Mobile music service aims to compete with Apple overseas

Initiated by British mobile music firm Omnifone, the music service will be launched by the second quarter, offering unlimited track downloads at 2.99 euros ($3.88) a week including data traffic charges.

"We expect to definitely get to the millions of (subscribers) by the end of this calendar year," said Omnifone founder Rob Lewis about the new service, called MusicStation.

Apple announced its entry into the mobile phone market last month when it unveiled the iPhone, incorporating an iPod digital music and video player. It will hit U.S. stores in the summer and will be available to consumers outside the United States this fall.

MusicStation will be offered in all major western European markets before the iPhone is introduced. The first operators to provide the service will be Telenor in Norway and Vodafone partner network Vodacom in South Africa, Lewis said.

The special software to download tracks and play music will turn most phones into music-playing handsets, even models that were not designed as music phones, he said.

"It works on 75 percent of actual handsets today," he told Reuters in an interview ahead of the 3GSM wireless trade show in Barcelona, Spain, which started Monday.

He added that the number of handsets able to provide the service would be several times the number of iPhones sold. Apple targets sales of 10 million iPhones in 2008.

Music on mobile phones has been around for several years, but most music on phones is currently ripped from CDs and files swapped on the Internet, not sold by operators over their wireless networks.

The iPhone has caused mobile companies concern because Apple aims to sell music for the iPhone through its online iTunes Store, bypassing mobile carriers.

"Apple will be selling music without operators being able to take a slice of the action," said Lewis.

This is of particular concern in Europe, where most people already carry a handset and any additional revenue has to come from data services such as music sales and Internet access.

MusicStation works on both second- and third-generation mobile networks, although it will take more time to download tracks on a second-generation GSM network. Consumers will be able to down download one track in the background while listening to another.

The service also tracks personal music tastes and interests, provides news and marketing offerings and has a community service to find users with similar musical tastes.

The catalog is localized per country and averages 1.2 million available tracks, Lewis said.

Consumers can keep the tracks for as long as they keep their subscription. Charges will be added to their phone bill.

Tracks will reappear if consumers renew their subscription, can be recovered if a phone gets lost or broken and will be transferred when a consumer upgrades to a new handset.

Handsets with limited storage capacity will make room for new downloads by deleting least played songs.

"It's one of the most consumer-friendly and secure platforms we have seen," Rob Wells, senior vice president, digital, at Universal Music Group, said in a statement.

Operators that will offer the service include those based in Europe, Australia, Hong Kong, New Zealand, the Philippines, Singapore and South Africa.