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Can Voda, O2 crack the German market?

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Vodafone and O2 have now rolled out the 3G-based home broadband service they promised earlier this year: prices look more aggressive than first expected. But can it succeed? Well, maybe, just maybe, in some apartment blocks.

The device looks like an ordinary broadband connection, with a box on the wall. One socket is Ethernet for the home PC network. Another is USB, for a printer. And then there's the three-line phone outlets, so you can (suggests Matthew Haigh in Mobile News) plug in a phone, a fax box, and an answering machine.

Vodafone's (German language site) Zuhause web service is giving "limited download" over its German 3G network to subscribers - five Gig of data a month - for twenty Euros a month. A comparable service, Surf@home from O2, will be a lot higher (German language site) priced, with some differences in the small print.

Will it work?

Initial reaction from Pyramid Research is dismissive. Pyramid Research analyst Joel Cooper asserts, “Do not expect a fixed-mobile revolution anytime soon. These services will have limited impact on the German telecommunications market. Cooper says they will not lead to widespread substitution of fixed-lines for two key reasons.

His reasons are compelling: with a downlink speed of 384K max (until HSDPA equipment rolls out) 3G can't really match ADSL, especially with ADSL 2 being offered in homes near the exchange, at 2 megabits and more. Typical cable modem rates are now at least a megabit in the UK, and ADSL and cable prices are coming down.

"2004 saw the price of DSL tariffs spiral downwards as ever more ISPs sought to differentiate on price. Price pressure has continued into 2005 and although showing some signs of slowing, on the whole looks set to continue throughout the rest of the year," adds Cooper.

However, while he's spot on as far as "widespread substitution" goes, the service may, nonetheless, generate revenue for the two carriers, by providing broadband into some apartment blocks which refuse to allow cable or ADSL connections. It's also the case that these devices will be an easy way of getting broadband for short-term tenants who can't get landlord permission to install their own fixed line phone.

The services are being sold to German householders as "six times faster than ISDN" which raises the question of whether "ethics in advertising" considerations may be raised. The peak download speed may compare well with ISDN, but ISDN is symmetrical; if you get 64 kilobits down, you also get 64 kilobits upload speed.

For someone posting their holiday snaps onto a website, 3G upload speeds will be a significant obstacle, being actually slower than standard ISDN, and significantly slower than 128 kilobit ISDN.

Full details in the Vodafone press release.

© NewsWireless.Net

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