Handsets key to Sunday's 3G launch

October 21, 2004

Sunday Communications believes broad supply of new handsets will be the key to the success of its 3G mobile service launch in Hong Kong early next year.

Managing Director Bruce Hicks told Dow Jones Newswires that he expects around a dozen 3G handset models to be introduced from now until the middle of next year.

He said handsets are "very much a factor" at the launch and wants to have a "good selection of handsets available".

Globally, operators with commercial 3G services have offered only a few handsets at the launch. 3HK, the only 3G service provider in Hong Kong, delayed its launched to January of this year when its handset delivery was delayed. The operator now offers less than 10 models of 3G handsets.

SmarTone Telecommunications' 3G launch later this year and Sunday's launch next year is expected to fuel demand for data services.

Hicks believe demand for multimedia experiences is increasing but it is still "a bit too early" to enter the market and offer 3G services now. He said that could change in another three or four months, when there are more handsets available and when people are more comfortable using multimedia services.

Analysts said a majority of customers use their mobile phones for voice and not data applications. Since 3G handsets are more bulky than traditional handsets, handset appearance is an important factor in driving demand. Consumers using their mobile phones mainly for talking are unlikely get a 3G handset.

SmarTone and Sunday's introduction of 3G services will likely see their profits drop next year because of increased 3G spending on the network and attractive offers for customers. Analysts believe operators will use a combination of heavy tariff discounts and subsidised handsets to attract customers.

Consumers would gain as there would be more choices and better prices as operators jostle against each other with competitive packages.

In the end the quality of the 3G networks and handsets could prove crucial. So far, technical glitches in networks and handsets have hindered customers' experience of the new service such as drop call problems.

But the low cost and wide availability of broadband services in Hong Kong is a major deterrent for consumers considering using 3G, which charges a premium for access to data content.

CSL, the fourth 3G license holder, does not have an timeframe for the introduction of 3G services but will launch when the market is ready.