Dark clouds over 3G in Europe - report

date: November 14, 2001

CIT's latest title '3G in Europe: Future Markets (Preparing for Launch)' says Europe's 3G concessions are estimated to have cost licensees in the region of GBP100 billion. Add to this the mammoth cost of rolling out new generation network infrastructure and the not insignificant outlay involved in the testing of networks and the total start-up figure may jump to GBP300 billion. The sheer size of this figure has ensured that operators - and in particular their shareholders - are anxious to launch services as soon as possible so that they can begin the herculean task of recouping costs. Yet signs are that there are teething problems with the technology, forcing operators to delay service launch.

Two of the world's biggest mobile operators - NTT DoCoMo and Vodafone - have experienced difficulties with 3G technology. The former reported 'software glitches' during recent trials while the latter angrily denied rumours that its new network would only be capable of 84kbps, making it too slow to deliver multimedia applications. Whatever the eventual speeds achieved, convincing current users to move en masse to 3G is going to be hard enough, without negative reports casting doubts on whether so-called 'killer applications' will become reality.

After such huge outlays operators are keen to start recouping their start up costs. Revenue will depend on how quickly 2G/2.5G users migrate to 3G networks and on the kinds of applications offered by the new technology. If 3G operators launch before promised services are available, they will face an uphill task in convincing customers to upgrade. Just look how long it has taken for WAP and GPRS services to get a footing. Persuading customers there are enough benefits in 3G to invest in a new handset will be the most difficult challenge yet faced by the mobile companies.

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