Isle of Man advances in 3G race

The race is on to launch the world's first third generation mobile phone network

By the BBC's Internet Correspondent, Rory Cellan-Jones.

Another milestone has been passed in the race to build a third generation mobile phone network - and in an unlikely place.

You can be sure the rest of the mobile industry will be watching very closely

Eddie Murphy
Analysys

The Isle of Man's telephone company Manx Telecom took delivery this week of the first 3G handset to arrive in Europe.

The whole telecoms industry is spending huge sums to roll out the new 3G network, which promises to make the internet mobile by delivering data to handsets at much higher speeds.

Delays in producing the new handsets mean that most consumers across Europe are unlikely to get the new service before 2003.

David and Goliath

But in a David and Goliath contest Manx Telecom is competing with Japan's telecoms giant DoCoMo to get the first network up and running.

Japanese engineers have been working on the Isle of Man since Christmas 2000.

Unlike the phone companies which paid a fortune for 3G licences in auctions in Britain and across Europe, Manx Telecom, which is wholly owned by BT, was given its licence for nothing.

The Isle of Man government saw this as a way of promoting the island as a centre of e-commerce.

BT sees the pilot project as way of testing the viability of the new system and its attractions to consumers. The company has sent key staff to the Isle of Man.

New masts have been built and equipment is being installed in the island's main telephone exchange by NEC of Japan and Germany's Siemens, which are partners in the project.

A dozen Japanese engineers have been on the island since Christmas.

Engineers working on the new 3G masts in the Isle of Man

The first handset was flown to the island by NEC on Wednesday and as Manx Telecom's chief executive Chris Hall opened the parcel at the firm's headquarters in Douglas, there was great enthusiasm.

"To have the opportunity to hold the first handset to arrive in Europe is very exciting," he said. "We see this as very important to the industry."

Difficulties ahead

As more handsets arrive - and only a hundred are so are expected in the near future - the new applications will have to be tested.

Mobile video telephony will be among the first services - customers will be able to see each other while making a call.

Other services will include online games and location services, enabling customers to get information about local businesses as they move around the island.

3G network cable are fitted in the Manx Telecom's exchange.

It is hoped that the network will go live at the end of May.

The investment community will watch what happens with great anxiety.

Shares in telecoms companies have dived as concerns mount about the huge borrowings undertaken to finance the new technology.

Customers will have to be very enthusiastic about the new services if the investment is to pay off. David Manning, head of UK equities at Foreign and Colonial is one of the most experienced fund managers: "I'm cynical about 3G," he says.

"Many of the things that the phone could - and I stress could - offer, we just won't want to buy."

Mr Manning believes we are seeing the greatest corporate gamble since the building of the railways.

Now the 75,000 inhabitants of the Isle of Man will provide the first indications of whether that gamble will pay off.

"You can be sure the rest of the mobile industry will be watching the project very closely," says Eddie Murphy of the telecommunications consultancy Analysys.

"There's a lot of money riding on this."