e-business: Go-slow threat to launch of G3.

Byline: Steve Pain Technology Editor

BT's planned launch of Europe's first third generation (3G) wireless network this summer may disappoint users, with slower speeds than expected and without always-on connections, a key advantage of the new high-speed technology.

Europe's fifth largest mobile operator will launch 3G on the Isle of Man but its current plan is to start the service without always-on net connections, which enable high-speed web surfing and music and video downloads and help boost videoconferencing services.

The latest setback to 3G could affect not only BT but other mobile operators as well. These companies paid about pounds 60 billion to win European 3G licences and now must make money from that investment by building high-speed networks that offer huge improvements in performance and win customers.

Some analysts say technical obstacles may delay the large-scale deployment of 3G services for as long as five years.

BT is using the Isle of Man as a testbed for the technology. But it says it will offer the 75,000 inhabitants a real 3G service.

However, the speed of the Internet connection will be only 64 kilobytes per second at first. That is about six times faster than current WAP phones, but falls far short of the 384 kb/s that the technology is supposed to be capable of handling.

The service will also not be featuring technically complex packet switching technology, which enables always-on Internet connections.

Users will have to dial-up to get on the web, the same time-consuming and frustrating process that has discouraged widespread use of WAP phones.

BT is racing Japan's NTT DoCoMo to launch the world's first 3G network. Both have delayed launches planned for this month - BT to late summer or early autumn and DoCoMo to October.

A joint venture of Siemens AG and NEC Corp, called Mobispher, is building the network.

Svante Stenbom, Siemens' UK managing director of mobile networks, said BT would be justified in claiming it had beaten DoCoMo even if it launched without packet switching.

'It will still be the world's first 3G network, but it won't be the full 3G experience,' he said.

Few people will be able to use video-conferencing because the 200 NEC handsets BT plans to distribute at the launch require a separate plug-in display to show video

And there are unlikely to be many of those available, according to a project spokesman said.

Siemens also revealed that the project has been delayed by problems with a fundamental network component, and not by faulty NEC handsets as BT recently claimed - triggering a row between the three companies over who was to blame.

NEC engineers are working around the clock to fix software in the radio network controller.

Revenues from voice calls are anyway expected to fall as prices keep dropping towards the level of fixed-line calls.

The cost of free voice could also be offset by higher subscription fees for 3G. BT is using the example of a pounds 30 monthly charge on sample 3G bills.

Mobile firms plan to squeeze further revenues out of 3G by sending advertising to handsets.

Meanwhile, BT has refused to confirm reports it is to scrap its mobile phone brand, BT Cellnet, in favour of a new international identity.

'We will be looking at re-branding BT wireless, when we demerge it this autumn, and we may, at that time, consider re-branding Cellnet,' said a spokesman for the group.