3G still treated with caution

The launch of NEC's latest third-generation (3G) handset shows how the communications market has changed, as operators concentrate on bread today rather than jam tomorrow.

NEC's new handset is the fourth 3G phone to be made available in the UK.

It incorporates the standard twin camera design to allow videoconferencing, but has a much larger screen (47mm x 57mm) than previous models and a built-in keyboard.

The handset supports Java and can download suitable applications, and has enhanced location-based tracking built in.

But mobile phone operator 3, which will support the new phone, seems to be benefiting from adopting a more traditional mobile business plan rather than pushing the 3G technology.

And rivals and mobile developers are focusing on existing technologies that are widely available, such as GPRS, rather than 3G.

Last month 3 cut its voice charges to levels comparable with other mobile operators. It also introduced better-value pre-pay options and has started subsidising handsets.

The company's sales push also received a boost when the decision was made to sell 3's handsets from branches of Superdrug.

But Andy Buss, senior analyst at Canalys, warned that it is still early days. "It's still really only the early adopters buying 3G phones," he said.

"Phone videoconferencing is looked on as a bit of a gimmick by business. 3 is now moving towards behaving like a traditional mobile network, subsidising handsets and offering competitive rates and getting voice and data to usable prices.

"We estimate this approach has increased 3's subscriber sign-up threefold "

For example, the new phone sells for about £50, compared to the £400 price tag for the first 3G handset.

Although 3 was unable to supply usage figures before going to press, experts have estimated that the company has sold 100,000 handsets in Italy and 35-40,000 in UK.

Competitors are not so keen to rush into the 3G market just yet. Orange recently said it was planning to roll out a limited 3G service in the UK in October but would have no qualms in delaying launch until it was satisfied that it could service the market directly.

Other mobile operators like Vodafone are concentrating on data, but mainly for GPRS business users rather than the consumer market.

"Most of our work these days is on user interfaces for 2.5G," said Chris Cox, marketing manager for mobile developer 3G Labs.

"Network operators are concentrating on making what they've got easier to use. There was some activity on 3G with the Hutchinson launch, but that's now faded."