Nick Lane says "Analysts unsure that video will drive data revenues"
Telecoms.com
27-February-2003
Despite claims from mobile operators that video services might well be the "killer application" that drives data revenues going forward, fears of more stagnation within the industry have not abated. Indeed, many operators look set to resist further investment in 3G networks until the growth of mobile data, driven by whatever service, becomes more apparent.
This year's 3GSM World Congress in Cannes was perhaps noted more for its lack of 3G-related news than for anything else.
"Operators, terminal developers, service providers and application developers are singularly focused on improving revenues from their current 2G businesses for at least the next three years," said Stephen Pentland, partner at UK consulting firm Spectrum Strategy. "This is a long-overdue change for the good. Long gone are the days of operators with 3G business plans who did not even have 2.5G business plans, despite having deployed 2.5G technology."
"There is not an overwhelming need to do 3G right now," added Kevin Keough, vice president of corporate business development at Inet, claiming that up to 40 tier 1 and 2 European mobile operators planned to extend their 3G deployments by between 18 and 36 months. He added, however, that the economic environment had changed since the carriers invested in the license and that it "doesn't mean that they'll make the next step" and build the networks.
Analysts also noted that operators suggested an unwillingness to invest heavily in 3G until more signs of life for mobile data services emerge. "The overriding message was that there continues to be limited, if any, visibility regarding MMS uptake and 3G [WCDMA] deployments," said UBS Warburg's Jeffrey Schlesinger.
Others chimed in with their disappointment regarding the continued lack of visibility of "killer" applications and operator revenue models, though that view was countered by a number of the leading Asian mobile operators and vendors. "If multimedia is to take off, someone must take a leading role," said SK Telecom's CEO, Moon Soo Pyo. Speaking at 3GSM, Moon said that multimedia content would only be provided if there was demand. "Somebody [SKT] had to break that bad circle," he added.
Moon confirmed that ARPU on its 1xEV-DO network, JUNE, which launched in February 2002, is already "significantly higher" than the US$11 originally targeted. Although ARPU figures will not be released for a number of months, Moon said that video mail would play a key role in extending, and generating, revenues.
Handsets are the key
The bullishness of Asian carriers is, in part, due to the feature-rich terminals they are already selling. Camera-enabled handsets, for example, first hit the South Korean market in 2001 - the same year Japanese carrier J-Phone launched its Sha- mail picture-messaging service.
Vendors in the region have built on these terminals, with an increasing number of handsets now capable of recording video as well as playing it back. For European operators, though, there remain few options for offering handsets that can record video. Although terminals such as Nokia's 7650 and Sony Ericsson's recently launched P800 are capable of taking still images, they are as yet incapable of recording video.
Vendors such as Samsung and LG Electronics, which have been successful in the South Korean market, are now making an impression on the rest of the world. But the philosophy of "if we build it, they will come" no longer holds sway in today's mobile market. J-Phone's usage figures for Sha-mail offer proof: The number of pictures sent after a year tail off dramatically, with just 39% of the firm's subscribers saying they regularly exchange pictures after that time.
Keiji Tachikawa, chairman of NTT DoCoMo, seems undeterred by such statistics. Speaking at 3GSM, he told delegates that the Japanese cellco would increase the popularity of its i-mode service, which already has 36.6 million subscribers, by introducing video messaging. "Videophone services will make 3G indispensable to our corporate customers in the near future," he said.
According to Yoshiaki Ureshi, assistant general manager of NEC's international mobile and wireless systems division, the technical problems of 3G have been overcome to allow carriers to focus on providing killer applications, which he says will be video services, such as telephony or downloads, and MMS.
Ureshi says the introduction of videophones can increase the number of subscribers to FOMA - DoCoMo's 3G service, which has had a mixed reception from the Japanese market - and can give "a good impression of 3G in the European market." NEC has a vested interest in Europe, rolling out 3G networks for Hutchison, which is using video telephony as a gimmick to challenge the existing UK operators.
But analysts are more cautious. "We are highly skeptical of video telephony becoming a killer application as it has not even taken off in the fixed-line world," says Schlesinger. Furthermore, he adds that MMS has still not proved its value to the consumer.
For the most part, the majority of operators outside of Asia are looking to roll out video services over GPRS. Last week, Hungarian operator Westel Mobile also jumped on the video bandwagon when it launched video streaming over its GPRS network, while Optus Mobile in Australia has launched MMS video messaging over its GPRS network and will introduce video streaming at the end of April (see p. 9). An Optus spokeswoman told 3G Mobile that the first terminals used to offer the service have the ability to record short video clips without sound.
telecoms.com
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"For the most part, the majority of operators outside of Asia are looking to roll out video services over GPRS..."
That's an amusing concept. The recycled panacea? - compression!!! - With as many times as they've wheeled it out - if it worked, Europe would be the size of Key West.
"According to Yoshiaki Ureshi, assistant general manager of NEC's international mobile and wireless systems division, the technical problems of 3G have been overcome..."
And it's a good reason for all the schedule delays. LOL! |
