Irwin's on a tear!
Friday February 23, 04:37 PM
Mobile firms face 3G delays
By BBC News Online internet reporter Mark Ward
As the GSM World Congress ends, mobile phone companies have been left with the realisation that they have a tough few years ahead of them.
Many network operators are faced with recouping the cost of the huge sums they paid out for licences to operate a new generation of phone networks, and all will face similar sized costs to build them
To make matters worse, experts and analysts warn that customers for the new services are likely to be thin on the ground for a long time yet.
As the conference closed a survey revealed that less than 25% of companies say they are willing to splash out on new phones and services to bolster their business.
French connection
This week Cannes played host to the GSM World Congress - the annual meeting of the phone firms, handset makers and technology companies involved in the mobile business.
About 25,000 people attended the event.
GSM, or Global System for Mobile communications, is a European developed technology used in 69% of the world's mobile phone networks.
The mobile phone world is at a pivotal moment in its history. Handsets are starting to evolve from convenient gadgets that let people talk while they walk to trusted devices that can act as a purse, ID card, diary, travel guide or music player as needed.
But phone firms wanting to create networks that can support this array of services have had to spend money on a licence for radio spectrum and some are now starting to spend cash to build the actual network. built around a technology called Universal Mobile Telecommunications Service (UMTS).
However the loss of confidence in technology companies is making it very difficult for telecommunications firms to finance this.
As a result many of the sessions at the conference were devoted to sober discussions of how companies can manage this financial squeeze and how they can attract customers and start paying off their debts.
Wireless worries
Jim Healy, GSM Association Chairman, said mobile phone firms face now the same problems they always have of needing to invest long before they have the subscribers to support such an outlay. "In the long term mobile phone networks are a licence to print money," he told BBC News Online, "but in the short term it is a necessity."
Mr Healy said that customers could take between three and 10 years to move to UMTS networks in large numbers. This could seriously dent the chances firms have to recoup their investment as many licences last for only 20 years.
He said the reason for this could be the slightly clunky nature of the technology being rolled out. "Today using computers is not unlike owning an automobile in the 1920s," he said, "it was very useful thing and gave lots of benefits but you had to be a halfway decent mechanic to make it work."
"When you move into Wap and the things we are doing, its unfair, unreasonable and unrealistic to think that wireless data is somehow going to be easier to do than wired data."
A study released on Thursday this week implies that companies may be reluctant to sign up for the new services because of the high cost.
A survey by analyst firm Gartner Group found that 82% of European companies see mobility as increasingly important to their business, but only 24% say they will pay more than they do now to use future phone services that let them manage more of their business on the move.
Slow connections
Some fear that the slow pace of change, driven by either the wariness of customers or a spending squeeze, could hold Europe back. The basic technology that underpins the future high-speed data services is already in use in other parts of the world. Korea Telecom for example has been running a third-generation network since August 2000.
"Third-generation UMTS networks will be late," said Irwin Jacobs, chairman and chief executive of Qualcomm that developed the technology behind both Korean Telecom's network and future European third-generation networks.
He added that those building UMTS networks could be waiting a long time for any significant return on their investment. "Everything has been stretched out in time and costs have been higher than anticipated," he told News Online.
Mr Jacobs warned that that the relatively slow data download speeds of European mobile networks could look paltry when set against the speed that other networks, particularly those in Asia, are starting to roll out. Korean Telecom is already building a network that offers peak download speeds to mobile users of 2.4 megabits per second.
Current GSM networks operate at 9.6 kilobits per second and even the future UMTS networks will work at roughly this speed but most are two-three years away from being ready for customers.
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