Financial Times FT.com

Setback for Nokia music service

By Andrew Parker and Rob Minto in London

Published: October 2 2008 23:15 | Last updated: October 2 2008 23:15

Nokia faces a setback at the global launch of its music service in the UK this month because the country’s big four mobile operators do not plan to sell it.

Vodafone, O2 , Orange and T-Mobile are not expecting to use their high street stores to offer Nokia’s handsets featuring its unlimited music download service in the run-up to Christmas.

That would be a setback for Nokia, the biggest mobile handset maker, which is beginning an ambitious strategy of putting services such as music on to phones. It also underlines tensions between Nokia and the operators.

Nokia’s Comes With Music service had a global launch party in London on Thursday.

Two Nokia handsets featuring the service, which offers consumers the ability to download as much music as they want over a 12 or 18 month subscription period, go on sale on October 16 in the UK.

However, Nokia’s long-awaited 5800 mobile, its first touchscreen smartphone, is not one of the two launch models for the service because it will not go on sale in the UK until next year.

The UK is the only market where the Comes With Music service will be available this year. It will expand into continental Europe, Asia and the US next year.

In the short term, Nokia is likely to have to rely on Carphone Warehouse, the mobile phone retailer, to be the UK distribution channel for its Comes With Music-enabled handsets. Nokia will also use its London shop and website.

The two Nokia handsets featuring the service that go on sale in the UK with Carphone this month are the 5310 and the N95.

Priced at £130 ($229), the 5310 will be available on pay-as-you-go deals, and Carphone is the exclusive UK distribution channel for the handset this year.

The N95 will be tied to monthly contracts with the operators, although Nokia said Carphone had not yet provided pricing details.

The cost of the contracts will be partly determined by Carphone’s commercial arrangements with the operators for subsidising handsets. Many mobiles tied to monthly contracts are given free to consumers.

It remains unclear how many operators will agree to provide network coverage for the Comes With Music-enabled 5310 and N95 from October 16.

Nokia said: “We are optimistic we will have several operators on board by the end of the year.”

The operators all declined to comment.

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