Irish users will pay a premium for 3G services

Comment: Technology Reporter, Jamie Smyth, asks why mobile prices continue to be higher in the Republic

The next generation of mobile phones arrived this week amid a blaze of marketing hype as Vodafone began selling a new suite of multimedia and video services.

A galaxy of television stars and sporting heroes, such as Davina McCall and David Beckham, have been employed to persuade us to upgrade our handsets so that we can download music and video clips.

But, behind all the marketing hype, there is a depressing familiarity about the prices set by Vodafone Ireland for its flagship third generation mobile (3G) service.

For example, the standard cost for Vodafone Ireland's premiership soccer service, which offers mobile phone users access to goal clips and interviews, is €9.99 per month, while the same service in Britain costs just £5 (€7.17).

Video games cost between £1 and £5 (€1.43 and €7.17) to download to 3G mobile phones in Britain while the same games cost between €5 and €7 in the Republic, according to the firm's official 3G websites.

But, perhaps the biggest difference between Vodafone Ireland, Vodafone UK and Vodafone Germany is the subsidy each firm will offer subscribers to help them upgrade their handsets.

Vodafone's country websites show that contract subscribers can upgrade their handset for free in both Germany and Britain. In the Republic, the cheapest upgrade offer is currently €144 for a Motorola V980.

Faced with a barrage of criticism about its 3G pricing policy, Vodafone went on the radio last week claiming that free mobile handsets were only available in special online offers in Britain. And, in any case, comparing prices for different 3G services between Britain and the Republic was not comparing "like with like", according to the firm's public relations gurus.

Luckily, after several years of debating prices with Vodafone executives, I've learnt to treat this kind of "marketing twaddle" with a healthy does of scepticism. So, armed with a notebook, pen and umbrella to help me fight my way through the Christmas shoppers, I headed north in search of the truth on Vodafone's 3G pricing.

Northern Ireland, a market of about 1.7 million people, benefits from having five network operators compared to just three companies in the Republic. And a casual walk through any big shopping district illustrates that there is stiff competition among the major mobile phone companies.

"3G is already proving very popular this Christmas," says one shop assistant in a Vodafone store in Belfast's Abbey Centre. "We are getting a lot of people upgrading their phones to 3G."

So how much does it cost to upgrade to a new 3G handset in Northern Ireland?

"Well for two of our handset models it is almost always free if you spend more than £30 a month," says the assistant. "Of course, you can buy extra bundles of voice and text services for an extra £40 or £50 if you want."

The free handset offer is also available for new contracts and there is no requirement to sign up for the offer on the internet.

About 40 metres around a corner in the shopping centre at Phones for U, a store that stocks handsets from Vodafone's main 3G competitor, "3", a shop assistant unveils yet another free mobile handset offer.

In this Christmas offer "3" is offering 500 voice minutes and 100 text messages per month for just €21.54. Not bad when you consider that Vodafone's Irish consumers currently pay €99 per month for a package of 500 voice minutes anytime day or night.

It is hardly surprising, therefore, that Vodafone's Irish consumers currently spend more on mobile services than any other European subscribers of Vodafone companies. With the introduction of the new costly 3G services, it is likely this gap will widen even further in the future.

The pricing gap is particularly infuriating given the mobile phone industry's earlier promises to roll-out next generation services faster and cheaper in the Republic if 3G licence prices were set lower here than abroad.

The telecoms regulator duly obliged, enraging the Minister for Finance in the process. It sold the B licences at a cost of €110 million over a period of 15 years and an A licence for €40 million, a fraction of the €8.5 billion price tag that Vodafone UK paid for a licence.

But although the Irish licences were sold at a fraction of the price of equivalent 3G licences in Germany and Britain, consumers here are getting the technology no earlier. In fact, several deadlines for the launch of 3G services came and went without any sanction from regulators, despite strict penalty clauses it had written into the text of the 3G licences.

For example O2 Ireland and "3" both currently claim to be offering 3G services to the public, although neither firm is supplying handsets in the Republic.

Even Vodafone, which must be congratulated for launching the first commercial 3G services in Ireland, is encountering handset supply problems in the Republic.

A quick trip to the Vodafone Ireland store in Henry Street earlier this week highlighted that most stores are still only stocking a single 3G handset - the Motorola V980.

A Nokia model should be in stock next week in the run-up to Christmas, according to one shop assistant. But after almost three years waiting for the roll-out of 3G, my advice to Irish consumers is don't bet the house on it.

Clearly, competition is the key incentive for firms to provide better prices and service for consumers in the 3G market. And in Ireland this is unlikely to begin until the first or second quarter of 2005, when O2 and "3" are likely to enter the marketplace.

Until then consumers should think carefully about whether to sign a 12-month contract now or wait for a better deal next year.

3G adds to pricing confusion

Comparing prices was a complex job in the mobile world when voice services accounted for the majority of a person's usage, but the launch of third-generation (3G) services makes comparisons even tougher.

Vodafone's suite of 3G multimedia and video services can be purchased through a monthly subscription fee or by paying for each service that is downloaded.

The most expensive service, premiership soccer, costs €9.99 per month while individual news video clips can cost as little as €1 .

Third-generation handsets in Ireland cost €159-€319, although a heavy mobile user may be able to get a €25 discount if it is requested in the shop. Third-generation services are only available to contract customers, although it will be extended to pre-paid Vodafone customers sometime next year.

Separate voice bundles called "Super Time" packages are available for 3G subscribers, which the firm claims are cheaper than its 2G packages.

Consumers should be particularly wary of notching up large bills when they initially sign up for 3G as they will not be used to paying for downloaded content.

Parents should also be wary about buying young children 3G phones for Christmas until content-filtering technology is made available next year to help them block out unsavoury mobile content.