Vodafone, the world's biggest mobile phone firm, has admitted that the launch of its third-generation (3G) phone services could well slip into 2003.

The news comes as the company slows down construction of its 3G mobile phone networks. Vodafone chief executive Sir Christopher Gent attributes the delays to a lack of handsets.

The news caused Vodafone shares to fall 4.6% to 141.25 pence on Friday. The stock has now lost almost two-thirds of its value since March last year.

A delayed 3G launch means that it will be even longer before Vodafone is able to recuperate some of the money invested in securing the new licences and building the network.

3G mobile phones promise to relay information 40 times faster than the current phones and will be able to display video, stream music and connect at high speeds to the internet.

The slower pace of development means that the group now plans to build 750 3G base stations in the UK by the end of this year instead of the 1,200 originally planned. One Vodafone analyst said that the slowed rollout would mean a cut in capital expenditure on 3G of 5% in the year to March 2002 and a 13% cut the following year.

The delay has been caused by the late production of dual mode handsets which support both 3G and existing services. "There is, despite what some manufacturers say, a slip in the availability of handsets," Sir Christopher told the Wall Street Journal.

Vodafone's arch-rival BT is pushing ahead to launch the UK's first ever third-generation phones on the Isle of Man within the next few months. And BT pipped Vodafone to the post in launching its GPRS mobile phone network - mobile services which are not as advanced as 3G but offer an always-on connection to the internet.

In Japan, NTT DoCoMo has already launched a trial of third-generation phones but experienced a series of glitches. Investors have shunned the telecoms sector because of fears about the large amount of money invested into 3G mobile phones.

They feel that there is not enough evidence to show whether the phones will work successfully, attract enough users or be commercially viable.



A BBC television-meets-telephone text messaging experiment has been hailed a record-breaking success.

The Joy of Text show, screened on BBC One on Saturday, was the biggest ever mass text exercise receiving more than 500,000 text messages, a spokesman said.

The messages sent to the programme, presented live by Ulrika Jonsson, will now be compiled into a spin-off book.

"Nothing like this mass text has ever happened before and as far as we are aware this will be the fastest book ever written," said a spokeswoman for the publisher, Transworld.

The BBC collaborated with mobile phone companies and used new technology to allow such a large number of messages to be received.

The book, which will also be called The Joy of Text, will be edited by Doug Young who created the fastest published book - 100 Recipes In no Time At All.

That book was produced in 48 hours for the Challenge Anneka TV Show.

Viewers of The Joy of Text show took part in a live poll on the use of text messaging.

It indicated that 66% of people use text messages to avoid talking, 52% to apologise, 48% to gossip, 37% to flirt, 37% to say: "I luv u", 34% to lie, 20% to ask for a date, and 6% to end a relationship.

Text messages have been put to a range of different uses in the last 12 months.

The Guardian newspaper ran a text message poetry competition and Bridget Jones fans can get daily messages from their heroine.

A text message sent from Bali to England helped save 14 tourists stranded in a boat, while smokers hoping to quit can be sent messages encouraging them to fight the nicotine cravings.

Last year at the Edinburgh fringe festival theatre goers could follow a play via messages on their phone and earlier this year MTV UK launched a service to allow viewers to choose videos via messages on their phones.

But text messages have also fallen foul of the law. A farm worker in Scotland was fined £100 for sending obscene mobile phone text messages to a man he accused of wrecking his marriage.


Veteran songwriter and producer Pete Waterman has criticised musical mobile phone ring tones as a "waste of money".

Waterman airs his criticisms in an investigation into the cost of mobile phone ring tones on BBC One's Hard Cash programme, due to be broadcast on Monday.

The Coventry-born impresario, known for his knack for spotting mass market pop acts, says that most of the tones on the market are not worth the money.

"I just think some of them are rip-offs and some of them are blatantly nothing like the song," he said.

Many children dial premium rate numbers to get a hold of the week's chart hit for their mobile phone's ring tone.

The lines charge up to £1.50 a minute and can cost even more from mobiles.

Hard Cash found youngsters who had spent nearly £300 after changing their ring tones repeatedly.

The cheap way to get a new ring tone is to find one of the many internet sites where various dial tones can be downloaded for free.

But Waterman - who was part of the Stock, Aitken and Waterman outfit that produced Rick Astley, Bananarama and Steps - says that many of these are not even recognisable.

"In the office we downloaded a load of ring tones from the internet and we could only recognise about 20 of them."

Waterman has been responsible for 20 British number ones, 200 British hits in all and record sales totalling over 500 million.

Some of the better known hits he has produced are Bananarama's Love In The First Degree, Kylie Minogue's Better The Devil You Know, and Dead Or Alive's You Spin Me Round.

He is well-known for his outspoken opinions on the music industry - most recently he dismissed Popstars group Hear'Say as "karaoke".

Last year Waterman charted his rise from Coventry railway worker to multi-millionaire record producer in an autobiography entitled I Wish I Was Me.


The launch of the world's first third generation mobile phone service on the Isle of Man has been delayed by at least three months because of malfunctioning handsets.

British Telecom, which had been due to start the service at the end of May, said its Manx Telecom subsidiary was postponing the launch because of a software problem in phones supplied by NEC.

The service on the tiny island off north-west England would have been the world's first after Japan's NTT DoCoMo delayed its launch in Tokyo from May until October.

BT said it will now launch the Isle of Man's high-speed mobile internet service at the end of summer or early autumn.

A BT spokesman said the NEC handsets lose their connection when the caller moves into a new mobile "cell" - or a new area covered by the network.

A software problem in the phone prevents the network seamlessly passing the call to the radio mast in the new cell. The problem is the same one that forced DoCoMo to delay, the spokesman said.

The setback comes as British Telecom steps up its battle to win back the confidence of its investors. The debt-ridden telecom giant has revealed further details of a major cost-cutting programme aimed at shaving about £600m off its operating budget.

BT's new chairman Sir Christopher Bland will travel the country briefing investors on the plan this week.

The company also hopes to shed 5,000 jobs this year through "natural wastage", a spokesman confirmed. He said that the company had also cut 5,000 jobs last year. The company hopes to avoid any compulsory redundancies.

Sir Christopher retains his previous position as chairman of the BBC until a successor is found. In another move to overhaul its strategy, BT is considering the option of creating a new telecom company in conjunction with the US telecom giant AT&T.

The new company would combine Concert - BT's global telecom joint venture with AT&T - and BT's Ignite unit, which provides broadband services. The company, which would also include AT&T's own business services division, would be floated on the stock markets in London and New York with an estimated value of £5bn.

The plan is one of a dozen options being considered for Concert, including downsizing. Concert's performance has been disappointing, as was shown when BT reported a £2.8bn ($4bn) pre-tax loss for the fourth quarter. Concert racked up a loss of £89m after a previous profit of £69m.

BT, which has a 50% stake in the company, is also discussing options to sell its stake in Concert to AT&T. BT announced last week it is to demerge its mobile telephone and internet division BT Wireless. The remainder of BT, which includes the core fixed-line business, is to be renamed Future BT.

Existing BT shareholders will hold shares in both companies. BT has told shareholders it was necessary to demerge BT Wireless because of tough market conditions and increasing competition in the mobile phone sector.




You can get sports updates, bank balances and stock prices via the short message service (SMS) on your mobile phone and soon you will be able to get a soap opera, too.

The soap will be based around the lives, loves, triumphs and disasters of a group of eight characters. Each episode will stretch across three SMS messages.

The idea is already on trial in Germany and its inventors are now talking to British TV companies to develop the soap and the update service further.

Leading the way with this new form of episodic entertainment is technology company Materna, which has signed a deal with German mobile phone firm E-Plus

The drama, simply called SMS-Soap, revolves around the lives of eight individuals - called Laura, Franziska, Judith, Inka, Tim, Mirko, Jan, and Ulf - who all work at an advertising agency owned by Tim.

Michael Ohajuru, a spokesman for Materna, said three messages were needed for each episode because the 160-character limit of one SMS message would not allow the story to develop enough. "The only downside of SMS is its brevity," he said.

Mr Ohajuru added that many mobile phone networks allowed up to three messages to be linked together as a single "event" for which the customer was charged the price of only one message.

The SMS-Soap will be free until the end of May when E-Plus will start charging 39 pfennigs (12p) for each episode. A weekly summary of events in the soap will be posted on the E-Plus website every Sunday.

Mr Ohajuru said Materna was currently negotiating with the makers of soaps in the UK and expected a similar service to launch in Britain soon.


As technology develops it gets harder and harder to work out what has changed when a new gadget or widget goes on sale.

This is especially true of mobile phones. The first mobile phones were as bulky portable and attractive as a breeze block.

Now they are all slinky, shiny and interchangeable. The improvements made to each one only become clear when you start to use them.

Third-generation, or 3G, networks are going to continue this trend. The phones will look the same as ever but the uses to which they can be put will simply explode.

In the old days, when all phones were fixed rather than mobile, making a call involved establishing a direct electrical connection between your handset and the one you were calling.

The same happens with GSM mobiles, but instead of setting up a dedicated circuit, a small portion of the airwaves are reserved for your call.

This is a really bad way of dividing up the available airwaves because it means that the spaces and pauses in speech get the same priority as the words.

3G networks change all this. Instead of reserving airspace each conversation is chopped up into packets, each one of which is labelled with a code denoting which dialogue it is from.

There are different flavours of these sorts of networks. The flavour that many GSM networks are expected to adopt is known as Universal Mobile Telecommunication Services (UMTS), but the US is adopting a different flavour in a move that could preserve existing incompatibilities. This radical change means 3G mobile networks can support lots more subscribers and let them download data much faster. On current GSM networks data chugs around at 9.6 kilobits per second (kbps).

By contrast the upper limit for 3G networks is 2 megabits per second if you are standing still and 384 kbps for those on the move.

These are maximum rates and possible speed will fall as more people download data in any particular cell. It is possible that at peak times phone users will be lucky to do better than the 56kbps possible over a fixed phone.

Using packets of information to carry voice and data also means that your phone is effectively always connected to the network. This means that SMS messages, e-mails, video clips, or whatever can be delivered any time, you don't have to dial-up to check mail.

This will mean a huge change in the way that you pay for your phone. Mobile operators will have to stop charging on the basis of talk time and move to a model based on the packets you download or a single charge per month covering anything and everything you do.

The move to 3G networks means you will be able to do many more things with your mobile phone. It could become a wallet holding train or cinema tickets, discount vouchers for shops or even a key to unlock your house.

All these extra tasks will put something of a burden on the handset. At the moment screens on phones are small, they are difficult to type or get data into and they typically only work with one mobile phone technology.

Third-generation networks might require bigger screens, especially if you download video clips, better ways to move data in and out of them, and bigger memories if you want to carry your MP3 files with you.

The handsets themselves are likely to get slightly bigger to hold batteries to support these new uses and to include chipsets for existing mobile networks as well as the new ones.

Until UMTS is ubiquitous you'll be forced to use the best network available in your location. Because the cells that make up 3G networks are much smaller than those of existing network technologies you could be stuck with your 2G phone outside the big cities.


The day of 3G may be dawning but it will be a long time before the sun sets on our existing mobile phones.




Text messages. We can't get enough of them, and phone companies hope they are a taste of the future. But, for the user there's a hitch.

For most of us, Wap is woeful but SMS is simply smashing. We can't get enough of them. In February more than 800 million text messages were sent across the four UK phone networks.

In the past we've been sending most of these messages to each other, but now companies, and mobile phone firms in particular, are starting to realise that SMS could do the job that Wap was supposed to, and help them ensure that third-generation (3G) phones are not a complete flop.

"The precedent setting, the partner creation, the revenue demonstration, the proof of principle for 3G services are all going to happen through SMS," said Andrew Bud, chief executive of SMS management company Mblox.

Mr Bud believes that consumers will use SMS for their first taste of the information-based services that phone operators hope will provide the revenue to pay for their new high-speed phone networks.

The reason for this change in thinking is obvious. "SMS has 100% penetration, every telephone can do it, it's proven technology," said Nigel Couzens of city-info firm WCities, "unlike Wap and the forthcoming GPRS technology."

So brace yourself as more companies begin using SMS to send adverts, news about discounts and special offers to you. The inbox on your mobile could soon be bulging with all manner of messages.

The precedent has already been set at the Lakeside and Bluewater shopping centres in Essex and Kent where late last year SMS advertising firm ZagMe ran the first trials. With its system subscribers tell ZagMe when they are going to the mall, how long their shopping trip will last and the bargains they are interested in.

The trial has been hugely successful. More than 50,000 people and 150 shops signed up with ZagMe. The service sends a few messages per hour to subscribers. The first messages caused near riots at the stores where the first few consumers to turn up got discounts on sports shoes.

Bill Green, chief executive of ZagMe, put this enthusiasm down to the "novelty factor" but adds: "The use of this is going to become very much a part of life."

The simple reason for this is because it works. ZagMe estimates that a £70,000 direct mail campaign can reach around 85,000 people and produce a response rate of about 1.5%. By contrast a £70,000 ZagMe campaign reaches more than 230,000 people and gets a 10% response.

Mr Green said restaurants in particular like the service because it helps them keep the tables filled. By sending out an SMS during quiet times they get customers coming to the restaurant and keep the tills ringing.

ZagMe started with shopping centres because they are geographically distinct areas and it is easy to know which mobile phone cell the messages should be piped through. Now the service is starting to be expanded into other malls and soon will be available along major shopping streets in city centres.

It is not just shops that are starting to use the service. Last week messaging company Justabeep launched two services, "barbeep" and "nitebeep", that let people know of drinks promotions and DJ appearances via SMS. So far 65 bars in Glasgow have signed up. London and Paris are next. It is only one of many more services that are expected to be launched this year.

WCities, which provides city guides for all manner of mobile devices, is also looking to use SMS as a way for people to find what they want when they are in unfamiliar surroundings.

Mr Couzens from WCities said city centres are perfect for this type of service because the cells served by mobile masts are smaller in built-up urban areas. "Positioning is still done via cell ID and is crude at the moment," he said, "but it is possible to get down to 100 metres in some cases."

Soon it will be possible to interrogate the WCities guides via SMS and get in return a list of good restaurants, cinemas or whatever close to where you are standing.

By getting people used to using their phone to access these sorts of services, be they shopping discounts, sports results or restaurant reviews, many mobile operators are hoping that it will be easier to persuade consumers to move to, (and pay for) third-generation networks.

With 3G networks, and the improvements to existing mobile phone networks, it becomes possible to send longer messages and include sounds, images or video clips or digital tokens that can act like cash.

The downside is that some unscrupulous firms are bound to start sending out spam and clogging the vastly bigger inbox of your futuristic phone with messages that you don't want about services or offers you don't need. Welcome to the information age.


Vodafone has shunned an initiative to help telecoms firms cut the costs of building the high-speed mobile networks needed for the next generation of phones.

Competing mobile phone firms are pushing to establish a shared infrastructure in order to cut costs and help reduce debt-mountains.

A proposed link-up, aimed at shaving 20-30% off the cost of setting up the new high speed mobile network, is expected to be unveiled in the coming weeks.

But D2 Vodafone, the German cellphone arm, is not willing to share its network with its competitors, even for the sake of cutting costs.

The huge cost of 3G licences - which will allow mobiles to provide access to the internet or near-TV quality video - is the key reason why telecoms stocks have plummeted on the world's stock markets over the last eighteen months.

"Such a cooperation would be a brake on competition," said D2 Vodafone boss Juergen von Kuczkowski at the Cebit trade fair in Germany. "We will fight against any cooperation that will depart from licence conditions," he added.

Six mobile phone companies won 3G licences in Germany at a total cost of more than 50.5bn euros ($46.1bn, £30.4bn). It is the smaller companies that are suffering most from the huge capital expenditure demanded from the 3G auctions, whereas Vodafone has weathered the financial pressures better than some of its rivals.

And Vodafone may have already invested more in its network hardware than the smaller firms. If Vodafone agrees to share its network, it risks presenting its rivals with a better position in the market.

"From the moment when infrastructure is shared with another operator, competition ceases.... we do not want our competitiveness to be threatened," said Mr von Kuczkowski.

But the co-operation package has been welcomed in principle by other leading companies such as Deutsche Telekom's T-mobile subsidiary. And Viag Interkom, the German mobile phone group that is part owned by BT, has said that it hopes to reveal a cooperation proposal with its rivals in the coming weeks.

Deutsche Telekom paid the highest price for its licence, and was forced to absorb a 1.06bn euro loss in the last three months of last year. But Deutsche Telekom has also voiced doubts about whether regulatory hurdles can be overcome.

Sharing a network reduces competition and risks lifting the lid on consumer prices, therefore needing to win regulatory clearance. The regulator has already indicated that the operators should submit plans for cooperation. And some companies are also sceptical about whether the licence conditions can be changed retrospectively.

The six telecoms companies who paid up to buy the 3G licences in Germany are Deutsche Telekom, D2 Vodafone, E-plus (Hutchinson, KPN etc), Viag Interkom (BT etc), MobilCom (France Telecom etc) and Group 3G (Telefonica etc).



Vodafone engineers were "ecstatic" on Monday after making the first third-generation (3G) mobile phone call from a real network in the UK.

The British mobile phone giant said the "live voice call" was a significant milestone toward rolling out its 3G services.

"The advent of a new generation of mobile multimedia services will enable our customers to live more of their lives through their mobile device," said Gavin Darby, chief operating officer of Vodafone UK.

Third-generation services promise to give users high-speed access to the internet and will allow them to download video clips.

Vodafone made a series of calls over a real 3G network, rather than a test network, in the Thames Valley area where it has rolled out 30 radio base stations.

"You could hear how ecstatic they were about making the call," said a Vodafone spokeswoman who spoke to one of the 3G engineers shortly afterwards.

The company has been rolling out the network with its infrastructure provider Ericsson since autumn last year.

Industry experts, however, were less enthused. Ian Harbage, a fund manager and telecom expert at Barclays Stockbrokers, said the 3G call "was not particularly meaningful".

He added that investors would be more interested in the company's ability to meet targets to deliver commercial 3G services.

Vodafone plans to launch its first live 3G service in the second half of 2002, offering initial services in large cities and around major transport routes. The company also said that it was on schedule to exceed its licence obligation of covering 80% of the UK's population by 2007.

Vodafone's competitors were keen to downplay the company's so-called "milestone". A spokesman for BT Cellnet said the British Telecom subsidiary had already made a 3G call in March, but conceded this was at a test facility in Slough rather than from a proper network.

The UK mobile phone group Orange said its 3G network rollout should also be complete by the middle of next year.

Earlier this month, the Isle of Man's telephone company Manx Telecom, owned by British Telecom, took delivery of the first 3G handset to arrive in Europe. Manx Telecom is competing with Japan's telecoms giant DoCoMo to get the world's first 3G network up and running.

Vodafone paid £5.9bn last year to obtain a 3G licence for the UK. The company is one of five groups that paid a total of £22.5bn for British licences. Vodafone already launched its General Packet Radio Service (GPRS) - also known as 2.5G - at the beginning of this month.

Before making a full transition to 3G services, the company plans to phase in 3G capability onto dual-mode handsets that can also handle GPRS technology.

The huge cost of 3G licences has increased the debt burden for telecom companies as they borrow money to fund their purchases.

Mounting debt at the companies has subsequently placed pressure on their share prices, causing telecom stocks to plummet over the last 18 months. Vodafone's stock hit a high of 399p in March 2000 before steadily declining through the rest of the year and 2001. At 1025 UK time (0925 GMT), the stock was at 202.75p, down 6% from Friday's close.

Vodafone also said it was not concerned by media reports that Ericsson is about to cut another 6,000 jobs when it releases its first-quarter results this week.







Nearly a billion mobile phone text messages were sent in January, according to the latest industry figures from the Mobile Data Association.

If you take the average price of sending a message at 10p, that means the texting business is now worth £100m a month.

Teenagers are the biggest text messagers, with children as young as twelve known to have run up bills of £60 a month.

Teenagers love the simplicity and secrecy of text messaging, but they often mistakenly believe that it's cheap.

According to the Carphone Warehouse, BT Cellnet and Vodafone charge 12p to send a message, Orange charges between 4p and 10p depending on the tariff, and with One2One it can cost either 10p, 5p or nothing, depending on the call type.

The total number of messages rose to 929 million in the UK last month, compared to just 756 million the previous month, or 322 million a year earlier.

The 18.6% month-on-month increase was spurred by a frenzy of 'Happy New Year' messaging.

And figures are expected to be equally high this month, due to a boom in romantic messages on Valentine's day.

Telecom watchdog Oftel is to investigate whether Britain's 40 million mobile phone users are increasingly sending text messages to avoid higher call charges for mobile phones.

"Texting is a very conspicous development and we want to see what effect it has had on the market," said an Oftel spokeswoman.

"It is a possibility that the growth in text messaging could drive down the cost of mobile calls," she added.

Vodafone and BT Cellnet says that the number of spoken calls made from mobiles is also continuing to grow, albeit at a much slower rate.

"There will always be a demand for making calls to and from mobiles irrespective of the growth of text messaging," BT Cellnet's Carole Williams said.

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