3G telecom invokes weak response from industry

By Lucas van Grinsven

PARIS: Few mobile phone operators are in a rush to bring fast third-generation networks to the consumer masses, even as the first carriers in Europe are cautiously going live with test users, industry players said on Friday.

The mobile phone industry, which gathered here for a conference on 3G wireless telephony and mobile Internet, is split between those who are under legal obligations to build new and costly third generation networks in the next few years (Europe), and those who can wait for consumer demand to justify such the expense (Asia and the Americas).

However, most agreed that 3G networks -- the equivalent of broadband Internet for the wireless world -- would make little difference to consumers, for they would get largely the same services they get over the current, second generation (2G) of wireless networks.

These services include picture messaging, email, calendar functions and downloadable games. "The experience you'll get as a consumer is exactly the same," said John Strand, of Danish wireless research and consultancy firm Strand Consult.

U.S. and Asian operators said they couldn't foresee a need for 3G networks for another four to five years, and they would get by with fine-tuning and improving their second generation networks until then.

"The consumer must need it first," said Chief Executive Napoleon Nazareno of Smart Communications, the largest wireless carrier in the Philippines with 7.5 million subscribers. It has one of the world's highest percentages of data traffic over its network, with 40 percent of total revenues generated by data services, mostly text messaging.

Leo Nikkari, director of 3G industry relations at number three U.S. wireless carrier AT&T Wireless, said even new handsets with cameras and big colour screens -- which could boost data traffic -- would not be sufficient to warrant the building of a superfast network any time soon.

"We don't see anything in the market driving demand for Wideband CDMA," said Nikkari.

WCDMA slow to take off

WCDMA, or Wideband Code Division Multiple Access -- known in Europe as UMTS (Universal Mobile Communications System) -- allows users to perform many computer functions (including watching and sending video) via mobile devices but has been slow to take off.

Japan's NTT DoCoMo Inc, the first carrier to launch WCDMA a year ago, has been struggling to recruit users due to limited coverage areas and poor battery life on the phones. This week, it cut its end-of-year 3G subscriber forecast again to 400,000 -- only a third of the customers it had originally anticipated.

In Europe, the roll-out of UMTS networks has been plagued by delays as cash-strapped operators who spent billions of euros on wireless licenses in 2000 have slowed investments to repair battered balance sheets.

Alcatel Chairman Serge Tchuruk said on Friday he did not expect the high-speed UMTS mobile Internet market to properly take off before the end of 2004. "I still believe in UMTS. The question is timing. I don't see a strong development in the UMTS market before the end of 2004," the telecom gear maker's chairman told French LCI Television.

Anglo-French operator Orange recently reiterated it does not expect a commercial launch of UMTS services before 2004. Hutchison 3G this week received the first 1,000 3G handsets for its British network and Austria's Mobilkom also took off with a small pool of trial users. Vodafone hopes to go live in several European countries next year when it can get enough handsets to market.

Lack of handsets has contributed to the slow roll-out. Finland's Nokia, the world's largest handsets maker, introduced its long-awaited 3G phone last week but immediately said it would not be for sale for up to six months until it had ironed out teething problems.

And Nokia mobile phones executive vice president Anssi Vanjoki last week played down the need for 3G, because 2G would be sufficient for the foreseeable future. All of this has been bad news for telecoms gear-makers such as Ericsson, Nokia, Nortel, Siemens, Alcatel and Lucent -- already struggling with declining sales because operators have cut back investments.

3G — Why?

When asked why consumers would need third generation telephony at all, Nortel's Director of UMTS Product Solutions, Scott Wickware, replied "speed". For example, business people will be able to download email quicker, open attachments faster when using a computer and be able to handle video-conferencing via their mobile handset.

However, most industry players believe that high-brow, business applications will not ultimately make or break 3G telephony. Its future lies in the hands of the mass consumer market. And consumers, who are just getting around to the concept of picture messaging, are unlikely to start clamoring for the slight speed advantages offered by 3G networks anytime soon.

© Reuters