Bluetooth: treading on 3G territory
As part of its Fast Foreword series, Arthur Andersen has issued a report on Bluetooth and 3G. The underlying thesis of the report is that Bluetooth poses a serious threat to the revenue streams that 3G operators have factored into their business models.
To offer customers the convenience of accessing information, any time, anyplace, whether on the move or stationary, operators such as France Telecom, Deutsche Telekom, British Telecom and Vodafone have spent billions buying Third Generation (3G) mobile licenses in Britain, Germany, France, Italy and elsewhere. According to the Arthur Andersen report, investment in 3G across Europe has exceeded all expectations and total spending is estimated at $300 billion.
The report explains that the investment recovery models used to justify the expenditure are based on the widespread adoption of 3G, and the value creation that 3G operators can offer their customers through customized services. According to Arthur Andersen, Bluetooth, which enables seamless connectivity between networks and personal devices such as mobile phones and PDA's, provides an alternative for wireless communication within small geographical areas and thus renders 3G redundant in many places.
By deploying Bluetooth networks in airports, shopping malls, hotels and other places where people on the move typically browse for information or seek entertainment, Bluetooth could seriously affect 3G revenues. These Bluetooth networks require the installation of wireless servers and access points that relay traffic to the landline network, which is in turn connected to the Internet or information databases. Citing a cost of approximately $3,000 per server, Arthur Andersen upholds that this relatively low one-time cost provides significant savings over ongoing 3G airtime costs, while also creating a network for all types of data transmission within the in-building area.
With the centerpiece of these Bluetooth networks being the access server, Arthur Andersen states in its concluding remarks that "Bluetooth arrived on Monday 16 October 2000 as Red-M announced the first Internet-ready Bluetooth access server". Red-M is a wholly-owned subsidiary of Madge Networks (NASDAQ - MADGF).
While to-date much discussion has focused on the potential of Bluetooth networks without factoring in the impact on 3G, the Arthur Andersen report highlights this new angle, and goes on to suggests that 3G and Bluetooth can be complimentary rather than competitive. But regardless of how 3G evolves, one thing that is becoming abundantly clear is that the potential for Bluetooth networks, and the providers of infrastructure products such as Red-M, is huge.
The full Arthur Andersen report can be viewed here: arthurandersen.com
George J. |
