Four out of five for 3G Live!

John Delaney, Principal Analyst and Dario Betti, Senior Analyst

Today, Vodafone becomes the first tier one operator to make a pan-European commercial launch of 3G services for the consumer market. Vodafone certainly aims to make a big splash: it is launching simultaneously in at least 12 European markets, and it is budgeting a huge amount of money for advertising and promoting 3G - around £15 million in the UK alone.

Vodafone has used 3G to wrap some substantial innovations around its data portal offering, Vodafone Live!, and we can't fault it on the strength of its commitment to 3G. Its offering is clearly the result of a massive investment - reportedly over euro14 billion in licence fees and over euro7 billion in capex - and the operator is earlier to market with consumer 3G than most of its competitors.

This is a big commitment, but has it been well directed? How does Live! 3G stack up on:

• branding? The strategy is to present 3G as an enhancement of the Vodafone Live! portal, rather than as a new, distinct service in its own right. This clearly makes sense, in view of the success that Vodafone has had in establishing the Live! brand. It also follows the principle that users buy services, not technologies
• handsets? Here we can see the benefits of size. There are ten different phones available at launch, including models from most of the leading brands, as well as Vodafone's key vendor for Live!, Sharp. Seven of these are exclusive to Vodafone, at least temporarily. About six of the ten will be offered in each country market at launch
• content and services? Although 3G is positioned as an enhancement of Live!, there are several distinctive 3G-only content and service elements in the Live! 3G portal. The range of services and the extensive premium-branded content that Vodafone has built up on the Live! portal are combined to make a powerful proposition
• on pricing? Importantly, there is a prepay option at launch, in addition to two contract tariffs. This is also the beginning of the end for per-Kb charging. With the Live! 3G portal, users will not pay for finding and downloading content, but only for the content itself. This will appeal strongly to users, and will also cause a shake-up in business models. Vodafone wants new revenue-sharing deals with its content providers, to 'partly offset' the lost traffic revenues. Other operators will undoubtedly follow Vodafone's lead here
• on coverage? The target segment is within heavily populated areas, and therefore Vodafone believes that its coverage is adequate to satisfy most of the early adopters of Live! 3G. We believe Vodafone may be taking an overly sanguine view of what people will be satisfied with. If the services offered by Live! 3G are really compelling, then people will want to be able to use them wherever they are. If they can't, it will annoy them. At £40-60 per month minimum ARPU, on contract, these are the customers Vodafone can least afford to annoy.

John Delaney is a Principal Analyst, specialising in the market for services in fixed and wireless public networks. He can be contacted directly on john.delaney@ovum.com.

Dario Betti is a Senior Analyst, specialising in the management and regulation of new media. He can be contacted directly on dario.betti@ovum.com.

For a more detailed assessment of Vodafone's Live! 3G launch offering, see our WirelessMultimedia@Ovum advisory service portal.