Qualcomm and Teleepoch
Enter Into a 3G CDMA Subscriber Unit License Agreement, October
6, 2007
MTN chooses Cambridge Broadband
Networks for multi-service wireless network in Rwanda, October 6,
2007
Brazilian government to
publish 3G bidding rules soon, October 6, 2007
KTF 3G service suffers
from technical problems, October 6, 2007
Argentina’s Personal
lunches 3G service in Rosario, October 6, 2007
Russia has it's first 3G
network, October 6, 2007
AT&T could drop Alcatel-Lucent
as 3G mobile network supplier, October 6, 2007
Enea Extends License Agreement
with ZTE for 3G Handsets, October 2, 2007
LG to unveil premium handsets
in Brazil, October 2, 2007
KTF 3G subscribers doubled
in less than 3 months, October 2, 2007
3G policy in India will
be non-uniform, October 2, 2007
- previous news
|
|
Why and When UMTS Will Be Adopted - report
September 4, 2003
The question isn't whether UMTS will be deployed but rather how quickly.
This question is answered in the newest Shosteck Group white paper, entitled,
UMTS - WHY AND WHEN IT WILL HAPPEN: TIMETABLES AND FORECASTS.
The paper compiles, expands and updates the views that the firm has presented
in its strategic seminars and studies since 1999.
"Four factors are driving UMTS adoption," stated Dr. Herschel Shosteck,
President and Chairman of The Shosteck Group. "These are: (1) regulatory
mandates, (2) greater network capacity, (3) reduced capital and operating
costs, and, for end-users, (4) the availability of well-functioning, numerous,
and low-priced handset models."
"Most important, and least recognized, is providing low-cost voice capacity,"
Dr. Shosteck continued.
The study points out that the UMTS air-interface is more efficient than
are the GSM-GPRS and EDGE interfaces, in particular for mixed voice and
data. This translates into greater traffic capacity per MHz of spectrum
and, correspondingly, lower operating costs. These lower costs become
more pronounced as traffic increases.
"Yet, the industry has seemingly ignored the capacity gains and cost
savings that UMTS allows and, instead, focused on the data services that
it enables," stated Jane Zweig, CEO of The Shosteck Group. "Abstractly,
the industry recognizes the capacity and cost advantages for voice that
UMTS provides. Yet few are talking of those advantages - and, by inference,
paying full attention to them. When placed in the perspective of industry
revenues, this lack of attention is remarkable. Voice generates most revenue,"
she continued.
The study observes that because UMTS increases capacity, it will become
increasingly important, indeed essential, for facilitating expanded data
services. However, into the near- to mid-terms, if not beyond, voice will
continue to produce most revenues.
"On this account, the strategic advantage of UMTS may lie as much in
the low-cost voice capacity that it provides as in the high-speed data
services that it enables. Network costs are high during the early years
of UMTS, thus explaining the reluctance of many operators to invest in
it," stated Dr. Shosteck.
"Beyond 2006-2008, the situation reverses. Both increasing traffic and
a greater proportion of data will inexorably raise the per-minute costs
of EDGE and, especially, those of GSM-GPRS. At the same time, the costs
of UMTS will continue to decline. Once the cost curves cross, the operators
that have deployed UMTS will enjoy an increasing cost advantage over those
who have not," he continued.
The crossing of the cost curves would explain Hutchison's market entry
as a "pure" UMTS operator and its seemingly untenable tariff reductions
in the U.K.
In March 2003, Hutchison launched Europe's first commercial UMTS networks
in the U.K. and Italy. On June 5, Hutchison-U.K. slashed voice tariffs
to 5p per minute or less. This represented as much as a 50 to 70 percent
discount on the average price for mobile calls.
"It appears that Hutchison has reached similar conclusions to ours -
that UMTS will prove profitable based on its lower costs for voice alone.
From this perspective, Hutchison's pricing makes competitive sense - assuming
its continuing commitment to UMTS - and it could build a meaningful subscriber
base before its competitors respond," stated Ms. Zweig.
In the white paper, the firm looks more deeply into the recurrent drama
which EDGE has provided for Western European operators. Since late 2002-early
2003, trade press reports reflect a reviving European interest, if not
commitment.
"What may be a rekindled European interest in EDGE raises two questions.
First, to what extent, if at all, might deployment of EDGE delay the launch
of UMTS? Second, to what extent, if at all, will investment in EDGE reduce
investment in UMTS?" commented Dr. Shosteck.
To delve beyond the press reports, the firm surveyed the seven major
European and North American vendors of wireless infrastructure as well
as several major European operators.
Whatever impact EDGE may have, no vendor sees it as delaying the launch
of UMTS. In general, respondents view EDGE as a supplement to UMTS, enabling
operators to provide data services in lower traffic areas at less cost
than would be possible with UMTS.
"In addition, respondents saw virtually no effect from EDGE on UMTS investment,"
pointed out Ms. Zweig. "They view the technologies as providing different
functionality under different circumstances, UMTS for high-traffic areas
and EDGE for lower-traffic areas."
Handsets acceptable to end-users are essential for the adoption of UMTS.
Acceptability encompasses: (1) good performance, (2) a large number and
variety of models, and (3) low prices. Shortcomings with any of these
will inhibit adoption.
"On the one hand, UMTS handsets will soon work reasonably well and numerous
models will quickly become available. These will encourage UMTS adoption,"
stated Dr. Shosteck. "On the other hand, wholesale prices may decline
at a relatively slow rate. If reflected at the retail level, it would
inhibit adoption. However, high wholesale prices will be mitigated by
operator subsidies," he continued.
Network operators will subsidize UMTS handsets to $100 or less. This
is being driven by Hutchison-U.K., which is already selling handsets for
as little £49 ($80).
"Some will argue that such subsidies will lead Hutchison to bankruptcy.
However, over the mid- to long-terms, UMTS will enable it to provide lower-cost
voice service. As such, Hutchison believes that it can offer voice to
heavy users at as much as 50 to 70 percent below current rates and still
prosper. If it attracts enough such users from other operators, the handset
subsidies - in the abstract - make sense," stated Ms. Zweig.
"Whether or not Hutchison has the financing to reach breakeven is another
matter. Nonetheless, with subsidizing to less than $100, the price of
handsets as a barrier to adoption of UMTS, at least for heavy users, will
no longer be an issue," she continued.
The paper also points out that established operators may find that subsidizing
UMTS handsets for their heaviest users will be a less expensive way to
relieve capacity on their GSM-GPRS networks than by adding GSM-GPRS infrastructure.
The concluding chapter forecasts UMTS subscribers and handset sales by
year. In 2007, the firm estimates 125-150 million UMTS subscribers and
70-85 million UMTS handset sales.
|
3G Motorola A920
