Three UK launch prompts fears of a 3G backlash

ORANGE has warned that the launch of the next generation of mobile phones by rival operator Hutchison 3G could damage the entire wireless industry if the infant technology fails to live up to expectations.

Hutchison launched its 3G phones to a mixed response on Monday under the name Three UK, but the actual handsets are not available for sale and none will be delivered to customers until the end of the month.

Analysts had predicted that Hutchison would launch the services on March 3 2003, a decision based as much on the company’s desire to take advantage of the auspicious date (03/03/03) as the technology being ready.

3G, which will allow always-on, high speed video and internet access over mobile handsets, has yet to be proven as 100% reliable in trials and concerns exist that glitches remain.

If Three UK’s handsets are poor sellers, or if they fail to meet customer expectations, the backlash against 3G could be considerable.

Orange’s finance director, Mike Newnham, said that he was not worried about Hutchison stealing a march by launching its products earlier than its rivals, all of whom have yet to launch.

He said: "We are not concerned [by Hutchison’s launch] - it’s good that they have started to raise the profile further of the services that we will all offer.

"My concern is that there is a risk that the phones will not work that well. That could result in poor user experience for customers.

"People’s perspective will be dampened if it falls short of what it is supposed to offer the customer."

Last week, Orange’s parent company France Telecom announced France’s largest-ever corporate loss of 13.7bn. These crippling debts mean that France Telecom and Orange, along with the other licence UK holders, Vodafone, T-Mobile and O2, will be watching closely to see how Three UK fares.

Between them, the operators paid 22.5bn for licences in government auctions three years ago banking their futures on the technology taking off as the market for the current generation of handsets - 2G - saturates.

3G phones are already on offer in South Korea and Japan, where they are enjoying mixed fortunes although user numbers are on the rise. In trials closer to home however, old problems continue to persist such as dropped calls when users move from one network to another.

Despite these problems, Newnham insisted the public is starting to understand 3G and said that Orange would launch when the technology is ready, either later this year or early in 2004.

He said: "Deep down, I feel that people are starting to get a feel for 3G. We will launch with the right content and at the right time."

A spokesperson for Three UK said that the company was aware that the weight of expectation was resting upon the firm’s shoulders.

He said: "We have got a new technology and we see that the industry as a whole is looking at us, but we are concentrated on our business."

On Friday, the company said it was investing a further 650m in 3G technology in the UK.