Despite the many obstacles facing British 3G operator '3,' its ties to Orange will help it succeed, experts say.

In its recent assessment of Hutchison 3G's UK subsidiary '3,' research company Current Analysis said that it is taking "a slightly positive stance" on '3' UK, and on its plans for building a new UMTS-specific network in the UK and delivering 3G services.

Concern had been raised from various quarters within the industry that Hutchison, which also has a 3G licence in Ireland, would struggle because it lacks a 2G/GSM/GPRS network, the standard most British consumers are currently using. And Current Analysis points to other potential stumbling blocks, such as the firm's lack of an existing customer base, massive expenditure in building its network and no apparent services targeted at business customers -- a group most likely to have the spending power to purchase its product.

Another potential trouble is the cost of 3G handsets, which come in at STG199, compared to rival 2.5G multimedia handsets from Vodafone at STG99. The fact that '3' UK will sell dual mode handsets as part of its roaming agreement with O2 is however a positive sign.

Current Analysis also said it had faith in '3' because it is, in many ways, following in the footsteps of Orange, which itself was a new entrant to the UK mobile sector that managed to succeed. Not least of these ties is that Hutchison 3G's biggest shareholder is Hutchison Whampoa, one of Hong Kong's largest companies and initial owner of Orange in the UK.

In this vein, some of '3' UK's top executives are ex-Orange workers, including Managing Director Dr. Colin Tucker and Strategy and Marketing Director Lisa Gernon.

"Everyone who wants a phone in the UK has one," warned Michael Ransom, author of the report, adding that if '3' is to make a successful entrance into the market it will have to show people how its services work and the benefits that come with them.

Indeed the company's report acknowledges the importance of 3's focus on content, referring to its contracts with the UK FA Premier League to deliver football content, along with similar deals with the BBC for other video content. Furthermore, 3 reportedly has partnerships with nine game development companies for a range of new and classic style arcade games.

Current Analysis also offers a few recommendations to would-be '3' subscribers including a suggestion that consumers organise in-store demonstrations of the company's service prior to purchase. The researcher also advises against customers upgrading to GPRS, claiming they will only have to upgrade to 3G in the future, and notes that there are dual-mode phones GSM/GPRS and 3G phones already available.

Asked if '3' will succeed in the UK, Ransom said "It's a 'when' rather than an 'if,' over a long period of time," adding that mobile phone users are only starting to use picture messaging and video on their phones. © ENN