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Several mobile phone companies plan to sell cheaper version within weeks of Nexus One device going on sale

Google's plans to take on the iPhone are running into problems in Europe as several mobile phone companies plan to sell a cheaper version within weeks of the internet company's Nexus One device going on sale.

Even Vodafone, which Google has signed up to provide network access for the Nexus One, is expected to sell the cheaper device online and through its own stores.

The rival device, codenamed the Bravo, is made by Taiwanese handset manufacturer HTC, which also makes the Nexus One. Both mobile phones have the latest version of Google's Android mobile phone software installed. Both have large colour touchscreens and 5 megapixel cameras, and include a microprocessor that is faster than the one found in the iPhone.

However, the Bravo costs about $100 less than the Nexus One, according to mobile industry sources. Also, the mobile phone companies will have more control over how their customers buy the Bravo than the Nexus One.

The Nexus has also run into problems in the US where Google has been criticised for poor after-sale services. Because the search firm has no customer service infrastructure, customers with problems have had to rely on emailing Google and have often had to wait days for a reply.

Another difficulty has been Google's insistence that the Nexus can only be sold online, which has led to sluggish sales of an estimated 80,000 in the US since it launched a month ago. That compares with the 600,000 iPhones that were shipped in its first month and more than half a million Motorola Droid devices.

The Nexus is nevertheless regarded as a good alternative to the iPhone and the ­Bravo's similarity will lead to great interest when it is launched at the Mobile World Congress trade show in Barcelona next week.

The networks will be able to sell the Bravo through their own stores and online, instead of being hamstrung by Google's ambitions to be a sort of one-stop mobile phone shop.

Both O2 and Vodafone are very interested in the Bravo, with T-Mobile and Orange also understood to be looking at it. It could arrive in the UK within weeks of the Nexus One going on sale.

The Nexus One was launched in the US last month and will arrive in the UK next month. While it can be bought without a mobile contract, UK customers will also have the option of signing up to a long-term contract with Vodafone, which will enable them to get the device for free. The contracts are expected to cost about the same as Vodafone charges for the iPhone, which it started selling last month.

Under the deal with Google, Vodafone is only allowed to handle billing inquiries. This distinction between handset and network inquiries is understood to be part of the deal Vodafone has agreed in order to be Google's wireless partner in the UK.

Vodafone eager to become iPad wireless provider in the UK

• Chief executive "very interested" but refuses to say whether talks have taken place
• Vodafone reports better-than-expected third-quarter profits

Vodafone has set its sights on selling the Apple iPad in the UK after its success with the iPhone, which it started selling in the UK last month.

Speaking after the world's largest mobile phone company by sales announced better-than-expected third-quarter results, chief executive Vittorio Colao said he was "very interested" in the iPad, which Apple boss Steve Jobs unveiled in San Francisco last week.

"I have not, personally, touched one but I really look forward to it. I believe it is going to be another important piece of the [mobile] data experience.I think anything that improves the customer experience with mobile data is welcome and as such I would be very interested in having it."

He refused to say whether any talks have actually taken place, but Apple is understood to be scouting for UK wireless partners for the device. Earlier this week O2 UK chief executive Ronan Dunne said he is also interested in the iPad, but it is unclear exactly how it will be sold this side of the Atlantic.

There is speculation that O2 and Orange have already put in an order for the micro-SIMs needed to provide 3G wireless connectivity in the iPad.

Orange has already started talks with Apple to sell the iPad in the UK. The company, owned by France Telecom, was also the first British network to break O2's exclusive hold on the iPhone. It started selling the handset last November and is understood to have sold over 200,000 by Christmas.

Vodafone's third-quarter results yesterday were boosted by sales of smartphones, which pushed the company's revenues from mobile data services – such as internet browsing – over £1bn in the quarter for the first time in the firm's history. In the three months to end December, 25% of all new phones sold by Vodafone across the world were smartphones, up from 20% in the second quarter of the year, with the bulk of those sales in Europe. Colao said he expects smartphones to make up between 30% and 40% of all the phones the company sells in its next financial year to end March 2011.

The figures were warmly welcomed by the City as showing signs of recovery in some key European markets such as the UK and Germany, where the company has lost ground to rivals and been battling against the tough economic climate, while its cost-cutting programme is also bearing fruit. Shares in the company were up almost 5% after the company raised its forecast for free cash flow for this year by £500m to between £6.5bn and £7bn and forecast annual operating profits of £11.4bn to £11.8bn, rather than its initial forecast of £11bn to £11.8bn.

On a like-for-like basis, revenues fell slightly in the quarter but the decline was far less than in previous quarters. Overall third-quarter revenues were up more than 10% to £11.5bn as the company benefited from currency fluctuations.

Colao said he was conditionally optimistic about the group's prospects. "I keep my feet on the ground; I see what I see. I see a few things going in the right direction. I see mobile data continuing to grow. I see a good performance in [fixed-line telecoms]. I see in some markets like the UK and Italy a good performance, but I still see a lot of price pressure in voice and I still see unemployment being a concern in Europe."

There had been some speculation, ahead of the results, that shareholders were pushing for a break-up of the company as it has consistently underperformed its publicly quoted peers. Colao, however, said the size of the company – which has operations from western and central Europe through to Turkey, India and South Africa as well its Verizon Wireless joint venture in the US – not only gives it scale in purchasing, but also an advantage in international roaming rates and helps it to attract business customers"There is a full set of opinions on how to structure Vodafone and we take due notice of all of them," he said. "The board regularly reviews our corporate structure but there is unanimous consent now that in our opinion the current structure serves shareholders well."

• 3.5% of BBC's licence fee to upgrade broadband network
• BT says it aims to get fast broadband to 10m homes by 2012

The Conservatives today claimed they were willing to loosen BT's grip on the local telephone network and use parts of the BBC licence fee to deliver "superfast" broadband to the majority of Britain's homes by 2017.

Using "market-based solutions" the party believes the UK can be the first leading European country to have speeds of "up to" 100 megabits per second (Mbps), the shadow chancellor George Osborne said. He said "the Conservatives would support changes to the regulatory ­framework", adding that private investors being allowed to pay for better cabling would encourage competition. If the market failed to deliver, then 3.5% of the licence fee currently used to pay for digital switchover could be diverted to pay for broadband expansion, Osborne said. That would raise between £750m and £1bn on the basis of 25m TV licences.

But Labour hit back, noting that the proposal to tax the BBC would benefit Rupert Murdoch's BskyB and Carphone Warehouse, whose co-founder David Ross donates to the party as an individual. Labour has committed to extending broadband to 90% of homes by 2012 at 2 Mbps. Labour has also planned a 50p a month levy – a "broadband tax" – which will be used to fund "next generation broadband" for areas where the market is unlikely to deliver.

This levy is expected to raise between £1-1.5bn by 2017 But Osborne claimed his plans were more ambitious than those of the government. "In the 19th century we built the railways," he said. "In the 20th century we built the motorways. In the 21st century let's build the superfast broadband network that will create hundreds of thousands of jobs for Britain."

He said the Conservatives would end BT's "local loop monopoly" and allow other operators to move in with their own ducts and fibre cables, an approach that has proved successful in countries such as Singapore and South Korea.

" I think the best way to deliver this is by breaking up the British Telecom monopoly at the moment, which holds back companies such as Carphone Warehouse or Virgin".

He added:" if we find the market can't do that, then use the BBC licence fee, the digital switch over money in the BBC licence fee, to get Broadband out to the rest of the country.

Shadow culture, media and sport secretary Jeremy Hunt said: "These regulatory changes will create the right conditions for sustainable growth and ensure that the digital sector plays a leading role in a competitive, balanced economy."

But financial secretary to the Treasury Stephen Timms said: "On broadband it's not Britain but the Tories that are playing catch-up. Labour have already announced measures for rolling out broadband across the country – and the Tories have opposed the plans to make that happen."

Other Labour sources pointed out that the founder of Carphone Warehouse has donated £150,000 to the Tories and is a friend of many senior Tories.

Liberal Democrat culture, media and sport spokesman Don Foster said: "This announcement shows once again the fantasy world of Tory economics. Anyone can promise the earth – what matters is how you pay for it. All independent research shows that the market simply cannot provide high speed broadband in all parts of the country in the short term without investment.

"Hints that the license fee payer will be hit are the closest the Tories come to explaining how they intend to pay for this."

A spokesman for BT said: "The UK boasts one of the most competitive broadband markets in the world with BT having a 25% market share. Ninety nine percent of homes can access copper broadband, prices are low and close to 20m homes are already enjoying services. Technology is moving on and BT is at the forefront of that revolution. We are investing £1.5bn to get fibre to at least 10 million homes by mid 2012 and we want to go further."

• This article was amended on 2 February 2010. The original described Carphone Warehouse as a donor to the Conservative party. This has been corrected.

Apple iPad: no UK price until launch

Apple says it will not reveal UK pricing for iPad until its launch at the end of March

Apple has surprised would-be buyers of its new iPad touchscreen computer, saying it will not announce UK prices before it launches at the end of March.

Although it announced US prices for all six versions of the touchscreen "tablet" device with and without 3G connectivity at the launch on Wednesday night by Apple's chief executive Steve Jobs, the UK office said today that there will be no UK prices offered until the launch, expected in 60 days' time – or 90 days for the 3G versions.

However, the MacWorld magazine website takes an "educated guess" at UK pricing for the iPad, which it predicts will range from £388 to £591 for the Wi-Fi model, and £490 to £693 for the Wi-FI and 3G model.

The iPad is a 9.7in tablet computer with a virtual keyboard which can surf the web, do email, display ebooks and play video. US prices start at $499 for a basic version with Wi-Fi wireless networking but no 3G connectivity, rising to $829 for a 3G version with 64 gigabytes of storage. However iPad users in the US will have to pay separately for 3G data plans being sold separately by Apple's exclusive mobile partner there, AT&T, which already supplies the iPhone there.

Mobile phone companies in the UK – O2, Orange, T-Mobile and Vodafone – are looking to strike similar deals in Europe ahead of a launch later in the year. The Guardian understands from multiple source that no choice has been made.

Apple initially sold the iPhone through exclusive partners in the US, UK, France and Germany, but for the iPad the British mobile phone networks are not expecting Apple to offer exclusivity. None was willing to comment on the iPad.

Andrew Harrison, UK chief executive of the Carphone Warehouse, Europe's largest independent mobile phone retailer, commented: "To me, the really interesting thing is what we are seeing is devices designed with how the consumer uses the internet very much in mind, rather than just a computer that was made for business use trying to fit the consumer."

Bloggers and commentators had mixed reactions to the device. It cannot run Adobe's Flash software, used by many advertisers and games companies online to create eye-catching motion on web pages, which some see as essential to web browsing. Many women were dismayed by the name: the San Francisco Examiner pointed out that "for North American women the word 'pad' means but one thing, a sanitary napkin". But Nick Carr, author of The Big Switch, about the move towards cloud computing, described the launch as "the day the PC died", saying that Apple "wants to deliver the killer device for the cloud era, a machine that will define computing's new age in the way that the Windows PC defined the old age."

Without a price ahead of the launch it may be difficult for retailers to judge the public's interest – and so whether the device will sell in large or small numbers. Amazon's Kindle, which includes mobile networking in the price, only launched recently in the UK, and Amazon has never disclosed sales numbers, though it is reckoned to have sold only about 500,000 to the end of last year.

The decision to keep the UK price under wraps is unusual for Apple, which usually announces UK pricing simultaneously with any launch, and could either indicate concern about exchange rate fluctuations, or a desire to keep people intrigued about the device, or that non-US networks are seeking to sell it with some sort of subsidy.

Already several UK mobile phone companies subsidise the cost of laptops to persuade customers to sign up for long-term mobile broadband contracts. Anyone signing up to a two-year mobile broadband deal with T-Mobile at £40 a month, for instance, gets a free Sony Vaio laptop worth £499.

However, Apple has forced AT&T to give up persuading customers to sign long-term contracts in order to subsidise the iPad; instead, it will effectively be available on what in Europe would be seen as a 30-day rolling Sim-only contract such as those offered by O2 and Vodafone.

"It does not look as though it has the traditional subsidy model," said Harrison. "If you put Wi-Fi and 3G in it, it is actually more expensive not less expensive."

In a note relating AT&T's financial prospects following the news, Jonathan Schildkraut, analyst at Jefferies & Co investment bank said the tariffs are "in line with the current data add-on options available with voice packages, and well below the roughly $60 plans currently offered by wireless carriers for a laptop card. The prepaid plan can be activated directly from the iPad and, because there is no contract, can be canceled at anytime."

Meanwhile anyone who already has a wireless broadband "dongle" under a long-term contract and is thinking about installing its SIM card into an iPad will be disappointed. The iPad is the first mass-market mobile device to use micro-Sim cards, which are smaller than the current range of Sim cards and were designed for small consumer gadgets such as Birmingham-based Lok8u's range of wireless-enabled wrist watches.

The iPad is also likely to prove a major headache for makers of similar devices, especially Taiwan's Asus which recently announced plans for its own tablet, and Nokia which last year unveiled a "booklet" computer with built-in 3G. There are also understood to be several tablet computers running Google's Android software in the works, with France's Archos rumoured to be planning to release one in March.

Several mobile phone carriers keen to sell Apple's iPad in the UK

Steve Jobs has fired the starting pistol in the race to bring the iPad to the UK, with several mobile phone operators and retailer Carphone Warehouse interested in selling Apple's new tablet computer to consumers this side of the Atlantic.

Jobs announced on Wednesday that a version of the device that can access 3G mobile phone networks as well as Wi-Fi will start shipping in the US in April under a deal with AT&T, which already supplies the iPhone in North America. Mobile phone companies in the UK – O2, Orange, T-Mobile and Vodafone – are looking to strike similar deals in Europe ahead of a launch later in the year.

Orange, owned by France Telecom, has taken an early lead in the race to bring the iPad to the UK and has already held talks with Apple. But it has been in this situation before. It was very close to an exclusive deal with the iPhone but was beaten at the last minute by O2.

Vodafone and O2 have yet to begin discussions with Apple, according to sources, but are interested in the iPad. Neither company, however, reckons the iPad will be offered exclusively in the UK. Orange, in contrast, reckons it might be able to get an exclusive deal if it can offer the right sort of subsidy for the phone, which might make it cheaper for British users.

However in the US, Appple has shown little interest in getting it's phone subsidised by it's wireless partner there, AT&T. Instead it seems to have preferred offering consumers the chance to dip in and out of wireless broadband, rather than being tied to a ling term contract.

T-Mobile is understood to be talking to Apple at group level rather than specifically in the UK, meaning it is likely to be trying to put together a deal in more than one European market. Orange is likely to want to clinch a deal for France as well as the UK and T-Mobile in Germany. Vodafone, meanwhile, will also be looking for a deal in Italy, according to sources.

Andrew Harrison, UK chief executive of the Carphone Warehouse, welcomed news of the Apple device, adding: "To me, the really interesting thing is what we are seeing is devices designed with how the consumer uses the internet very much in mind, rather than just a computer that was made for business use trying to fit the consumer."

Carphone Warehouse, Europe's largest independent mobile phone retailer, was Apple's exclusive third party retail partner for the iPhone and Harrison obviously hopes to repeat the experience with the iPad.

"Our perspective is we play in the world of connectivity and particularly mobile connectivity and this device fits well within that; we think there will be a whole range of them. This is an extension of a smartphone perhaps even more than it being a smaller PC. It is much more in the territory that we operate in," he said

"We have done a phenomenal job with the iPhone and smartphones in general and bringing connectivity is something we would be delighted to talk to Apple about."

But the AT&T deal shows that Apple may be approaching the involvement of mobile phone operators with the iPad in a very different way from the way that it uses them for the iPhone.

Traditionally, mobile phone companies "subsidise" the up-front cost of hardware – usually mobile phones, but increasingly laptops – in return for persuading a customer to sign up to a long-term contract. The operator assumes it will make the subsidy back over the life of the contract. That is how the iPhone is sold in the US and Europe, while even Google followed this model with its Nexus One, signing a deal with T-Mobile in the US which sees the phone's $529 price tag fall to $179 in return for signing a contract. Vodafone is expected to sell the Nexus One in the UK at roughly the same price point as the iPhone.

Already several UK mobile phone companies subsidise the cost of laptops to persuade customers to sign up for long-term mobile broadband contracts. Anyone signing up to a two-year mobile broadband deal with T-Mobile at £40 a month, for instance, gets a free Sony Vaio laptop worth £499.

But with the iPad, Apple has forced AT&T to give up on persuading customers to sign long-term contracts. Instead the iPad will effectively be available on what in Europe would be seen as a 30-day rolling SIM-only contract such as those offered by O2 and Vodafone.

Customers have two pricing options in the US, a mere 250MB of data for $14.99 a month, or unlimited data for $29.99 a month. That means that while the basic version of the iPad – without wireless capabilities – will start at $499, the 3G version of the device will start at $629. Under the traditional operator model, the 3G version of the device would have been cheaper.

"It does not look as though it has the traditional subsidy model," said Harrison. "If you put Wi-Fi and 3G in it, it is actually more expensive not less expensive."

In a note on AT&T following the news, Jonathan Schildkraut, analyst at Jefferies & Co investment bank said the tariffs are "in line with the current data add-on options available with voice packages, and well below the roughly $60 plans currently offered by wireless carriers for a laptop card. The prepaid plan can be activated directly from the iPad and, because there is no contract, can be canceled at anytime."

"Given the prepaid nature of the service associated with this product, including the no contract/cancel at any time feature, we expect that AT&T would not have to subsidise the device. We would view this as a significant positive – given the large subsidy associated with the iPhone (estimated at up to $400). Additionally, this would imply better overall economics around the device (without the initial margin dilution of an iPhone sale)," he said

"The flip-side, of course, is that the usage patterns of this type of device are unknown. However, given the multimedia capabilities, and the video functionality in particular, we would assume that iPad could be another network hog. This could drive incremental congestion issues on AT&T's already strained network – leading to further network dissatisfaction, and potentially a need for ongoing higher levels of capital spending".

In other words, not getting people to sign a contract gives the operator very little chance to factor the potential cost of future infrastructure investment into its pricing plans. Then there is the worry that applications which allow internet telephony – such as Truphone and Skype, which are already available on the iPhone and will port to the iPad – will further erode the network's profitable voice and text traffic.

Apple initially sold the iPhone through exclusive partners in the US, UK, France and Germany, but for the iPad the British mobile phone companies are not expecting Apple to offer exclusivity. None of the mobile phone companies was willing to comment on the iPad.

Incidentally, anyone who already has a wireless broadband "dongle" under a long-term contract and is thinking about buying an iPad and putting the SIM card from their laptop card into the iPad will be disappointed. The iPad is the first mass-market mobile device to use micro-Sim cards, which are smaller than the current range of Sim cards and were designed for small consumer gadgets such as Birmingham-based Lok8u's range of wireless-enabled wrist watches.

The iPad is also likely to prove a major headache for makers of similar devices, especially Taiwan's Asus which recently announced plans for its own tablet, and Nokia which last year unveiled a "booklet" computer with built-in 3G. There are also understood to be several tablet computers running Google's Android software in the works, with France's Archos rumoured to be planning to release one in March.

Digital decisions left too late, says former Ofcom policy expert

Arrival of Digital Britain report so close to election leaves media and telecoms issues as 'policy-making orphan', says Kip Meek

Kip Meek, the former chief policy partner at Ofcom, said today that the Digital Britain report had come at the wrong time, leaving key matters of media and telecoms policy unresolved as the UK heads towards a general election.

Speaking at a Westminster Media eForum seminar on digital switchover today, Meek said the issue of spectrum – both trading existing spectrum and auctioning off the spec on the airwaves released by the digital switchover process – had become a "policy-making orphan".

Meek, who held a variety of roles at Ofcom between 2003 and 2007 including chief policy partner, was made the independent spectrum broker in Lord Carter's interim Digital Britain report in January last year.

In this role he laid out recommendations to kickstart spectrum trading and the stalled auction process for new spectrum, feeding into the final Digital Britain report that appeared in June.

"The whole process, of which I was a part as the independent spectrum broker, was the wrong point in the electoral cycle," he said today.

"Governments do not have any choice about that. The importance of this point is for the next government, be it Tory or Labour or some other: the issues that Digital Britain was grappling with, of which this [spectrum] was an important part, are extremely complicated. It's better to have a run at them.

"The Conservatives were wrong to say that the problem with Digital Britain was that it was yet another set of proposals, fairly green proposals. These are incredibly complicated issues and not rushing one's fences at these issues is important.

"I hope that after the election we can look at some of these issues again. Those we have not made progress on we can take a fresh view on."

The question of spectrum – including the auction of new bands at 800MHz and 2.6GHz – was complex but important, he added.

"This is a very difficult and opaque subject – it's very difficult for politicians and policy makers to get excited about it.

"But TV and mobile are the two devices which are going to be where all the innovation is going to be over the next few years... We in the UK have the opportunity to be a player in the implementation of next generation mobile. I would urge politicians to focus on these issues even though they are difficult and opaque."

Today's forum also heard a progress report on the digital switchover process, which has been completed in the Granada region in north-west England. Wales, the ITV West region and STV are the areas being switched in 2010.

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