Vodafone UK Reinvents the Mobile Internet

| June 6, 2007| Wireless Services - Europe | Competitive Update

Analyst: Emma Mohr-McClune

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: High

Event Summary

June 6, 2007 – Vodafone UK launched its Mobile Internet under Vodafone live! service, featuring major Internet brands such as Google, eBay, YouTube, MySpace, Hotmail and Yahoo! Mail from within Vodafone live!. Contract customers are offered a monthly data pack of GBP 7.50, for up to 120 MB of data for mobile Internet use per month. Customers exceeding that ceiling will be charged at the standard prepaid rate of GBP 1 for 500 KB of usage per day. Usage of less than 500KB will incur a proportionately lower charge. However, those exceeding the 500KB will experience no further costs until they have used 15 MB.

Analytical Summary

• Current Perspective: Positive on Vodafone UK’s new Mobile Internet service initiative. The revamped Vodafone live!, enhanced with MySpace, Google search, YouTube, eBay, Hotmail and Yahoo! Mail is now clearly a cut above competing ‘open Internet’ propositions such as T-Mobile’s Web’n’Walk and 3UK’s X-Series. Vodafone UK has, furthermore, succeeded in embracing the open Internet without devaluing live! real estate. However, the accompanying flat-rate pricing model exhibits some weaknesses.

• Vendor Importance: Very high to Vodafone UK, as this service represents a significant milestone in the operator’s mobile data and content strategy. ‘Mobile Internet under Vodafone live!’ represents many months of partnership and strategy development, as well as significant application development and integration, to mirror and accommodate the online application preferences and habits of users surfing the Web from a PC.

• Market Impact: High on the European mobile market, as this UK service outlines the future shape and direction of Vodafone live! across all Vodafone's key territories. This is the first time that Vodafone has lined up all of its key Internet giant partners within a single service, marketed in tandem with a flat-rate mobile data tariff, for a forceful re-entry into the mobile Internet market.

Recommended Competitor Actions

• T-Mobile UK should downplay Vodafone’s Mobile Internet initiative as a limited version of true discovery. The competitor should emphasize that Vodafone live! users will not, in fact, be able to access their favorite online applications from a mobile phone, but watered-down, compromised and highly controlled versions of them.

• Orange UK should recognize that this event trumps the Orange World experience several times over. Vodafone’s partnership and integration of some of the biggest and highest-profile Internet brands worldwide makes Orange World look distinctly old-fashioned. A competitive response is well overdue.

• 3UK needs to broaden its X-Series handset range significantly over the course of this year to retain competitive parity with Vodafone. In terms of handset applicability, Vodafone’s Mobile Internet under Vodafone live! is easily the more accessible service.

• 3UK should recognize the one major omission within this service – instant messaging – and see an opportunity to flag up differentiation for its X-Series line. 3UK could also argue that X-Series is a more ‘international’ service – X-Series users are not charged extortionate roaming data rates whilst accessing the service across another 3Group network abroad.

• All competitors should be aware of a recent roaming data initiative from Vodafone Germany, as this model could well be transferred to other Vodafone op-co markets to strengthen the Mobile Internet proposition going forward.

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