November 16, 2006 9:38 AM PST

U.K. mobile firm to offer flat-fee access to Web

Mobile operator 3 has announced a major shift in its business model, repositioning itself as a media and Web access company, a strategy that has been more common among broadband sellers.

In a plan called X-Series, 3 has signed up the likes of eBay, Windows Live and Yahoo as partners and will begin selling their services, including instant messaging and browsing, on a flat-fee basis, regardless of how many clicks they make, messages they send and receive, or videos they view and download.

Traditionally, mobile operators have shied away from such a model, fearing they will be reduced to mere conduits for content and service providers.

"It's a natural progression in our broadband strategy... It's what our network is designed to do. It's the natural next step for our business," said Frank Sixt, group finance director at 3 owner Hutchison Whampoa.

"We are taking our chances and going naked into the world outside," Sixt added. It's a U-turn for the company, which previously offered users browsing via a "walled garden" (where browsing is limited to specific content), which it finally ditched earlier this year.

Like all U.K. wireless operators, 3 has rolled out HSDPA (high-speed downlink access), also known as 3.5G--a technology that affords users speeds of up to 1.8Mbps. It's now hoping to capitalize on such speeds to offer higher-bandwidth applications.

Among the partners 3 has signed up is Skype, which will offer free calls to PCs and mobiles in countries where 3 operates. Skype's co-founder, Niklas Zennstr?m, said it will roll out premium services such as Skype In and Skype Out, as well as other functionality like Skype Chat, next year.

Zennstr?m said that people have expressed concerns that mobile operators will disrupt their own market by adopting voice over Internet Protocol, or VoIP. "I'm pretty confident... they will get more customers," he said.

John Delaney, principal analyst at Ovum, said adopting the Internet business model may prove perilous for 3, but could ultimately pay off.

"Embracing the Internet model is risky. In the worst case, 3 could end up having its role reduced simply to providing Internet access. But as the U.K.'s smallest operator, and the one with the least legacy stake in the traditional business of mobile telecoms, 3's best hope of out-flanking the competition has always been to embrace disruption. That seems to be the path it has chosen to take here," he wrote in a research note. "One big question, which wasn't answered today: how much will all this cost?"

The X-Series will launch on two devices initially, the Nokia N73 and the Sony Ericsson W950i, and will be available from December 1 in the U.K. and next year in 3's other territories.

Jo Best of Silicon.com reported from London.

See more CNET content tagged:
mobile operator, IBM xSeries, Skype, HSDPA, U.K.

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Here's a quick suggestion to help them market their flat fee pricing model:

Buy the domain name www.FlatFee.com.

It's FOR SALE.
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