Speaker says service providers paid market price for 3G

date: 21st February 2001, source by: eetimes.com

The chairman of the UMTS Forum, an industry group promoting a European 3G mobile communications standard, has rejected suggestions that mobile communications operators have overpaid for licenses for next-generation 3G services and will have trouble recouping the billions of dollars they've committed to pay for them.

"These operators aren't stupid — they paid what they considered the market price and are confident they will get a good return on their investments," said Bernd Eylert at the GSM World Congress conference and exhibition here.

After mobile phone service operators collectively pledged about $70 billion for 3G operating licenses in United Kingdom and German license auctions last year, sentiment on 3G services has cooled, forcing the postponement of a license sale in France due to a lack of participants.

"The problems they [mobile phone service operators] are facing with stock market valuations are temporary," Eylert said. "In the long term, UMTS and third-generation will prove to be a boon, but it will take time. GSM was not an instant success, and it too had its teething problems.

"In fact, I would find it very surprising if everything ran smoothly with the early deployment of UMTS," he said.

Eylert said he disagreed with the way some countries, notably the United Kingdom and Germany, used auctions to award 3G licenses.

"We feared this approach could jeopardize UMTS and its roll-out. But, on reflection, you have to accept operators paid what they considered the going rate — even if some privately may say that was too much. But competition will drive these services quickly. Over the long term, they will not lose out."

Eylert said the UMTS Forum has looked at the kinds of applications that will drive the next-generation technology and had concluded that high-speed mobile Internet access and multimedia messaging services, developed from today's short-message-service facility within GSM, would play a key role in driving the network roll-out.

"Over 60 percent of revenues from the UMTS networks will be derived from data communications in the long term," he said.

Eylert stressed a novel approach to content aggregation and delivery would be needed to drive the uptake of UMTS services.

"Third-generation will be about much more than just mobile Internet," he said. "We will see new entities such as content providers, ISPs and virtual mobile network operators emerge as the main sources of delivery to end users."

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