Video phone sales 'struggling'

Despite aggressive discounting and a huge advertising budget, not enough people are buying video phones

Subscriptions to 3G services are expected to fall well short of Hutchison 3G's targets when they are released later this month.

The subscriber numbers of Hutchison 3G's 3, the UK's first third-generation high-speed mobile phone service, will be revealed on 21 August when parent Hutchison Whampoa announces its financial report. But according to The Business, city analysts estimate the company has signed up fewer than 100,000 customers, which will leave it struggling to achieve its end of year target of one million subscribers.

Additionally, the majority of 3's video mobile customers are not the high-spending business users it expected, which means the company will take longer than promised to deliver a financial return on its £10bn investment, according to the report.

When 3 launched in March, its handsets were retailing at £200 and subscriptions cost between £60 and £100 per month. But with pressure from Vodafone's popular photo-messaging Live service -- which has already signed up two million customers -- it began offering free handsets and a £25 monthly tariff that includes 500 minutes of free talk time.

Unless subscription rates pick up, Hutchison is expected to sign up around 400,000 users by Christmas, which is less than half of its initial target. 3 will have to compete with 2G and 2.5G services from other operators, which have already made a splash with consumers via photo-messaging, colour screens and Web browsing.

European mobile operators slammed 3G phones at the 2003 UMTS (Universal Mobile Telecommunications System) Congress in Holland last June, claiming they were "unfit for the mass market". The handsets were criticised for being too big, expensive and not having long enough battery life.