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Dongles power 3's data surge

Mobile broadband's magic stick masterplan

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Maverick mobile operator 3 UK says it's seen a 700 per cent increase in data traffic since it launched its price-busting dongle last October. Average data throughput on the network rose to 1,400 mbit/s by February, a steep ramp from 200mbit/s when the offer was introduced.

The dongle is available to pay-as-you-go customers for £70, with 1GB for a tenner, or 3GB for £15. T-Mobile and Vodafone have followed suit with aggressive dongle deals.

3's UK CEO Kevin Russell said it had conjured half a million customers "from nowhere", as he gave details of the networks roadmaps for higher higher 3G speeds, and how it will share infrastructure with T-Mobile.

But we weren't alone in wondering the aspiration of becoming the king of mobile broadband was something to wish for. Data networks don't make money - ask a British ISP - and the new investment in fibre is coming from taxpayers or is being cross-subsidised by TV. So what's the masterplan?

Russell told us it was all about incremental margin. He didn't think mobile broadband was going to display fixed broadband by 2012 - a figure we plucked out of the air - and preferred to see it as a new marketplace, rather than one of substitution.

"Data becomes valuable as a leverage into increased share of the handset business," he said. "We have a different strategy from the other four operators."

So, give away the data and make more on handsets. It seemed rude to point out that you can walk out of a 3 Store with a dongle, but no handset.

Another reporter asked the same question, phrased differently. Nobody makes money from data - "so isn't your business model running on empty?"

Russell said he didn't understand the question.

It's odd to hear the mobile guys advocate flat-rate data plans, just as the fixed broadband world is beginning to realise what a disaster flat rate plans have been. Many ISPs have very little wiggle room when demand for traffic increases. Then again, as any roaming data user can confirm, that's not a problem for the mobile operators: they'll cheerfully stick several thousand quid on your bill if you exceed your quota.

German unification

Last December the Hutch-owned operator agreed with Deutsche Telecomm to pool their resources. Expect to see the benefits of the deal with T-Mobile in the second half of next year, Russell said. Today, neither 3 nor T-Mobile have great 3G coverage in rural areas. But by the end of the 2008, most of the mainland UK will be irradiated by UMTS, as 2G is replaced by 3G over 9-12 months.

3's roadmap will see the network upgraded to 7.2Mbit/s (theoretical) speeds in the second half of this year, which according to Jackson should translate to a doubling of speeds from the 1-2Mbit/s today. In the second half of 2009, this should be upgraded to 14.4 Mbit/s... but that's "more about capacity than speed improvements," said Russell.

There was one other interesting aside.

Russell welcomes service operators to partner with 3, but said that if their business model is based on a service charge, this should be passed on directly to the customer. For example, if an IM service charges money, the punter should be able to see how much it costs. In other words, don't expect us to subsidise it.

Russell also said that spectrum refarming was becoming a pressing issue, and also wanted Ofcom to look into mobile termination charges. Asked if he thought the regulator could do a good job, he politely moved onto further questions. ®

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