Will Your Mobile Phone Replace The Ipod?

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Will your mobile phone replace the ipod?

REUTERS[ SATURDAY, FEBRUARY 12, 2005 05:47:14 PM]

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PARIS: Top French radio group NRJ predicted on Friday mobile phones would replace portable music players such as Apple Computer Inc.'s iPods, as it unveiled plans to become France's third high-speed mobile service provider after Orange and SFR.

"The mobile phone will become the digital portable music player of tomorrow on which you can do everything," Jean-Paul Baudecroux, chairman of NRJ Group's supervisory board told Reuters in a interview.

"I don't think people want to have several devices in their pockets."

NRJ -- which broadcasts radio channels including the popular Nostalgie, Rire et Chansons, NRJ and Cherie FM -- is to launch a mobile phone service in September using the high-speed 3G network of SFR.

The radio group will buy 3G minutes wholesale from SFR, France's second largest mobile phone provider, which is controlled by media group Vivendi Universal, and effectively become the country's first alternative mobile virtual network operator (MVNO).

The move is part of NRJ's strategy to diversify into new media. The group is planning to launch in France a new digital TV station, partly music-themed, called NRJ 12 at the end of March.

The mobile phone deal marks an audacious bid by the radio group to tap into the youth and over 50's markets and leverage its weekly radio audience of 24 million listeners.

"We believe there are customers to be grabbed in the 11-14 year-old age bracket and in the over-50s," said Baudecroux.

As the French mobile phone market matures, mobile phone service providers believe that one of the best ways they can widen their customer bases is by targeting specific segments of the population.

"MVNOs are a good way to exploit and penetrate different segments of the market," a London-based analyst said of the NRJ/SFR deal.

NRJ said its mobile customers would be able to find out the title and artist of a song played on the radio and download it from their mobile devices within minutes.

"It is also a way to encourage people to download music legally," Baudecroux said of the new 3G service.

As 3G picks up in France, Baudecroux said NRJ Mobile aims to attract 1 million mobile phone subscribers within three years.

"There will be a 3G boom in France just like there has been a broadband (high speed Internet) boom in the country," he said.

"In the long term, only 3G will remain; it's the balance between mobility and high-speed data transmission. Data increasingly represents a higher proportion of sales than voice, so average revenue per user (ARPU) will continue to increase."

NRJ said it would benefit from mobile handset purchasing agreements secured by giant service provider Vodafone Group Plc, which owns 44 percent of SFR.

The MVNO agreement with SFR coincided with the announcement on Friday of a co-branding deal between Orange, the mobile arm of France Telecom, and TV broadcaster M6 and the aim of later enabling M6 to become an MVNO.

Orange, which launched its own 3G service in Britain and France in December after SFR and Vodafone launched theirs, said Orange 3G mobile phone subscribers would get access to M6 content under the co-branding deal at first.

SFR and Orange have been under government pressure for months to sign an MVNO agreement to increase competition in the French market.

The French industry ministry has long been seeking to end the cozy oligopolistic situation in the French mobile market enjoyed by its main three players Orange, SFR and Bouygues Telecom.

Already two MVNOs operate in France -- Breizh Mobile, which uses Orange's network; and Debitel, which has access to SFR's network -- but their commercial success has been relatively limited, at least until now.

One analyst in Paris said he was skeptical of the NRJ deal. "I don't know if NRJ will have the means to support such a distribution network" for the new mobile phone service, he said. "But we will see how it works out."

French banking group Credit Mutuel-CIC is to take a 10 percent stake in NRJ's mobile unit and will provide the wireless service provider with payment and client management systems.