Reasons to be cheerful of 3G - report
October 28, 2002
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The Thinking Box is a new consultancy
firm |
The Thinking Box, a London based consultancy firm, forecasted that
3G penetration would reach 50% of mobile users in Europe by 2007
which means 3G mobile phone networks in Europe are likely to prove
a better commercial prospect than many of the gloomy projections
suggest.
Rather than communicating with a brand, a service or a piece of
content, what people primarily want to do with their mobile (3G
handset included) is communicate with other people. Applications
based on self-generated content, such as photo and instant messaging,
will meet instant success.
In 2007, the consultancy warns that mobile phones will be still
mainly used for the same reasons as today (communicating with other
people). However, applications based on interaction with a third
party, provided they are intelligently selected, promoted and managed,
will be the cherry on the cake, adding a crucial extra 15% - and
more beyond 2007 to mobile operators turnover.
APPLICATIONS
3G early expansion will be driven by peer-to-peer applications.
The report identified 5 killer applications for the near future
(Video calls and MMS are included). Regarding video calls, the interviewees
were truly amazed by the possibility of video call. They couldn't
believe that this spectacular innovation would be available in the
next few months in their country. Video calls will definitively
catch people's imagination.
REVENUES
In 2007, ARPU will have increased by 50%.
- Voice will still represent the main source of revenue 62%.
- SMS will predictably disappear and will be replaced by MIM mobile
instant messages.
- Peer-to-machine revenues will only account for 22% of ARPU
TARIFFS
- SMS and voice tariffs on 3G must remain the same (as they are
today on GSM networks) if not diminished
- 15 Euros per month for 3G services (on top of current GSM bills)
is perceived as an acceptable expenditure.
HANDSETS
- The fact that 3G handsets will be chunkier than current devices
will not deter customers, on the contrary
- Innovative devices such as 'Danger' with its large screen and
removable keyboard will draw a lot of attention.
- Dual-band phones seem to be a good compromise.
WHO WILL DRIVE 3G'S EXPANSION? OPERATORS THAT DON'T HAVE A GSM
NETWORK such as HUTCHISON 3G
Because 3G is their sole source of revenue, they will be very aggressive,
especially regarding price. Like it or not, competitors will be
obliged to follow and even be forced to adjust their strategy.
3G WILL ATTRACT INDIVIDUAL USERS
Proposing high tariffs, supposedly for a rapid ROI, and targeting
business users will not benefit 3G, and the European telecom industry
at large.
SCENARIOS FOR 3G
Thinking Box identified 4 scenarios for 2003, plus 5 long-term scenarios
for 3G (2003 2007). For our most optimistic scenario, 3G penetration
reaches 75% in 2007 (of mobile users). Most pessimistic: 15%. Median
scenario: 50%.
THE BIGGEST THREAT TO 3G? 2.5G
Postponing 3G's launch will trigger a vicious circle for the mobile
industry in Europe, in that it will give breathing space for GPRS
to expand and create competition for 3G.
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3G Motorola A920
