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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: Eric L who wrote (17255)	12/12/2001 9:37:49 AM
From: Eric L	Read Replies (1) \| Respond to of 34857

re: FT on 3G "Launches" >> Unclear Signal Clouds Launch Dan Roberts reports on the problems facing mobile phone operators as they try to bring 3G to the market. Financial Times Dec 10, 2001 Dan Roberts Warnings about the late arrival of third generation mobile phones have grown ever louder in recent weeks. But not all European operators have given up on the original promise of a full commercial launch by the second half of next year. Hutchison 3G, the newest entrant, is sticking firmly to its internal target of a September debut, in spite of fears from many rivals that there will not be enough suitable handsets by this time. MMO, formerly the mobile division of British Telecommunications, confirmed last week that it did not expect enough handsets to guarantee widespread availability from high street retailers until well into 2003. Chris Gent, chief executive of Vodafone, made a similar point at the time of his company's last interim results. However, Vodafone also stuck to its prediction that a commercial service of sorts would be "launched" before the end of 2002, probably targeted initially at business users. It is this distinction between a formal launch and one that allows widespread availability that perhaps explains Hutchison's relative optimism. The joint venture - which is part owned by Hutchison Whampoa of Hong Kong, Japanese operator NTT DoCoMo and KPN of the Netherlands - refuses to go into details about what it means by a "launch". And its need to make a name for itself in the fiercely-competitive UK market may explain its rush to be first with the launch. Nevertheless, Hutchison's aggressive timetable also demonstrates the importance of a close relationship with handset manufacturers. Unlike MMO, Hutchison has already agreed a contract to receive large numbers of handsets from NEC of Japan. The details remain confidential, but NEC is believed to have agreed to pay substantial cash penalties if the phones arrive late. NEC has already proved it is able to build some 3G handsets by supplying NTT DoCoMo for its recent launch in Tokyo. It also supplied the same handsets to MMO for a large-scale trial on the Isle of Man. However, neither of these two services allow customers to use existing second generation networks if they travel outside Tokyo or the Isle of Man. The challenge of producing substantial numbers of "dual mode" handsets able to roam seamlessly between 2G and 3G networks is what is worrying the sceptics. Even if the technical challenge of cramming both technologies onto one chip is cracked in time, there may not be the stockpiles of handsets necessary for simultaneous launch across Europe. Those operators with the closest links to key Japanese manufacturers hope they will be first in the queue for what few phones are available in time. Hutchison's close relationship with NEC is helped by the fact that DoCoMo, one of its three parents, happens to be NEC's largest global customer. Hutchison has also given NEC a lucrative contract to build its 3G network infrastructure. Nevertheless, other operators insist there will be plenty of choice when they need to strike their own contracts. MMO is in discussions with about 20 suppliers and is expected to forge close links with Nokia, Ericsson, Panasonic and NEC. Vodafone is large and powerful enough to be able to dictate terms with many suppliers and has close links with the Japanese market. NEC likes to boast that its early experience in Japan will give it a headstart over European rivals, although it concedes that some 2G expertise is essential. "Getting dual mode technology right is not that easy, and that is one reason why we have a partnership with Siemens, which understands how European second generation networks work." Nokia, the world's largest manufacturer, insists that delivering dual-mode handsets in time for launch in the second half of 2002 will still be possible. But not all its customers are so sure, even of a limited supply in 2002. Orange, the largest UK operator, is not planning a 3G launch until 2003, and doesn't expect the majority of its new phones to have 3G capability until 2005. Supporters of the industry are putting a brave face on these delays by pointing to higher-than-expected revenues from existing services like text messaging, which means there is less urgency to launch new services. Others believe that the heavy debts of many operators have encouraged the industry to delay investment in 3G until its finances have recovered. If this is the case, then blaming late delivery by the manufacturers is a convenient excuse. Not surprisingly, few are prepared to admit to this practice. "We are not just using the manufacturers as an excuse," said MM0. "It's not about being first with the technology, it's about being first with a service that people will want to pay for." << - Eric -