Vodafone passes 3G 'milestone'

The British mobile phone giant said the "live voice call" was a significant milestone toward rolling out its 3G services.

"The advent of a new generation of mobile multimedia services will enable our customers to live more of their lives through their mobile device," said Gavin Darby, chief operating officer of Vodafone UK.

Third-generation services promise to give users high-speed access to the internet and will allow them to download video clips.

Thames Valley 3G

Vodafone made a series of calls over a real 3G network, rather than a test network, in the Thames Valley area where it has rolled out 30 radio base stations.

"You could hear how ecstatic they were about making the call," said a Vodafone spokeswoman who spoke to one of the 3G engineers shortly afterwards.

The company has been rolling out the network with its infrastructure provider Ericsson since autumn last year.

Industry experts, however, were less enthused.

Ian Harbage, a fund manager and telecom expert at Barclays Stockbrokers, said the 3G call "was not particularly meaningful".

He added that investors would be more interested in the company's ability to meet targets to deliver commercial 3G services.

Commercial launch in 2002

Vodafone plans to launch its first live 3G service in the second half of 2002, offering initial services in large cities and around major transport routes.

The company also said that it was on schedule to exceed its licence obligation of covering 80% of the UK's population by 2007.

Vodafone's competitors were keen to downplay the company's so-called "milestone".

A spokesman for BT Cellnet said the British Telecom subsidiary had already made a 3G call in March, but conceded this was at a test facility in Slough rather than from a proper network.

The UK mobile phone group Orange said its 3G network rollout should also be complete by the middle of next year.

Earlier this month, the Isle of Man's telephone company Manx Telecom, owned by British Telecom, took delivery of the first 3G handset to arrive in Europe.

Manx Telecom is competing with Japan's telecoms giant DoCoMo to get the world's first 3G network up and running.

Licence costs

Vodafone paid £5.9bn last year to obtain a 3G licence for the UK.

The company is one of five groups that paid a total of £22.5bn for British licences.

Vodafone already launched its General Packet Radio Service (GPRS) - also known as 2.5G - at the beginning of this month.

Before making a full transition to 3G services, the company plans to phase in 3G capability onto dual-mode handsets that can also handle GPRS technology.

The huge cost of 3G licences has increased the debt burden for telecom companies as they borrow money to fund their purchases.

Share pressure

Mounting debt at the companies has subsequently placed pressure on their share prices, causing telecom stocks to plummet over the last 18 months.

Vodafone's stock hit a high of 399p in March 2000 before steadily declining through the rest of the year and 2001.

At 1025 UK time (0925 GMT), the stock was at 202.75p, down 6% from Friday's close.

Vodafone also said it was not concerned by media reports that Ericsson is about to cut another 6,000 jobs when it releases its first-quarter results this week.