Vendor warning could herald 3G

date: 26th February 2001, source by: Total Telecom

Prompt rollout of 3G networks in Europe is looking increasingly unlikely after French vendor Alcatel warned it had set back its projections for commercial deployment by a year. And CDMA specialist Qualcomm has predicted W-CDMA will not be deployed on a large scale until 2004-2005.

Daniel Preiskel, partner and head of the telecoms group at Steptoe, Johnson & Rakisons Solicitors, believes that 2002 is no longer a realistic launch date for 3G in the U.K., saying he would not be surprised if it slipped to 2004.

News of a delay in the availability of W-CDMA will be "a blow" to already beleaguered mobile operators, he added.

At the 3GSM Congress in Cannes last week, Alcatel said its third-generation handsets will probably not hit the market until early 2004 and UMTS terminals will not take over from existing phones until 2007 (the company previously predicted 2005). The vendor blamed the delays on the time and investment needed to develop the technology.

Qualcomm CEO Irwin Jacobs told the Financial Times that W-CDMA services were not likely to be commercially viable until late 2004 or early 2005. Operator rollout plans usually predict full commercial deployment in 2002. However, Qualcomm's own cdma2000 standard competes with W-CDMA.

But handset manufacturers Motorola and Nokia do not share the gloom. A spokesman for the U.S. vendor said W-CDMA infrastructure would be shipped to Telsim and Telefonica this year. The timescale for mass deployment is a matter for the operators, he said, but "we will be ready whenever - the contracts are fairly specific about that." The company's full-blown third-generation cdma2000 (known as dv) will see mass deployment in the U.S. and probably Japan in the first quarter of 2003, he added.

A spokesman for Finnish vendor Nokia said the company has noted Alcatel's announcement but "irrelevant of what Alcatel has said, Nokia is not intending to make any adjustments." In the past, the company has predicted volume deliveries of W-CDMA in the second half of 2001 and large commercial networks in 2002. Handsets are expected to be ready on the same timescale.

Preiskel attributes Alcatel's more cautious predictions to the general market downturn sparked off by inflated 3G license fees. The backlash in sentiment has impacted across the board, forcing vendors to cut back on their investment in 3G infrastructure and handsets.

Mobile operators may be spending too much time on financing, rather than developing and selling GPRS and 3G services, with the GPRS delay not boding well for 3G. "I have a certain sympathy with companies such as BT that were told they had to have a 3G license at all costs," Preiskel said. Now the company's value is suffering because it is perceived to have paid too much.

Preiskel added that he would like to see some of the vast sums earned in the auctions somehow ploughed back into the industry. "I would like something to be done on a pan-European basis - the industry needs it," he said, adding that the EU would be a suitable agent, though practical action is difficult to recommend.

The German regulator, in an effort to placate its out-of-pocket license holders, has initiated talks with the six companies to pool the cost of network build-out, the press reported Friday. Preiskel said this is "an encouraging, albeit small step in the right direction," and hopes others will swiftly follow suit.

top