3G Is Expensive but Essential, According to New Yankee Group Study

date: July 23, 2001 - source: The Yankee Group

Despite huge costs, anticipated delays, and unfavorable market conditions, the Yankee Group believes that 3G is the only way forward for European mobile operators. Capacity and efficiency gains realized with 3G spectrum are essential to support the enormous volume of data traffic mobile users will generate over the coming years.

In a new Report entitled, "3G in Europe: Expensive but Essential," the Yankee Group analyzes the true cost of launching 3G services, assesses the extent to which 3G will alter the European carrier landscape and presents our five-year 2.5G and 3G market forecast.

Simone Roberts, senior analyst and author of the Report comments, "Recent opinions on 3G have almost exclusively focused on the short term and consequently have been rather pessimistic. We take the approach that 3G is a long-term strategy and must be viewed as such. The vast majority of 3G operators will survive the next two to three years and will go on to achieve an acceptable return on investments." She goes on to say, "As far as we are concerned the 3G business case is just as solid as it was twelve to eighteen months ago—it's about capacity, capacity, capacity!"

- The total investment in 3G in Europe will be approximately $274 billion over the next five years;
- During 2001 next-generation mobile networks will attract few users but takeup from 2002 will be rapid with GPRS achieving widespread adoption by the end of 2002 and W-CDMA in common use by the end of 2004;
- New-entrant 3G operators face a far tougher challenge than incumbent 2G players by having higher start-up costs and limited market penetration opportunities; and
- Though 3G networks will not be launched until 2002, next-generation services will be launched this year on GPRS. Now is the time for all operators to position themselves in the market, define their service offering, and try to secure high-value customers who will remain with them as they launch their 3G networks.

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This book discusses 3G services from the view of what is needed for the service to provide value to the user, what is the value proposition for the user, how will money be made out of delivering the service, and discussions on how revenue sharing propositions might work to benefit content providers and network operators. 3G operators should take note of this highly recommended book.

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