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Thursday October 25, 1:21 pm Eastern Time
Motorola sees no European 3G adoption before 2004
By Lucas van Grinsven, European technology correspondent
LONDON, Oct 25 (Reuters) - U.S. mobile phone and equipment maker Motorola Inc (NYSE:MOT - news) said on Thursday it believed it could take until 2004 before a mass market for third generation wireless telephony starts to develop in Europe.
This is in line with expectations of most analysts, but a year later than forecasts from market leaders Ericsson of Sweden and Nokia of Finland.
Mobile equipment operators and telecoms companies are investing billions of dollars on developing high-speed third generation (3G) technology to transmit video, voice and rapid Internet services over mobile phones.
The longer it takes before 3G networks start operating, the longer it will take for these companies to start generating revenues and profits from their investments.
``There's a significant percentage chance it will be later than 2003,'' said Motorola's European president, Kevin Loosemore, when asked when he sees a large commercial launch in Europe.
The world's first 3G network has just been launched in Japan, and Nokia and Ericsson have said there will be 3G networks and handsets available for a European roll-out starting next year.
The technology used in Europe will be more complicated than in Japan, however, and Loosemore is wary of teething problems that will prohibit a mass roll-out.
``We'll go through a phase of many trials and experiments in which operators will iron out the bugs. The 3G standards aren't even finalised yet,'' said Loosemore, who is also responsible for Motorola's infrastructure business.
``In Spain (the licence to operate a 3G network requires) operators will have to demonstrate voice call capability (over a 3G network) between two major cities by June 2002. But will they be running it as a large scale commercial network? I suspect not,'' Loosemore said.
Loosemore also told Reuters in an interview he expects to have sold a total of five million GPRS handsets at the end of the year. GPRS cellphones can be continuously connected to wireless services.
The company said it had sold 1.5 million GPRS cellphones at the end of the third quarter.
General Packet Radio System (GPRS), or 2.5 generation, is the intermediate step between current wireless voice networks (second generation) and fast, always-on mobile voice and data networks (third generation).
GPRS IS FINE FOR TEXTING
It's not just the network technology that will be holding back large commercial usage of 3G. Loosemore also noted a lot of data services still need to be developed, and the most successful one at this moment -- text and image messaging -- does not need 3G.
``Most messaging you can do quite happily over a GPRS network,'' he said.
Wireless operators would milk their GPRS networks, which have just been installed, for what they are worth before moving over to the costly new 3G network systems, he said.
Most operators are struggling with budget constraints.
``If you're an operator, one of the key things is to optimise your 2G networks. That means to start getting applications over GPRS networks,'' he said.
Billing systems for data services are not in place either, another factor slowing down data services.
Loosemore also mentioned that Nokia and Ericsson recently told investors they do not see major sales of 3G infrastructure equipment in 2002. Nokia expects it will take until the second half of 2002 before sales start to support its top line.
``If they say that, there's a good chance it won't flip in 2003. Add it all up and it's not an impossible scenario that 2004 is more likely,'' Loosemore said.
He sees earlier 3G installations in hot spots such as certain city centres, but first and foremost to add extra capacity for voice calls, not for data services.
Also, certain operators will never build a 3G network that covers an entire country, Loosemore said.
``It's still an open debate whether operators will roll out full 3G networks. In many cases it won't pay back,'' he said.
NUMBER TWO IN RADIO ACCESS
Motorola competes, but also works together with rival wireless equipment makers such as Nokia and Ericsson, building radio access systems, but no switching systems.
Motorola aims to be the world's second or third supplier of 3G radio access systems, the same position it has in the second generation wireless infrastructure market.
Loosemore said he is talking to all the major operators about delivering 3G equipment and was doing trials with two of the top five. An announcement is expected later this week.
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