Voice is still the primary service

March 17, 2004

There is little evidence that customers want all the latest features on a mobile phone, according to the boss of an UK mobile phone retailer. John Caudwell, boss of the Caudwell Group that owns Phones4U, told BBC News Online the majority of customers want superb value for money and only a "minority that want bells and whistles".

He said data revenues are relatively small. Revenue from the download of wallpaper, ringtones and games were negligible compared to the revenue made from voice calls.

He believes a mobile phone price war is about to break out between rival operators. 3, the only operator in the UK offering commercial 3G services, is attracting customers with low cost voice calls and has been aggressive with its tariff pricing and handset subsidies. Other mobile phone operators will likely lower prices to keep customers loyal.

Caudwell said cheaper phones does not necessary mean people will make more phone calls. It could backfire and "take revenue out of the marketplace faster than revenue that can be replaced by new features". The price war could threaten overall revenue for operators.

He said the challenge for networks is to create services that customers really want and can't live without.