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 Wednesday, 1 January, 2003, 10:57 GMT
Mixed messages for mobiles
T68 communicam, SonyEricsson
Now you can get lots of gadgets for your mobile
The BBC's Mark Ward

When the history of mobile phones in the UK is written, 2002 will be remembered as the year when something did not happen.

This was supposed to be the year that third-generation (3G) mobile phone services were due to start.

By now, many of us were supposed to have signed up for these futuristic services that turn your handset into something that does much more than let you talk while you walk.

Instead, 2002 has been a year that had more disappointments than delights for phone makers and mobile network operators.

Message waiting

Ben Wood, senior analyst at research firm Gartner, said one of the big changes was that mobile phone firms have stopped selling 3G as something revolutionary.

Instead, he said, they are pushing it as the next step for phone users sending multimedia messages and pictures.

Nokia 7650, Nokia
Camera phones come in many shapes and sizes
This helps to explain the change in strategy by mobile phone firms

Instead of competing for new customers by aggressive pricing and advertising campaigns, operators are now concentrating on getting more out of existing customers.

The other explanation for this is that Britain's mobile phone market is saturated and any result any effort to make people change to a new phone is unlikely to be successful.

Operators have quietly been updating existing networks to handle much more data.

With this infrastructure in place, the operators have started trying to get people to update their phones to be able to handle these multimedia messages.

Costly choice

But there is no guarantee that customers will be any more likely to adopt new services on existing networks than they would 3G services.

Currently handsets that can take pictures, such as the SonyEricsson T68i, Nokia 7650 and the Sharp GX10, are expensive. Often users buying them have to sign up other services to get the most out of them that can add quite a lot to monthly bills.

Picture messaging is currently free on most UK networks as the operators attempt to persuade people to use it.

Another limiting factor in their take-up is the fact that on most networks, customers who pay-as-they-go cannot use them.

Mr Wood said that voice calls and text messaging will continue to provide most of the revenue for mobile phone operators for some time to come.

Text messaging, BBC
Text messages are still hugely popular
Text messaging in particular is still hugely popular. Britons now send more than 1 billion of them per month.

Even if multimedia messaging does start to be used it is likely that people will continue to send far more text messages than they will pictures or sounds.

The success of multimedia handsets could also mean further delays to the launch of 3G services.

This is because as the price of a handset goes up, the longer it is before customers are keen to swap it for another phone.

Statistics suggest that anyone buying a new handset now for multimedia services will be unlikely to change it for 18-24 months.

Profitable times

What is clear is that phones that have diaries, notepads and cameras built-in are likely to triumph over handheld computers that have a phone added to them.

This could well dent the ambitions of companies such as Microsoft which are struggling to break into the world mobile market.

In November Sendo, Microsoft's key partner in the development of its smart phone, dropped development of the device and declared its support for Nokia.

But the one company that cannot afford to wait much longer to launch its 3G service in the UK is Hutchison.

Of the five firms that bought a 3G license, Hutchison is the only one with no pre-existing network and no UK customers.

Originally it planned to launch its 3G service, imaginatively called 3, earlier this year. Now the start date has been pushed back to early 2003 even though the marketing campaign for 3 has already begun.

For many operators 2002 has ended on a better note than it started.

Last year some operators were reporting record losses and looked like they would struggle to meet debt commitments.

But now companies such as Vodafone and Orange have reported healthy profits and handset makers say sales are holding up.

2003 is going to be an interesting year.

See also:

16 Dec 02 | Business
14 Dec 02 | Technology
06 Dec 02 | Technology
05 Dec 02 | Entertainment
03 Dec 02 | UK
03 Dec 02 | Business
28 Oct 02 | dot life
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