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Last Updated: Friday, 2 April, 2004, 16:32 GMT 17:32 UK
3G - A Mobile Revolution?
By Jon Cronin
BBC News Online Business reporter

We are in the midst of a mobile phone revolution - but you could be forgiven for not having noticed.

3 shop in Italy
Hard sell - but will 3G make its mark?

Third generation - 3G - technology is set to revolutionize the way we use our mobile phones, offering a wide range of services, from video calling and messaging to news and information services.

Telecom companies spent billions of pounds at the beginning of the decade securing the licences required to set up 3G services.

Few of us have so far joined the 3G bandwagon, but that may be about to change.

A year ago, Asian conglomerate Hutchison Whampoa - the company which founded Orange - set the ball rolling in Europe with the launch of its '3' next generation mobile service.

Early days

The road has been rocky for the fledgling operator, and 3 has encountered problems with bulky handsets and patchy network coverage.

But rivals are now beginning the roll-out of their own next generation services - albeit more tentatively.

Vodafone's Connect 3G/GPRS PC datacard is the phone giant's first commercial venture into the world of 3G.

Initially aimed at corporate clients, the plug-in card service enables PC users to receive high speed data - up to speeds of 384 kilobits per second - while on the move.

2005 will be when we expect to see serious momentum behind 3G. The early buds are coming. It should blossom next year
Jason Chapman, Gartner

Vodafone's 3G coverage currently extends to only 30% of the UK population, but the firm hopes to push its reach up to around 50% later in the year - in time for the planned launch of a 3G mobile phone service.

Considering Vodafone spent almost 6bn on acquiring its 20-year UK 3G licence, some might say that its new venture comes not a moment too soon.

But the company's newly installed UK boss, Bill Morrow, insists it was money well spent.

"We are confident we are going to recover that cost. We are now bringing revenue into the 3G network," he told BBC News Online during the London launch of the 3G datacard.

Striding ahead

An experienced hand in the telecoms industry - with stints at Pacific Bell and Japan Telecom - he adds: "We've got plans for the casual user right behind this but we won't launch until we're ready."

Vodafone's new Connect 3G/GPRS datacard service
Vodafone's 3G PC plug-in card is aimed at people on the move

Rivals T-Mobile, mmO2 and Orange have plans to introduce similar services in the UK later this year.

Vodafone's move is symptomatic of the "strides in 3G" currently being taken in the industry, says Jason Chapman, a principal analyst with research group Gartner.

"2005 will be when we expect to see serious momentum behind 3G. The early buds are coming. It should blossom next year."

Currently, 3 is the only operator to offer something close to a full 3G mobile phone service in the UK.

Hutchison launched the network in March 2003. The company has a UK customer base of 361,000 and 77% coverage for video mobile calling.

Bring it on...

Supporting 3 has been a drain on profits for the operator's parent firm, which also runs 3G services in Italy among other countries.

But the company says it is in the development of 3G technology for the long run. "We are driving mobile services in the UK," according to 3's Edward Brewster. "We are not looking over our shoulder. We welcome competition."

We don't believe that video calling is going to be the killer application. People like to be prepared before they appear on screen

US market research group In-Stat/MDR shares some of 3's optimism.

"Although the press has long been publishing stories about the doom and gloom of 3G, the reality is that 3G is happening, although maybe a bit later and smaller than many had hoped," it declared in a recent report.

However, at UK mobile operator mmO2, the view of 3G remains more cautious.

Killer Application

Describing it stance as "pragmatic", mmO2 plans to introduce a 3G PC plug-in card service - along the lines of Vodafone's model - in Autumn, rolling out services to mobile phone customers later in the year.

But only if the handsets prove to be "robust enough", says spokesman Simon Gordon.

Hutchison 3, 3G service
The future for 3G handsets was bright, but it was also chunky

"We don't expect 3G to become a mass market product," says Mr Gordon. "It's just going to make things faster. At the moment, phones are bulky and battery hungry."

He adds: "We don't believe that video calling is going to be the killer application. People like to be prepared before they appear on screen."

If anything, mmO2 believes that faster music downloads and video messaging offered using 3G technology will be the applications that really capture the public imagination.

Despite the notes of caution, no major operator can seriously afford to ignore the advent of 3G.

However, the pace of introduction will be slower than first anticipated. For mobile phone revolution, read evolution.

Japanese rush to buy 3G mobiles
31 Mar 04  |  Business
Vodafone extends UK 3G coverage
02 Apr 04  |  Business
3G firm plans telecoms spin-off
30 Mar 04  |  Business
Sony Ericsson banks on 3G appeal
23 Mar 04  |  Technology
Hutchison hit by 3G phone losses
18 Mar 04  |  Business
Vodafone brings 3G to UK business
12 Feb 04  |  Business
Video phones show slow take off
16 Dec 03  |  Technology
DoCoMo shows 3G pick-up
07 Aug 03  |  Business

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