The mobile phone spin-off from BT, mmO2, has been forced to delay the rollout of its crucial third generation wireless service by six months due to concerns about the availability of handsets able to use the new technology.

The company, which demerged from BT last month, had hoped to launch the new wireless internet service next autumn. Yesterday the chief executive, Peter Erskine, admitted that the lack of so-called dual-mode handsets, which can access the new services and still receive voice calls where a 3G signal is not available, means the service will not be widely available until the first half of 2003.

"What we are looking at is potentially a slip of six months but we will be out there," he said yesterday at the launch of the UK's first big public demonstration of 3G services on the Isle of Man. "But what I do not want is networks lying idle."

Despite the delay, mmO2 still expects to spend £4bn on 3G networks in its four regions - UK, Germany, Holland and Ireland - over the next five years. However as 3G coverage will not immediately be available throughout the UK, dual-mode handsets are a crucial first step in the introduction of the new service.

Mr Erskine added that mmO2 intends to have a small scale service up and running in some of the UK's leading cities later next year but does not want to launch a full-scale service until he is sure that the company can get hold of enough handsets to satisfy demand.

Yesterday mmO2 began Europe's first significant public trial of the technology through its subsidiary Manx Telecom. Business customers and consumers will be able to trial 3G services such as web-browsing and video streaming using handsets made by NEC of Japan.