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Friday, 4 February, 2000, 15:49 GMT
What the Vodafone deal means to you




It's the biggest corporate takeover ever. Having snapped up Mannesmann for 112bn, Vodafone AirTouch has consolidated its position as the biggest phone company in the world, operating across five continents.

Mobile merger battle
Good news for shareholders, but what about the millions of mobile phone users?

Most of the potential for change, be it for better or worse, is some way off, say industry analysts. In the short-term, Vodafone subscribers - 42 million in total with the Mannesmann intake - will see little impact.

In fact, there is a chance they might even witness a slight deterioration as head office focuses its efforts on the nitty-gritty of assimilation, says Peter Richardson, an industry expert with Dataquest consultants.

The real difference will start to filter through with the launch of third generation mobile phones, due in the UK towards the end of next year.


Generations past and present
1st generation - analogue mobiles in the late 80s and early 90s
2nd generation - digital phones most common today
2nd generation plus - limited internet access
3rd generation - internet, TV, video conferencing etc
Ms Scott says Vodafone will use its big hitting influence to try and secure deals with top name service providers for 3G phones.

Just as the internet relies on new content to draw in users, so will third generation phones. The phones will be multimedia handsets with features such as internet access, video conferencing, traffic reports, up-to-the minute football scores and news bulletins.

The fight is already on to sign up brand name content providers. Vodafone has negotiated a deal with the BBC to feed live news to mobile phones, while Orange has signed ITN and the Press Association.

"The groundwork is being done now. There's a lot happening in that area now to make sure that they can offer the sort of services that they believe the market will demand," says Ms Scott.

"What is still uncertain is how much users will be prepared to pay for these types of services."


Mobile news with the Anna Ford of the future
Call charges are also set to fall further, although, with mobile ownership still rocketing around the world, this is more down to greater competition in the marketplace.

The takeover will bring about better international roaming, says Ms Scott, since it grants Vodafone a stronger footing on the Continent.

Currently the GSM standard that operates across Europe allows callers to use their phone in several countries, but often features such as voicemail are unavailable.

Now Vodafone will find it easier to usher in seamless roaming. Even the complex issue of foreign call charges will be simplified. Users may see rates flash on to the screen of their phone as they cross from France to Italy.

The issue has always been more complicated in the United States, where GSM is one of three different standards. This is likely to be ironed out with 3G phones which should operate to one standard worldwide. Again Vodafone will be at an advantage - its AirTouch brand is already an established network in the US.

Orange for sale

A pressing matter for customers on the Mannesmann-owned Orange network is that it will have to be sold off in the interests of preventing a monopoly in the Vodafone stable.

There will be no shortage of bidders for the network, which has marked itself out as an innovative brand, says Nicky Scott, of telecom consultants Ovum.

Energis and France Telecom are two of the likely interested parties, although Orange customers will probably not see much difference in their day-to-day service.

Yet even without Orange, there has been speculation that Vodafone will become an overbearing force in the mobile phone market - something that could be bad news for customers,

Both Ms Scott and Mr Richardson doubt it, since the European mobile telecom market is heavily regulated.

"People are starting to see prices coming down and they will not tolerate it going the other way."

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See also:
04 Feb 00 |  Business
Vodafone seals Mannesmann deal
09 Dec 99 |  Business
The mobile internet race

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