd love to see satelitte cards in devices, so that I could bypass my telco entirely, and be able to talk to my neighbours through their own base stations directly.

    Imagine a napster style community model that enables the leveraging of long distance wireless networks, without regulatory interference, control, or cost.