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U:fon muscles into Internet market

T-Mobile and Vodafone cut wireless rates after entry

By Michael Heitmann
Staff Writer, The Prague Post
September 26th, 2007 issue

On television, a green extraterrestrial has been landing in remote places across the countryside, introducing wireless Internet services to an incredulous populace.
The creature presents itself as U:fon — short for space alien in Czech — and it’s all part of a recent advertising push by the country’s newest mobile phone and Internet provider, MobilKom.
Since introducing service in May, MobilKom has pushed an aggressive marketing campaign, offering high-speed wireless Internet access for 499 Kč ($26) a month, with a catch: a two-year contract is required to get the company’s proprietary appliance at a discounted price of 2,999 Kč. Up from 10 percent in May, U:fon’s data service now reaches 60 percent of the population, according to spokeswoman Jana Studničková.
That’s not all that’s been aggressive about U:fon’s sales practices. Telefónica O2 complained last month that a U:fon salesmen told O2’s customers that they should sign up for U:fon connections before their existing landlines were shut off. Studničková said MobilKom has an ethical code and would be investigating the behavior of its external salespeople.
However aggressive their marketing, U:fon’s entry into the incipient wireless Internet market — which promises high-speed access anywhere a mobile-phone signal can reach — has coincided with two of the country’s major carriers, T-Mobile and Vodafone, slashing prices 25 percent and 21 percent, respectively.
However, T-Mobile’s price cuts were unrelated to U:fon’s entry, said T-Mobile spokeswoman Jitka Pacolová.
“We don’t think the offer of [U:fon] is on equal terms with a mobile phone company,” she said. “At this time, there’s no need to take action in response to U:fon’s offer.”
T-Mobile reduced prices for its Internet 4G data plans in August and now sells one-year mobile Internet access, including a modem, for 5,999 Kč — about the same as
U:fon. Vodafone also reduced prices in August, from 950 to 750 Kč for unlimited connectivity.
Where the networks vary widely is in the protocols they choose in order to transmit their data, with U:fon opting for the CDMA standard, a competitor to the GSM system common throughout Europe. This means existing mobile phones cannot connect to U:fon’s network.
The company’s CDMA signal has even disrupted analog television signals in some places such as Prostějov, north Moravia, prompting an outcry from the locals. With increasingly crowded airspace and ancient television sets, this is not an uncommon difficulty for mobile phone operators.
T-Mobile has chosen the UMTS standard for its network, a technology that the company says is optimized for data transmissions.
“This specialization makes much higher transfer speeds possible compared to other mobile technologies,” Pacolová said. The company has installed 100 new transmitters in the first half of 2007 and plans to add another 115 by the end of this year, investing 500 million Kč ($25.5 million).
Meanwhile, Vodafone’s EDGE-based system is the laggard of the group, due to its older technology, but it also has a huge coverage area, including all major cities. And while the other operators have opted for one standard, Telefónica O2 lets its customers choose the technology that suits their needs.

Michael Heitmann can be reached at mheitmann@praguepost.com


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