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But Wi-Fi will force pricing rethink

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Vodafone, the world’s largest mobile operator, officially launched its 3G service in the UK last week – although at this stage, this is accessible only with laptop data cards, not handsets. UK chief executive Bill Morrow told analysts that the future strategy for the all-important enterprise data market would rest on integrating different wireless technologies and allowing roaming from a single handset or laptop. The company plans a multimode PC card with Wi-Fi, 3G and, "eventually", WiMAX and possibly 802.20.

However, it is still taking a more cautious approach to WLAN cellular integration than its German competitor T-Mobile, which has built up the leading network of hotspots and will soon release dual mode phones as well as data cards.

Vodafone remains lukewarm towards offering its own hotspot network, preferring to include access to third party systems as part of its corporate data packages. The company has repeatedly said that it has no plans to build its own network.

Nor will it divulge any timescales for WiMAX, beyond saying this would need to be stitched into the overall service as products, and customer demand, emerged.

The 3G data card, following similar launches by T-Mobile and Orange, supports 364Kbps download and 64Kbps upload via a Vodafone dashboard application on the PC. Currently, the service works in the UK, Sweden, Italy, Spain, the Netherlands, Japan and Portugal and there are plans, as yet undetailed, to allow roaming with the Verizon Wireless EV-DO network - currently being rolled out by the Vodafone co-owned operator in the US.

Verizon Wireless has shown some of its co-parent's scepticism about hotspots as a major business although it has rolled out some services via the Wayport network. It has been the least enthusiastic of the US carriers about public Wi-Fi and its CEO Dennis Strigl said recently: "I would suggest it's less expensive for us to get high speed data rolled out on a network that already exists than it is for Wi-Fi to build cross country."

This seems to be a view shared by Vodafone and its Wi-Fi moves have been hesitant and designed to tick a box in the enterprise package rather than generate significant revenue.

Last year, it signed up to resell access to BT's Openzone locations, and to the airport lounge hotspot network owned by Lufthansa. But it also delayed a planned roll-out in Ireland and has now clarified its strategy with the decision not to build hotspots of its own.

This is partly because, unlike most of its European rivals, it has no links to a wired provider and so cannot offer what France Telecom, in particular, is playing up - the triple play of wired, cellular and Wi-Fi services with integrated billing and authentication.

However, while publicly sceptical about Wi-Fi as a business model for mobile operators, Vodafone recognizes that some customers will demand Wi-Fi services, particularly in its keenly-targeted enterprise market. It is expected to sign further access and roaming deals around the world to support its multi-network expansion.

One reason for suspicion about Wi-Fi is, of course, that operators can command higher rates on their own data networks. Vodafone has already been forced to make some pricing adjustments, following criticism of the high cost of its new 3G datacard service. Vodafone Sweden has lowered mobile data prices, highlighting the early stage that this market is in, and likely adjustments to be made as it becomes clear what users want and what they will pay for. In general the 3G service is priced around €100 for 75Mbytes of data, which led one user to estimate that viewing a news site had cost €25 - far more expensive than Wi-Fi, even in Europe, where hotspots are several times dearer than in the US.

© Copyright 2004 Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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