Competition in mobile data services has been thrown wide open, but cut-price tariffs are some way ahead The battle is on and the celebrities have been recruited for an intensive television campaign - 3G is on the march. SmarTone Telecom and CSL are the new forces to be reckoned with, launching the service last month to end Hutchison Telecom's 11-month monopoly of the third-generation mobile market. And in the fight for consumer dollars, the players' weapons of choice are handsets and the all-important data content. Consumers will no longer compare the number of voice minutes or text messages they include in their tariff plans. With 3G, video call minutes, multimedia messaging services (MMS) and short movie clip capacity are key. It is difficult to compare the various service plans offered by the three mobile operators merely on price. while SmarTone's are slightly cheaper than comparable plans offered by Hutchison, they provide less voice, video-call minutes and MMS quotas. Likewise, CSL has priced its four tariff packages higher than its rivals, but it is compensating by offering bigger handset subsidies. The fourth 3G licensee, Sunday Communications, will launch the service in the second quarter this year. The three operators so far have refrained from price undercutting but analysts say competition will heat up in the second half when they will be pressured to lower prices or offer more handset subsidies. 'When you get all four operators offering 3G after Sunday launches its service, they will race with each other to fill up the spare capacity with more subscribers,' an investment bank analyst said. Davina Yeo, associate director of wireless and networking research for IDC, said the three operators were unlikely to rush to migrate a great portion of their 2G customers to 3G in the first half of the year as they would be watching the competition and figuring out the best business model. 'In mid-2005, competition in 3G will really kick in,' she said. As at December 23, Hutchison Telecom said it had signed up 210,000 3G customers in Hong Kong since launching its service in January. With eight million mobile users, Hong Kong's penetration is 117 per cent of the population, meaning that the average Hong Kong mobile user has more than one mobile phone. Operators can now look to higher average revenue per user (arpu) for 3G, made possible by the premium charge on data and multimedia services. 'Over the longer term, I still believe 3G will bolster arpu to the $300-$500 level,' said Hubert Ng Ching-wah, CSL chief executive. In comparison, Hutchison's post-paid arpu stands at $205 as at September. Competition is likely to be fanned by the operators' readiness to sell 3G service without handset bundling. That strategy will mean customers in future will be free to switch networks and keep the same handset if they find a better deal. 'While I expect 3G tariffs will trend down after Sunday launches, it will still be priced at a premium to 2G tariffs,' an analyst said. Competition will also centre on content offerings as the speed of WCDMA (wideband code division multiple access) at 384 kilobits per second helps facilitate faster and smoother data transmission. 'We view SmarTone 3G services as more attractive for local customers than its competitors ... [its] exclusive soccer club channels on wireless network will differentiate [its] 3G service,' DBS Vickers analyst Wallace Cheung said in a report. SmarTone offers exclusive access to English football clubs such as Manchester United, Liverpool and Chelsea. Hutchison offers English Premier League and UEFA Champion League. 'I think mobile gambling will be a big thing for Hong Kong,' Ms Yeo said.