Keeping up with the Joneses - the UMTS licence race

Last Tuesday, Vodafone AirTouch, the world's largest operator of mobile networks, revealed its plans to launch a global Internet portal, available from cellphones or PCs.

Then on Wednesday, the UK's Radiocommunications Agency (RA) kicked-off the auction process that will eventually see five UMTS (Universal Mobile Telecommunications System) licences awarded to operators wanting to build-out high-speed third-generation (3G) networks.

As the dust settles, these two developments show just how important mobile data is becoming.

Vodafone, for all its past growth and present takeover manoeuvring, has failed to articulate its next-generation plans. It is unlikely to miss out on one of the UMTS licences - although it is just possible one of the current four UK operators will - but the thunder for so-called 2.5G technologies has been stolen by rivals BT Cellnet and Orange.

These 'inbetween' 2.5G upgrades for GSM networks include GPRS (General Packet Radio Service), HSCSD (High Speed Circuit Switched Data), and EDGE (Enhanced Data Rates for Global Evolution), and all promise speeds somewhere between today's pitiful 9.6Kbps data rate and full 3G, which promises anything up to about 2Mbps (but probably less).

Now Vodafone has partnered with some of the IT and communications industries' leading lights. The as-yet-unnamed portal will be offered to customers, starting in the summer, through working with IBM, Infospace and Sun (and the Sun/Netscape Alliance) for infrastructure and services; with Charles Schwab, Sabre's Travelocity and undoubtedly others for content; and with Ericsson, Nokia, Palm and Psion for devices.

These relationships aren't exclusive. The Sun/Netscape Alliance, for example, has already helped enable Orange.net, and deals will be struck between some of these vendors and Vodafone competitors all around the world.

But they represent progress for Vodafone. (They also represent a case for Mannesmann shareholders to accept Vodafone's bid, but that's another story.)

The company claims that by year's end it will be rolling out Version 2.0 of its portal, featuring unified messaging, GPS location, MP3 facilities and WAP-based services.

Dominic Bolger, IT manager at pipeline company PIH Ltd, told Silicon.com: "This is the sort of thing I am looking for as all of the executives here continent-hop and this service would be very useful rather than having to get on a land line, for dial-up networking, etc."

Henry Harrison, principal consultant at Schema, characterised the move as "really ambitious". He said: "This global strategy represents an 'all or bust' approach. If you impose services from the top-down, you can have great success - but there's no room for failure."

And as much as anything, the future of data services - mostly Internet-based services - depends on a guaranteed migration path. For most operators, 3G is very much on that path.

That's why any announcements like Vodafone's last week now have to be viewed with the RA's licence auction process looming large in the background.

The UK is touting itself as the first country to auction licences - but it's not the first to award them. Finland has used the 'beauty contest' approach, with the government deciding which bidders have the most compelling propositions.

The UK government's approach is set to raise billions for the Treasury, but analysts note that high-value bids from successful licensees will be recouped through passing on costs to users.

That makes it more important for Vodafone, and its rivals, to get their services right. Offering more than voice will be critical, as it is added-value data services that will bring in the cash, pay for the licences, and no doubt also keep the companies stock market darlings.