One more General Post, generally bad in a narrow way;-)
Narrow GPRS usage seen hitting operator revenue
8/30/01 10:24 AM
Source: Reuters
By Jan Strupczewski
STOCKHOLM, Aug 30 (Reuters) - The mobile telephony's fast data transfer standard GPRS is likely to remain a service for a narrow group of business customers next year, hitting operators' revenues, investment bank Morgan Stanley said on Thursday.
Its two-day seminar, focusing on third generation (3G) mobile telephony which promises multimedia on handsets and on GPRS (General Packet Radio Service) as an intermediate step, brought operators and equipment makers together in Stockholm .
"GPRS was seen as more of a niche service for the high-end market for a year or so," Damon Guirdham, a Morgan Stanley analyst specialising in operators and mobile telephony, told a news conference after the seminar.
"That makes us look again at revenues of operators. Delays in 2.5G (GPRS) matter, because they affect operators' revenues."
Although most European operators have already upgraded their networks to be able to offer GPRS, which allows the user to stay always connected to the Internet and quickly download data, few of them offer the service commercially.
"They have so far not succeeded to attract customers to the GPRS data service," Guirdham said.
Inadequate marketing and technical imperfections, which always accompany the rollout of a new technology, slowed the launch of GPRS, he said.
Morgan Stanley analyst Angela Dean said she expected the GPRS market to take off in earnest only in the second half of next year when GPRS handsets, currently offered only by Motorola and Ericsson, become more widely available.
She said introducing fast mobile data transfer would be a more difficult task for operators than the launch of mobile phones in the early 1990s.
"The move to mobile voice was compelling, while the move to mobile data is not that compelling," she said. From a technological point of view, the GPRS and 3G standards were much more challenging than the launch of mobile.
3G PHONES TOO BIG, TOO EXPENSIVE
Though the rollout of 3G networks is in progress, the mass usage of 3G telephony is seen delayed until 2004 or 2005.
Both operators and equipment makers stressed that it was important to successfully launch GPRS before moving on to the more complicated 3G, which was plagued by technical constraints in handset design including size, battery life and costs.
"The risk is that a 3G handset will look like a brick," Dean said. Further undermining the business case for 3G to an average customer was the fact that almost 80 percent of services it may offer is also possible with GPRS if the operator's network has enough capacity, she said.
Morgan Stanley analyst Nicolas Gaudois told reporters that representatives of the semiconductor industry said the semiconductor component of a 3G handset would cost some $150 against $50 in a second-generation phone.
The price would fall only after five or six years of large volume production, which is not expected to start before 2003-2004. The 3G handsets would therefore have to be subsidised by the operators, the seminar's participants agreed.
"This supports our cautious outlook for major operators or makes us even more cautious," Guirdham said, but would not comment if Morgan Stanley would lower any of its recommendations.
Copyright 2001, Reuters News Service
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