Vodafone has launched its 3G mobile network.
The company expects 3G to begin gaining mass market acceptance next year, and forecasts over 10 million customers will be using its Vodafone Live! portal with 3G services by March 2006. "Our rough estimate is that the 3G service will be used by 10 percent of our base within the next 15 months," said Vodafone CEO Arun Sarin.
Vodafone is hoping to make back its huge investment in 3G, including the £16.6 billion it spent on spectrum licences four years ago. Competitors like Orange and T-Mobile, who also paid out huge sums for European 3G licences, are also taking a cautious approach with the launch of their 3G services, which are expected by the end of the year.
Vodafone is presenting 3G as an enhancement to its existing Vodafone Live! portal, originally launched in October 2002, and is promoting 10 new 3G handsets, seven of which are exclusive to Vodafone, and services such as video calling, 3D arcade games, mobile TV and music downloads.
Vodafone has altered its pricing model for the 3G service, with users charged for individual content purchases, rather than by volume previously. Browsing will be free or included in a bundle of services.
Pricing comes in three packages. A £40 a month bundle offers 500 minutes of voice calls, 100 text messages, 50 minutes of video calls and charges 60p for sending each pre-recorded video message. The £60 a month bundle increases those offers, for example, offering 1,000 minutes of voice calls.
According to Ovum analysts John Delaney and Dario Betti, it is important that Vodafone is also offering a pre-pay option at launch, as it helps to encourage first-time users to the service. They also praised the company's decision to charge users for the content itself, as opposed to paying for the time it takes to find and download the content, which they believe will appeal to users and have the knock-on effect of causing a shake-up in business models.
Vodafone wants new revenue-sharing deals with its content providers, to "partly offset" the lost traffic revenues, Delaney and Betti said in an e-mail assessment of the Vodafone service, and other operators will undoubtedly follow Vodafone's lead.
But the analysts warned that Vodafone's decision to target its coverage area within heavily populated areas may prove to be risky if its 3G services prove not to be robust enough to cover such a large segment upon launch.
If the services offered by Live 3G are really compelling, then people will want to be able to use them wherever they are, Delaney and Betti said. If the services aren't accessible, then Vodafone risks annoying the customers they can least afford to annoy, the analysts said.
Vodafone's CEO brushed off those concerns on Wednesday. "We have been in this business for 20 years and are confident in CDMA, the core technology that is being used here," Sarin said. "We're not expecting any roadblocks in being able to power through and provide for our targeted market."
That market is primarily the consumer market, but Sarin added there are plenty of 3G services, such as video calling, that the enterprise market would find appealing.