Vodafone has announced a new €12 flat rate for 3G data, low enough to undercut the exorbitant price of Wi-Fi at European hotspots.

"Given that a typical European hotspot costs about €6 an hour, or €20-30 in business-class hotels, this would make it largely pointless for business travellers to use WiFi hotspots," says Dean Bubley of Disruptive Analysis. Wi-Fi is unmetered, but the Vodafone rate is capped at 50 Mbyte per day, which Bubley points out is enough for "two hours of Skype calls plus lots of emailed powerpoint documents." Skype uses about 500kbyte to 1 Mbyte per minute.

"With high speed 3G networks already deployed in many European markets, ongoing investment in new technologies to increase download speeds and clear, effective tariffs, Vodafone should be the network of choice for those seeking to use their laptops when travelling," said Arun Sarin, chief executive of Vodafone, throwing a gauntlet to hotspot providers and other operators.

The new tariff won't be available till 1 July 2007, so there is plenty of time for Europe's hotspot providers to respond with price cuts but, on past experience, there is little likelihood of this.

"The European Wi-Fi industry has managed to squander a more than 3-year lead over the cellular data industry," says Bubley. "It has been plagued by lousy interoperability, grudging roaming relationships, and stupid pricing. Obviously the right price for hotspot pricing has been on a par with public Internet cafes - about €1-2 per hour."

Foreign data costs will be swallowed up easily in travel budgets, said Bubley, coming in at less than taxi fares and restaurant bills. The only reason to use a European hotspot is for users who need more data, or are in places where 3G coverage is poor, he observed. Ironically, 3G coverage is at its poorest in the conference rooms in the basements of hotels that extort money for business Wi-Fi, he observes.