Orange 3G push squeezes the pips of Vodafone

Orange's entry into the UK's third-generation mobile services market could force Vodafone to lower its own prices, analysts believe.

Orange announced last week that it will begin selling a high-speed data card from 19 July. The Orange Mobile Office Card will provide coverage to around 66 per cent of the UK by population with what the operator describes as a "seamless" handover between the 2.5 and 3G networks.

A range of tariffs are on offer which significantly undercut the cost of the Vodafone Mobile Connect 3G/GPRS data card. For example, Orange users can get 'all you can eat' 3G access for £75 per month, compared to paying £85 per month to Vodafone for up to 500MB of access per month - or one gigabtye per month if they sign up before October.

Stephanie Pittet, mobile and wireless analyst at Gartner, believes Orange is wise to offer an unlimited access product, and predicts that Vodafone will have to respond to Orange's aggressive pricing.

"I can't believe they [Vodafone] will keep pricing that is so uncompetitive, especially when we are seeing other players coming in with something similar, but so much cheaper," said Pittet.

A Vodafone spokeswoman insisted that the company has no such plans at present and explained that its range of four tariffs - starting with 5MB of data for £10 per month - had been researched prior to launch. She did say that Vodafone, as with all its products, would monitor customer behaviour to check whether users found the tariffs too expensive.

Other experts suggest that even Orange's 3G relatively lower pricing may be on the steep side.

"I reckon the stable price for 3G data will end up at around £40 to £50 a month for unlimited access by the end of this year or early 2005," said Dean Bubley, founder of Disruptive Analysis.

Graeme Wearden writes for ZDNet UK