| The next step of third-generation (3G) mobile phones, offering
broadband use that would see such features as internet and video
links in the palm of your hand, has evolved into a huge obstacle
which is threatening the very existence of this supposed revolutionary
development.
European business confidence in 3G phones has plummeted in the
wake of spiralling licence costs, a lukewarm reception by mobile
phone users, and fears over recouping the tremendous outlay demanded
by European governments for the right to use the broadband networks
required for 3G mobility..
A concept for the future
3G phones were launched with proclamations that the handsets would
prove to be the very latest in technological sophistication and
application. Capable of providing high-speed data transmission
the 3G mobile phone user can access the Internet, send and receive
e-mail, play high quality computer games and have 2-way video
calls - this latest generation of cell phones were to bring us
one step closer the Next Generation.
Such was the promise that European telecom companies, to secure
3G licences across Europe, have spent a collective £60
billion.
However, far from heralding the new dawn of a more advanced
era, the community of companies, which were set to unleash this
exciting new technology, are showing signs of nerves.
Cutting their losses
Spain's Telefonica Moviles and Finland's Sonera Telecom Operators
lost more than £5 billion, when their joint venture in
Germany, Quam, collapsed recently without ever launching any
product or services. Telefonica Moviles further altered its
plans and abandoned its 3G operations everywhere bar the Spanish-speaking
world.
Orange, a subsidiary of France Telecom also announced plans
to cut back on capital spending in its German 3G company MobilCom.
Elsewhere in Europe, Sweden is expected to be amongst the first
wave of European nations to offer this new service, particularly
as it had chosen to adopt a concept of cheap licences in return
for strong performance commitments from successful telecom operators.
But now Orange, one of the nation's four 3G licence holders,
has asked PTS, the Swedish telecom authority, to delay its proposed
network completion date until December 31 2006, a full three
years after the originally agreed time.
The general scaling back of expenditure elsewhere in Europe
seems to have made the Swedish operation more cautious, and
caution is definitely the mood replacing the wave of optimism
that was once synonymous with 3G.
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Is there really a market out there?
The troubles endured by the telecom community have stemmed partially
from doubts over the true extent of the market for 3G phones.
For example, surveys conducted in the UK suggest that almost
half of all UK mobile phone owners are most likely to use their
devices for phone calls, and little else.
The 3G cause is further hampered by predictions that, in order
to make 3G a profitable venture for the service provider, users
may be asked to spend up to 10 times more than their present
financial outlay on mobile phones.
Experts have blamed this declining interest on telecom firms,
who, they claim were too hasty in buying 3G networks at vastly
inflated prices. Now, the investment market has become increasingly
nervous, and there are doubts that telecom companies will be
able to recoup that outlay.
Research suggests that UK consumers will not spend more than
£300 for a more sophisticated or 3G mobile phone and,
many of whom will not actually spend more than £150.
This news contrasts sharply with what's on offer, as new 3G
phones are currently priced at about £750, leaving the
telecom companies with a huge subsidy bill to generate sales.
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A glimmer of hope?
In Japan the world's first 3G mobile phone service provider, NTT
DoCoMo, has reported more subscribers to its service, but conceded
that people's expenditure had not risen accordingly.
The company's FOMA (Freedom of Multimedia Access) subscribers
totalled 134,00 at the end of August this year, up from the
April figure of 106,000, however the average figure for revenue
per user fell.
NTT DoCoMo has blamed the drop in revenue on the sign-up discounts
it offered. Basic 3G upgrade fees were cut by 55 per cent for
existing subscribers of normal mobile services - a ploy which
has seen a rise in numbers, but not in the fiscal sense.
This example seems to confirm the opinion of many analysts,
who predict it could be 10 years before the telecom companies
who gambled on the success of 3G technology will get their money
back. In Japan however, current market conditions have not dissuaded
NTT DoCoMo from forging ahead with the R&D on their experimental
4G technology.
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