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The internet on the PC has created new opportunities, at work and at play, for millions of Britons. It is inconceivable that people will not want access to the same information and entertainment from a device that they carry in their pocket.
The trouble has been the gap between the promise and the reality. The 3G technology arrived late, with phones that were too big and clunky to use, battery lives that were too short, data connections that were too slow and service tariffs that were too complicated and expensive. No wonder most people shrugged their shoulders with indifference.
Most of these problems are being solved; a new generation of faster “3.5G” phones is just round the corner. But perhaps most important is the advent of a new era of flat-rate, all-you-can-eat pricing.
The newest of Britain’s mobile network operators, 3, took the first step last week with the promise of the imminent launch of flat access fees — likely to be £10-£15 a month — for mobile internet services. This announcement was dressed up as a handset launch (“the X-series”) so the bigger significance was largely overlooked.
In the PC world, the arrival of flat-rate broadband services, with a set monthly price, changed the way people used the internet, contributing to an explosion in e-commerce and a new online culture. Now 3 and its owner Hutchison Whampoa are betting it will be the same with mobile phones. Frank Sixt, Hutchison Whampoa’s finance director, said: “We are setting a course that will take us away from the per minute, per message, per click, per event and per megabit charging universe that we live in today, and towards one simple but compelling proposition: it’s free when you use it.”
This starts to close the huge gulf that exists between telecoms companies, which have traditionally charged as much as they can, and internet companies, which have learnt to make a living from charging as little as possible, and often nothing.
This approach by 3 helps to explain why it has been able to recruit as its partners four of the biggest brands on the internet — Yahoo, Google, Ebay and Microsoft’s Windows Live — as well as the biggest mobile handset company (Nokia) and the coolest (Sony Ericsson).
It would be easy to dismiss this as just another exercise in big companies slapping one another on the back. But if you listen to the genuine enthusiasm from the likes of Universal Music — which has broken new artists solely thanks to the success of 3’s song-downloading service — you can begin to believe that 3 understands the mobile internet in a way that its rivals don’t.
Of course, it ought to. Without a legacy business as a cash-cow, 3 has to make 3G work, and it has tried harder and experimented more. It is still losing hundreds of millions of pounds a year.
Last week’s news does not mean that 3 has found a way to recoup Hutchison’s £19 billion investment. The company is troublingly prone to occasional bouts of stupidity. It refused to acknowledge that it would be late to market, although the technology wasn’t ready. It refused to admit it would miss initial sales targets, even though it had no phones. This year, the company misled this newspaper and other followers over the true level of deserting customers — even though Hutchison would shortly afterwards announce the figures to investors.
Nonetheless, 3 is getting many things right, which helps it attract smart partners such as Skype and Slingbox. The proposed flat-rate internet tariffs are not perfect, but they are a sensible step in the direction of finally creating the mobile internet.
Thompson’s bile
I REMEMBER bumping into Sir Clive Thompson in the changing room at Wentworth golf club some five years ago. It was only a few months after this paper had written a critical piece after he was ousted as chairman of Rentokil Initial, the support-services group he had built into an FTSE 100 company.
Thompson had taken great exception to our article. The only bit he said he liked was the introduction, which described how he sat in the back of his Bentley and worked while travelling. The rest of it, he said, was bile.
After having enjoyed a long and prosperous reputation as one of Britain’s top-performing executives, Thompson does not do contrition well.
And the “bile” word will not be far from Thompson’s lips after the avalanche of articles written about his involvement as chairman at the collapsed European Home Retail, which owns Farepak, the Christmas voucher business.
The government is now conducting an inquiry, but don’t hold your breath. The crime here is one of paralysis. As my colleague Ben Laurance explains on page 12, everyone saw the problem coming but nobody chose to solve it.
The Farepak collapse has wider implications. HBOS will undoubtedly review whether it should lend to companies like this again. They are simply too toxic and when they go wrong the damage outweighs the good done by Howard, the bank’s clerk who became the star of its television advertisements.
As for Thompson, before he was ousted at Rentokil he planned to serve on several big FTSE boards. The Farepak fiasco has put paid to that.
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