updated 11/10/2004 3:30:05 PM ET 2004-11-10T20:30:05

Vodafone Group PLC launched high-speed Internet services for mobile phones across much of Europe on Wednesday, ending a wait of several years since the world's biggest cell phone company spent billions for new wireless licenses at the height of the technology bubble.

The advanced cellular technology, often referred to as third-generation or 3G, can connect with the Internet at up to 40 times the speed of current mobile handsets, enabling users to send and receive richer content such as Web pages, video, music and high-resolution photos.

The high-speed service, already sold by Vodafone in Germany, Italy, Portugal, and Spain, was expanded Wednesday to Austria, Britain, France, Greece, Ireland, the Netherlands, Sweden and Switzerland. Vodafone also already competes in Japan's world-leading 3G market, though it has been struggling there.

Vodafone said its service and handsets can process incoming and outgoing data at an average speed of 380 kilobytes per second, comparable to an entry-level broadband connection via wired telephone or cable TV lines.

While third-generation services are already popular in Japan and South Korea, they are only now emerging in Europe and North America.

In Britain, for example, Wednesday's launch brought Vodafone into competition with a much smaller operator named 3. The two other major operators in Britain, Orange and T-Mobile, plan to launch 3G services by the end of the year. Orange is a unit of France Telecom SA, and T-Mobile is a unit of Deutsche Telekom AG.

In 2000, Vodafone spent about 14 billion pounds ($26 billion) on spectrum licenses to operate 3G networks globally during a bidding craze among wireless industry giants. Analysts agree the price paid was far too much, while rolling out the technology has proved far more difficult and far less profitable than envisaged.

Despite the lag in delivering 3G, Vodafone chief executive Arun Sarin said he expected the company to attract 10 million subscribers for the services worldwide by March 2006 _ about half from new accounts, the rest from upgrades by existing customers.

The company declined to disclose how many of its 139 million customers had already signed up for 3G services before Wednesday's launch. Spokesman Darren Jones said the new service, which requires higher-powered transmission towers than earlier systems, can reach about 60 percent of Vodafone's existing customers in Europe.

The expanded rollout also included the launch of Vodafone's first mobile portal for 3G services and an array of new 3G handsets.

The new portal links to different types of content and information such as highlights from soccer matches, interactive video games, a series of one-minute dramas based on the "24" television series, and other entertainment fodder.

The 10 new phone designs include seven aimed at the Japanese market, where Vodafone has been getting clobbered by the competition.

"The new phones will be like advanced personal entertainment centers in customers' pockets, bringing faster downloads of bigger, richer and more compelling video clips, games, music and ringtones as well as face-to-face mobile video calls," said Bill Morrow, chief executive of the British unit of Vodafone.

Sarin conceded that the rollout of 3G business would be expected, at least initially, to boost revenues but not net profits, partly because of the higher costs associated with providing the service, and partly because of the need to keep charges low to woo new business.

In its latest full-year ended in May, Vodafone reported stronger sales but continued net losses of 9.02 billion pounds ($16.15 billion), down 8.9 percent from the previous fiscal year.

Vodafone UK's new service will be offered in two bundled packages to British subscribers, one at about 40 pounds ($75) a month offering 500 free minutes of use and one at 60 pounds ($111) a month offering 1,000 minutes. Vodafone UK currently has 14.2 million customers.

Shares in Vodafone slipped Wednesday, possibly reflecting skepticism that 3G will provide adequate payback for the massive license investments. Vodafone's U.S. shares were off 61 cents at $25.54, a loss of more than 2 percent, in afternoon trading on the New York Stock Exchange.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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