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Last Updated: Friday, 17 November 2006, 00:16 GMT
Is the web going mobile at last?
Analysis
By Tim Weber
Business editor, BBC News website

Nokia N73 X-Series phone, using MSN messenger
Microsoft's messenger is now always on, and on your mobile

At long last the web has become truly mobile, promises 3G network operator 3 with its new X-Series of mobile phones. But is this yet more hype or a consumer dream come true?

Boring meeting, endless wait for the train? Whip out your mobile phone and watch a film that's coming in on your Freeview or Sky box at home - or even one that's on the hard drive of your personal video recorder.

Want to listen to good music, or show off pictures of your last holiday? Take your mobile and download a podcast or check out everything that's on your computer at home.

Never miss a beat on eBay auctions any more - just bid on the move. Oh, and don't bother with pub quizzes. The guys at the next table may use an X-Series telephone to access Google or Yahoo at broadband speed.

The holy grail?

Has mobile operator 3, owned by Hutchison Whampoa, discovered the holy grail of the mobile phone industry?

Until now the billions of pounds and euros spent on expensive 3G licences - which allow mobile phone companies to offer services at broadband speed - have failed to pay off.

Sony W950 X-Series phone using Ebay
Never miss a bid on eBay

Most people are still perfectly happy to use their phones for just a few things: making calls, for example, or sending text messages.

Neither music downloads nor camera phones made the 3G cash registers ring.

But if 3 is right, the search for a killer application was pointless.

Instead, the secret of 3G could be old-fashioned marketing - and a pricing plan that's nicked from the fixed-line internet.

It's not new - but it's packaged

For its X-Series of mobile phones, 3 has lined up impressive partners: Google, Yahoo, Microsoft, Nokia, Sony Ericsson, Orb, Sling Media, plus Skype and its parent company eBay.

X-Series services
Skype internet telephony
Microsoft Messenger
Ebay
Unlimited internet access
Google search
Yahoo Go services
Sling television access
Orb access to home PC
Podcast downloads on the move

The underlying technologies are not particularly new or cutting edge.

The special thing about 3's offering is that it provides all these applications bundled, user-friendly and ready to go - even Sling's access to your home TV set and Orb's connection to your own PC.

No hotspot, no laptop, no data card required.

Until now only people with smartphones and a lot of know-how could modify their devices to make them do what an X-Series phone does out of the box.

Little wonder that Nokia's executive vice president Kai Oistamo does not use the word "phone" once. Nokia's N73 X-Series is a "multimedia computer".

The killer

But here comes the real killer: customers will pay a flat rate for all their data transfers.

Nokia N73 X-Series phone, using Slingbox to watch BBC Two
Watch television without paying for a subscription twice

No counting of clicks or minutes or messages or megabytes of downloads (although "fair use" limits will apply, just as with many fixed-line broadband deals).

All you have to pay is a single monthly charge on top of your 3 subscription.

"Moving to flat rate charging is the key to unlocking the value of the mobile internet," says Miles Flint, the president of Sony Ericsson.

Frank Sixt, group finance director at Hutchison Whampoa, describes it simply as "the end of rationing".

Mr Sixt is cagey about the exact cost. All will be revealed at the beginning of December, although he promises that the service will cost less than fixed-line broadband.

It is this new charging model that will strike fear into the heart's of 3's competitors.

If 3's price hits the sweet spot - say at just a tad over 10 a month - which customer with a hunger for mobile excitement would keep paying by the megabyte?

A mobile revolution

Nokia N73 X-Series phone, using Skype
Now you can Skype on your mobile phone

The economics of the mobile web are simple. "About one billion people use PCs to access the internet," says Yahoo boss Terry Semel. "But three billion people use mobile devices."

Until now, says Niklas Zennstrom, the chief executive and co-founder of Skype, "we thought 3G was not real broadband, but it has now arrived".

Bringing the two together is a mass market opportunity.

Meg Whitman, who runs eBay, calls 3's X-Series a "key milestone" in the development of the internet.

No wonder then that 3's mobile web revolution persuades the likes of Google, Microsoft, and Yahoo to happily share a stage.

Who pays?

The proposed flat rate may pay some of 3's networks costs, but the real business model is advertising.

Google, Yahoo and Microsoft have all become experts in online advertising. Now they hope to transfer these skills to the mobile space.

Yahoo, for example, offers its content for free, but shares with 3 the revenue from display and search-driven advertising on X-Series phones, explains Geraldine Wilson, who is in charge of Yahoo's mobile offering in Europe.

The drawbacks

With its offering 3 has stolen a march on all its mobile competitors.

When I tried it the service worked without a hitch, even though all around me dozens of journalists were also busily trying out new X-series phones.

However 3 - with 14 million subscribers globally - is present in only a few countries. Any move into new markets would be prohibitively expensive.

And there are other drawbacks.

The X-Series has launched with just two phones, Nokia's N73, and Sony Ericsson's W950.

Both are great, but not perfect - although more models are promised for 2007.

But using them reminded me how slow 3G actually is - ISDN speed at best.

HAVE YOUR SAY
The mobile phone is just an appendage in an already saturated communications market
Chris Garrett, Hove

What would have been blistering speed five years ago has a snail's pace feeling in todays' gigabyte world.

Soon 3 will upgrade its network to the faster HSDPA standard. But to use it, customers have to upgrade to even newer phones.

And there is another worry that must be keeping network operators up at night: Are there really enough people out there, who want to fill their "dead time" with mobile access to the web?




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