Pricing and services critical to 3G success in US

May 9, 2005

The take off of 3G technology across the US is being prevented by the lack of country-wide access to 3G networks, but once this is resolved, affordable pricing and attractive end-user services and applications will be key to mainstream acceptance, according to UbiNetics, a producer in WCDMA and HSDPA terminal and test and measurement technology.

3G is the latest standard in high-speed wireless technology, offering increased data transmission speeds of up to 384 kbps. For example, using 2.5G, a three-minute song takes between six and nine minutes to download. Using 3G, it can download in 11 to 90 seconds. Popular 3G services in Europe and Asia include games, video messaging, live sports broadcasts and location-based services. Key factors UbiNetics believes will act as catalysts for 3G in the US include:

1. Carriers need to provide nationwide access to 3G networks. Currently 3G technology is only available in a small number of US cities, limiting the geographical penetration of the technology

2. Carriers need to have sufficient spectrum availability to prevent 3G from only being available in small markets. The electromagnetic spectrum that must be shared by government, commercial and private-sector interests is finite. At the current time, US carriers do not have anywhere near the spectrum they need to operate WCDMA effectively.

3. Pricing needs to be set where consumers don't feel as though they are being overcharged for new services and phones. The current £1/MB cost in the UK is much too high and US costs need to be 20% of this for mass adoption.

4. All manufacturers must be able to produce handsets for US carriers that function with 3G technology. Handset manufacturers need to produce versions of their phones that support WCDMA operation in the PCS (1900 MHz) band. Consumers need to have plenty of choice when deciding to purchase a 3G phone.

5. Carriers need to offer 3G services that appeal to consumers. By providing popular services, such as games, live television and high-speed Internet access, users will be more willing to purchase 3G technology.

"Carriers in the US need to focus on promoting the new applications that 3G will be able to provide, such as faster, higher video quality and quicker downloads," said Björn Krylander, CEO of UbiNetics. "Right now the emphasis is too focused on where and when these services will be provided, rather than on how consumers can embrace the data services that 3G provides. Consumers will be willing to pay for extra services, once they are marketed appropriately and priced affordably."

According to a Strategis Group study, the US is only expected to have 2.8 million 3G subscribers by 2006. The same report forecasts that China will have 26.3 million users, the UK will have 7.9 million and France will have 6.6 million 3G subscribers by that time.