Cost-conscious Brits won't flock to 3G

Many mobile phone users are too cost-conscious to make the leap to 3G, according to research published on Tuesday.

A new study from independent research group The Work Foundation casts doubt on the ability of third-generation network operators to build successful mass-market services in the near term.

MobileUK: Mobile Phones and Everyday Life looked at the evolution of the mobile phone market over recent years and studied how consumers use their handsets today. It concluded that despite the explosion in take-up - 75 per cent of the UK population now own at least one handset - many people are still very concerned about the cost of mobile phone use, which The Work Foundation predicts could threaten 3G's chances of success.

"There is a myth that talk is cheap. In fact, for most people, talk remains an expensive worry that needs to be kept under control," said Max Nathan, co-author of the report. "Our research suggests that the mobile industry must remember how important cost is to most people who buy and use mobile phones. The industry is aware of this but it doesn't change the fact that until 3G becomes better value most consumers will find it an expensive worry too far."

After spending a total of £22.5bn acquiring 3G licences in the UK, Vodafone, Orange, O2, T-Mobile and Hutchison 3G are under pressure to launch successful and lucrative third-generation mobile networks.

Only Hutchison has launched its service, called "3", so far. Its handsets cost around £400, with a contract costing £59.99 or £99.99 per month.

A pay-as-you-go option is also available, where video calls cost 50p per minute, voice calls to other 3 users cost 5p per minute, and voice calls to other networks cost 10p per minute. This may appeal to more occasional users.

Nathan, and fellow report authors James Crabtree and Simon Roberts, warn though that customers' sensitivity to price will make it hard for 3G operators to tempt them on board.

"One particular problem is getting users to move beyond pre-pay. Many advanced services are not available to pre-pay customers, and our research suggests that the industry will find it difficult to wean users off pre-pay," they said.

Graeme Wearden writes for ZDNet UK