GPRS pricing war breaks out

Vodafone launches with cheaper handsets than BT

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Vodafone has undercut BT on the price of handsets designed to deliver high speed Internet access over mobile phone.

From tomorrow, Vodafone will begin selling Motorola Timeport 260 GPRS (General Packet Radio Service) phones from its shops at £99.99, or half the price of mobile rival BT Cellnet - which charges £199.99 for the same handset.

Vodafone will be offering two price plans, which can be attached to a subscriber's normal monthly pricing plan. A bundled GPRS package for heavy WAP users includes up to one megabyte of data transferral for £7.49 per month (50p cheaper than Cellnet), and £4.99 for each additional megabyte (£1 more than Cellnet). Alternatively customers can subscribe to GPRS for £3.99 extra per month, 2p for each kilobyte of data (the equivalent of a typical WAP page) downloaded.

GPRS phones are designed to offer an "always-on" Internet connection at between two to three times the speed of current mobiles, and are seen by the industry as a stepping stone to 3G, which promises far faster data rates.

BT Cellnet launched the UK's first consumer GPRS service on May 18, though similar services have been available to business since earlier this year. Vodafone launched a service targeted at business in April and was not expected to launch consumer GPRS until September (when a wider variety of handsets are available), but now it has now decided to introduce the technology in the UK ahead of a later group-wide roll-out.

Vodafone's decision to subsidise the price of the phones more heavily than BT could be seen as a way to encourage faster take-up of the technology. However the move raises concerns about profit margin pressure on mobile operators whose £22.5 billion investment in 3G licences is seen as excessive and has put pressure on the share price and profitability of mobile operators.

Earlier this week Vodafone chief executive Chris Gent said 3G would cost his company £10 billion to roll out. ®

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