3 Plots Mobile Broadband

Pure-play 3G operator 3 Group outlined its latest vision for mobile data services with the launch of its X-Series wireless Internet strategy at a glitzy media event in London today.

X-Series is an attempt to deliver mobile broadband services with flat-rate access to the Internet by taking advantage of the improved economics offered by HSPA (high-speed packet access) radio access technology and the emerging capabilities of multimedia handheld devices.

The launch was supported by Internet companies Skype Ltd. , Yahoo Inc. (Nasdaq: YHOO), Google (Nasdaq: GOOG), and Microsoft Corp. (Nasdaq: MSFT) as they look to make the jump from the desktop to mobile, and by handset makers Nokia Corp. (NYSE: NOK) and Sony Ericsson Mobile Communications , which see flat-rate data access as critical to driving their own smartphone businesses.

Although a straightforward concept for wired broadband users, the idea of all-you-can-eat mobile data represents a spectacular u-turn on 3’s earlier support for so-called "walled-garden" content services under its control, and it turns up the pressure on those operators still clinging to the belief that they have a natural right to determine the mobile Internet business model charging structure.

X-Series services announced today include a mobile version of Skype, a Sling Media Inc. mobile client to access domestic TV on the move, a tieup with Orb Networks Inc. for remote access to desktop computers, and access to search, instant messaging, and portal services from Yahoo, Google, and Microsoft.

The long-awaited Skype mobile application is a mixed bag. It offers unlimited calls to other Skype users when they’re online, but does so over 3’s circuit-switched voice bearers in the radio access network. This makes it easy to use, but means that the service is tied to the 3 network. Skype Out, Skype In, or instant messaging, are not yet available.

While 3’s X-Series attempts to address many of the problems that have held back uptake of mobile Internet services, 3 says it will not reveal pricing information until commercial launch on December 1, 2006, in the U.K.

3 Group’s finance director, Frank Sixt, stressed, however, that mobile broadband services would be based on a new charging model, different from the pay-per-minute or per-megabyte structure that prevails in the European mobile services market. “Up to now, we all thought network capacity was something that had to be rationed, but economics in mobile are beginning to change” said Sixt, alluding to the carrier’s upcoming launch of HSPA services.

Unsurprisingly, this view was echoed by the carrier’s partners, all of which are equally motivated to boost usage of mobile Internet services and break down walled-garden service portals. “It’s been absolutely obvious that we needed someone to make the first move and price it in this way,” said Miles Flint, president of Sony Ericsson. Kai Öistamö, general manager of Nokia mobile phones division, meanwhile, declared the Internet as the “killer application for 3G.”

Also at the event was Canning Fok, managing director of 3’s parent company, Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY). Despite being good entertainment value, Fok skirted the issue on everyone’s mind -- does Hutchison have the stomach to continue propping up 3 financially?

He implied, however, that the group wasn’t quite ready to throw in the towel, by referring to his success with Orange in 1990s. “People said Orange was a Lemon,” he waggishly quipped.

— Gabriel Brown, Chief Analyst, Unstrung Insider