Vodafone enters 3G battle against Hutchison

Vodafone finally launched its long awaited third-generation (3G) mobile phone services yesterday, prompting rival 3 to immediately dismiss them as a threat.

Vodafone finally launched its long awaited third-generation (3G) mobile phone services yesterday, prompting rival 3 to immediately dismiss them as a threat.

Vodafone's 3G services will be more expensive than 3's but the company said they would stand out in terms of their quality and range. The company has spent £7bn in the UK alone bringing its 3G services to fruition.

Customers will be able to download entire music tracks, watch Premiership and Uefa Champions League highlights, place and receive video calls and watch a new made-for-mobile drama based on the hit television series 24.

Pornography will also be a feature of the Vodafone live! content which Arun Sarin, the chief executive, said would be carefully controlled. "It will be a revenue channel but what we want to make sure is that kids and minors do not have access to this content. We are working with all kinds of controls to make sure that people who should not be exposed will not be exposed," he said.

However, 3, which is owned by Hutchison Whampoa, said there was nothing in the Vodafone launch that warranted customers paying a premium for the services.

Using the Vodafone live! brand, the company expects to have about 10 million customers by March 2006. Mr Sarin said the introduction of 3G services would be "neutral" as far as the company's profit margins were concerned. The company expects its 3G users to generate above average revenue per user figures but refused to specify what levels were forecast. The 3G service will be launched in 13 countries, including an upgraded service in Japan, where Vodafone has slipped badly behind rivals.

Mr Sarin said the introduction of 3G services was "evolution not revolution" with the company facing the challenge of migrating its existing customers from the already advanced 2.5G Vodafone live! service to its more expensive 3G offering.

For £40 a month Vodafone customers will get 500 voice minutes, 100 texts, 50 minutes of video calls plus football, film clips, news and free browsing on the live! platform. They will also get three free full music track downloads per month.

For the same price 3 customers get 750 voice minutes, 150 texts as well as the same content although it offers music video downloads rather than straight music tracks. For £60 a month Vodafone customers can have 1,000 voice minutes, 100 texts and 50 video calling minutes. Customers of rival 3 get 150 free texts plus the same voice minutes and video minutes.

Gareth Jones, the chief operating officer of 3 said: "I don't see them as being overly competitive. There is nothing in the content that is a particular wow."