OXFORD, United Kingdom—While it’s been generally accepted within the industry for some time, Vodafone’s public admission that its third-generation (3G) network would provide much lower data speeds than originally anticipated is being seen by some industry analysts as a ploy to squeeze equipment manufacturers. The company says that its network will only provide a guaranteed minimum data speed of 64 kbps, far below the 144 kbps specified by the U.K. government in the auction details.
This admission by Vodafone, which has driven down the share price of other European cell-phone operators, is seemingly part of its strategy to warn the market about the problems associated with 3G deployment and also to put pressure on new entrants to the cellular market which need to attract capital. The company, which has now hinted that it will not deploy its new network until 2003, is also likely to heighten the stress on equipment suppliers by potentially increasing its negotiating position.
Vodafone is thought to be concentrating on the widescale deployment of its General Packet Radio Service (GPRS) network, rather than focusing on installing 3G infrastructure. The company recently told analysts to expect a 10-percent reduction in capital expenditure for 2002 and 2003, saving around
