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BT Pitches WLAN vs 3G

U.K. carrier British Telecommunications plc (BT) (NYSE: BTY; London: BTA) announced the expansion of its "Openzone" network of wireless LAN hotspots today, but then spoilt that positive news by making two specious comparisons in an effort to sell its story (see BT Extends Hotspot Network).

First, it compared its hotspot access prices with 3G charges that do not yet exist. Secondly, it was pitching a local-area network technology against a wide-area network technology.

"The comparison is irrelevant," says Declan Lonergan, European director of wireless research at the Yankee Group. "Pitching wireless LAN as an alternative to 3G is pointless."

BT, using access points from Cisco Systems Inc. (Nasdaq: CSCO) and integration services from Motorola Inc. (NYSE: MOT), now has 80 hotspots installed around the U.K., including some prime positions at Heathrow and Gatwick airports. It plans to have 400 hotspots up and running this summer and 4,000 by June 2005.

All well and good. But then, like a lemming with a stronger than average death wish, BT plummeted over the "let's compare our prices with 3G" cliff.

In BT's official statement, Pierre Danon (yes, he is français), the CEO of BT Retail, the business unit responsible for the WLAN rollout, is quoted as saying: "It is half the price of 3G and three times faster. It only costs 10p a minute for broadband access at a BT Openzone, which is an impressive figure when you look at the fact that 3G operators will be charging a lot more."

Yankee's Lonergan is unimpressed: "3G will not be priced by the minute or the hour, so to say that 10 pence a minute will be cheaper than 3G is not a comparison worth making. This is not at all helpful to anyone."

In addition, the mobile operators have not announced their 3G prices yet, so what was BT using in its comparison?

"Our comparison is based on GPRS prices and indicative 3G prices that mmO2 plc announced last year," says BT Retail spokesman Mike Jarvis. [Ed.note: Translation -- BT doesn't know what 3G prices will be, and it's basically talking out of its hotspot].

The "indicative 3G prices" referred to are some prices mmO2 put out for its trial service on the Isle of Man. Jarvis insists that combining GPRS tariffs and some tentative prices for a few hundred guinea pigs in the Irish Sea is a solid basis for calculating 3G tariffs.

U.K. 3G license-holders Vodafone Group plc (NYSE: VOD), mmO2, and T-Mobile (UK) were generally dismissive of BT's attempt at pitching the technologies as competitors, and although they agreed that UMTS service contracts would not be as expensive as BT's WLAN offer, none would commit to any detailed rebuffs of BT's claims. The wimps.

But at least one of the operators was able to throw back a like-for-like pricing challenge at BT. "Our WLAN service is launching in Ireland next week," says mmO2 spokesman Simon Gordon (see mmO2 Gears Up For WLAN). "We have a fixed monthly rate of €10 [US$10.83] per month." Unlimited use for a whole month? "Yup," confirms the mmO2 man.

Mabel, pass me the Guinness-stained street map of Dublin -- we're setting up shop in the Emerald Isle!

— Ray Le Maistre, European Editor, Unstrung
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