Operators signal 3G watershed

As Vodafone and T-Mobile launch 3G services in the UK, with the other operators soon to follow suit, we're likely to see a broader range of services for business

The launch by Vodafone and T-Mobile of mobile data services on third-generation (3G) wireless networks in the UK should pave the way for increased 3G competition and a broader range of services.

Vodafone officially launched its European 3G network on 12 February, with service to be made available in Germany, Italy, the Netherlands, Portugal, Spain, Sweden and the UK by mid-March. T-Mobile's UK network went live on Monday, joining the company's networks in Germany and Austria. Both networks will initially offer high-speed wireless Internet connections for laptop computers via a data card. Orange is believed to be planning a 3G launch for this summer.

The companies join Hutchison's 3 UK, which launched services nearly a year ago, on 3 March, 2003. Three has focused its efforts on selling consumer-oriented services such as video downloads and video calling, but fell far short of its target of signing up one million UK subscribers by the end of last year. Three does not sell data services.

Data killed the video star?
Competition from T-Mobile, Vodafone, Orange and O2 is likely to shift the focus of 3G from video downloads to business-oriented wireless data services. The arrival of such services could put pressure on companies such as BT and The Cloud, which offer nationwide networks of Wi-Fi access points, or "hot spots".

Wi-Fi, a type of wireless local area network, is an increasingly popular way of getting online, but Wi-Fi networks rely on the installation of hot spots in locations such as airports, trains and coffee shops. 3G networks, on the other hand, offer the promise of high-speed access anywhere, although coverage is currently centred on major cities and transportation routes. Where 3G coverage isn't available, data cards switch to an operator's slower GPRS network.

Some critics of subscription-based Wi-Fi networks say the service should be offered as a free facility in order to help attract customers, and some businesses have already begun following this path.

Vodafone said it sees 3G networks changing the way people think about mobile data. "With significantly faster data rates and greater capacity, customers will really start to see and experience the huge benefits of 3G, by being able to do more, faster," said Vodafone chief marketing officer Peter Bamford, in a statement. "Feedback received from our customers indicates how the card can transform the way they work."

Another blow to 3
Even when handsets become available for the networks of T-Mobile and Vodafone, they may not support video calling, a further blow to 3's strategy. Nokia, the largest handset maker, has said it does not see video calling as a popular service in the near term, and its first 3G handset for the UK supports only video downloads.

Currently, only a small range of mobile phone handsets are available for 3G services, but major manufacturers are finally beginning to add to the selection. Sony Ericsson's Z1010 is to launch sometime this quarter, as the company's first 3G entry. Nokia launched its 3G-capable 7600 handset last month.

Earlier phone shortages had caused revenue problems for Hutchison Whampoa, 3's parent company.