3G Rollout Status in Norway - report
February 16, 2003
On behalf of Swedish Post and Telecom Agency (PTS), Northstream
has performed an anlysis of the 3G rollout situation.
The report provides a descriptive and analytical overview of the
status of 3G rollout in the European Union and Norway. It focuses
on potential modifications of licence distribution and conditions
and the changing market outlook for 3G services in Europe.
The European Commission and national regulators share powers of
regulation over the mobile telecommunications sector in Europe.
While many regulators have made no alterations, at national regulator
level licence conditions that have been altered/clarified include
timing of service launch, timing of coverage milestones, network
sharing, extension of the licence period and revision of payments
for fees associated with the licence. These indicate there is some
limited flexibility to the industry, and a slight change of regulatory
focus from market liberalisation to 3G market facilitation.
Regarding availability of equipment, potential showstoppers from
a network functionality perspective include:
- Plain software stability of some of the nodes required for offering
reasonable service functionality.
- Interoperability between terminals and infrastructure.
- Interoperability between network nodes in case of multiple vendors.
- Handover and cell reselection between 2G and 3G.
Availability of handsets is strongly linked to interoperability
testing of handsets on networks. Access to handsets is not straightforward
for operators, and possibly less so for those in less influential
markets. Operators are more likely to cite handset delays than network
delays, in order to maintain their relationship with their equipment
vendor. However, actual reasons for delay rest on a balance between
handset availability and network functionality.
In Europe the number of operators has generally increased in comparison
to the 2G market situation, but not to the extent that was anticipated
at the time of 3G licensing. There is a Europe-wide trend for fewer
3G operators than originally anticipated. Operator announcements
show that 3G is delayed across Europe; operators expect initial
launches in mid-2003. Some operators indicate ‘soft launches’, i.e.
non-mass market launches, without major revenues at that stage.
Multi-national operator groups tend to co-ordinate delays.
Regarding operators’ financial situation - with reduced credit
ratings, and lower than anticipated profits, operators find that
the 3G commitments they’ve previously committed to will require
greater external financing, at a higher cost. This impacts their
capacity to rollout networks.
In the current European market the variety of services is lower
than expected, with service development increasingly dependent on
operators. This is reflected in changed industry expectations -
revenue forecasts made in 2002 are approximately 25% lower than
those made in 2001. Industry forecasts from 2001 to 2002 show a
slower 2G /3G conversion pace than originally anticipated. Market
take up is heavily dependent on handset and service availability.
Incumbent operators are likely to be 3G rollout status less impacted
by the delay than new entrants, as new entrants still have to secure
a customer base.
In both Europe and Asia, there is little evidence of 3G-specific
services. However in Korea, there are limited grounds for optimism.
While there is little difference in the successful data services
on 2.5G and 3G in these markets, there is an indication that more
sophisticated handset features stimulate greater usage of these
features, and greater revenues. In addition, these operators are
growing the non-traffic based proportion of their data revenues.
However, it is likely this is due to the large content communities
that are in place, which European operators have not successfully
stimulated.
Finally, Northstream concludes that evidence confirms that the
European 3G market is delayed, with many players waiting to roll-out
‘soft-launches’ in mid 2003. In addition that market has qualitatively
changed. There are differences from original expectations in terms
of competitors, services and revenues, which show that operators
are operating in an unanticipated market environment.
The findings can be found in a report that can be downloaded from
here (526KB).
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