3G not top of agenda at 3GSM show
Operators look for early data revenues from GPRS By Chris Nuttall, FT Investor 16:38 GMT Feb 18, 2002
LONDON (FT Investor) - Curiously, 3G - the next generation of mobile communications - may not receive that much attention at the 3GSM World Congress that takes its acronym in Cannes this week.
The year's major trade show and meeting of mobile minds has been guilty in the past of over-hyping the promise of third-generation phones capable of high data rates and downloads of rich revenue-inducing content.
The networks, handsets and applications have still to arrive and 3GSM is expected to concentrate instead on how the current 2.5G GPRS (General Packet Radio Service) technology can increase average revenues per user (arpu) as subscriber growth slows in the mature Western European market.
Lesson learnt
"I think the industry has learnt its lesson," says Neale Anderson, a wireless analyst at the Ovum research and consultancy firm.
"They are not even marketing their GPRS services under its name, they are pushing the services rather than the technology now and much of what they want to offer with 3G they can do now with GPRS."
Among the handset makers, Motorola [MOT, News, Chart, Research] played down 3G when it chose to announce its new models ahead of the show, in Milan last week.
It made them sound more like fashion accessories, emphasising their "design, style, elegance", with only one of the eight handsets being a 3G phone. See Motorola announcement
Sony Ericsson [ERICY, News, Chart, Research] [000010865, News, Chart, Research] does not plan any announcements and does not even have its own stand at 3GSM.
In a research note on Monday, Credit Suisse First Boston said the opening two days of technical discussions should focus on the issues that need to be resolved to get commercial 3G networks operational.
"The two areas of focus are likely to be the interoperability between equipment from different vendors and the standardisation process for the next evolution of the 3G standard," it said.
First 100 days
Neale Anderson of Ovum has just written a report on the first 100 days of Foma, the organisation set up in Japan by NTT DoCoMo [NTDMY, News, Chart, Research] for the launch of the world's first commercial 3G service last October.
Foma was launched five months behind schedule, it lacked content and dual mode handsets, and coverage has been restricted to a 20-mile radius of Tokyo. But Mr Anderson still considers it a considerable technical achievement:
"I don't believe they have shot themselves in the foot, it was a tremendous feat to get it up and running, probably a good two years before its rivals in Europe, and they are setting standards and showcasing their leadership," he says.
Video conferencing and the capacity for high-speed data downloads have been the main attractions so far, but only 53,000 subscribers had been signed up in the first four months and the target of 150,000 by the end of March seems certain to be missed.
This is in sharp contrast to the success of DoCoMo's content-rich i-mode phone service, which has been signing up customers at the rate of 50,000 a day. It had reached its first million six months after launch and hit 2m three months later.
"I think it's never going to fly like i-mode did, but I'm convinced it's going to be a long-term success. With subsidising, one 3G model is selling for less than top of the range i-mode phones and, with coverage expanding, i-mode users should migrate rapidly," says Mr Anderson.
MMS delay?
"i-mode did so well with its content services, but DoCoMo is trying to do the opposite this time in talking about the technology. It's everything we have been advising the European operators not to do!" See I-Mode partners with E-plus story
Credit Suisse First Boston expects the main 3GSM conference to deal with the stepping stones to 3G services, including multimedia messaging (MMS), unified messaging, location-based services and Java applications.
ABN Amro noted on Monday that telecoms systems provider Logica [LOG, News, Chart, Research] had warned it did not expect MMS to take off until late 2003, with operators taking a very cautious approach on the capital expenditure needed to provide a service that will allow video, audio and picture mail.
Overall, CSFB is sceptical that data revenues will come to the rescue of operators in 2002. But it holds out more hope for the hardware suppliers with handset sales meeting forecasts.
"We see the launch of new services and features (e.g. colour screens) as stimulating replacement demand," it says.
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