NEW DELHI, India-Though a late starter, the Asia-Pacific region may steal a march over Europe in rolling out third-generation (3G) networks.
On May 30, NTT DoCoMo became the first operator in the world to offer 3G services on a trial basis. In addition to this, Australia, New Zealand, Singapore and Korea have already issued 3G licenses. Thailand has issued one license to a new state-run entrant, while Hong Kong and Taiwan may do so later this year.
Market research firm Gartner said 3G adoption in Asia Pacific will be aided by relatively inexpensive 3G licenses. The recently concluded licensing in Singapore is a case in point, where winners walked away with 3G licenses by simply paying S$100 million (US$55.1 million) each. In Australia, the total cost of 3G licenses was just 8 percent more than the A$1.08 billion (US$940 million) reserve price. In fact, Gartner’s research reveals that 3G license costs in Asia Pacific are about 10 times less expensive than in Europe.
“Declining ARPUs (average revenue per user), increasing competition and deregulation have resulted in drastic tariff cuts, eating into operators’ profitability. So they are looking for alternative revenue streams, in addition to traditional voice services. 3G is well placed to drive future revenue streams. The i-mode success shows profits can be made from wireless Internet, provided consumer behavior, usage patterns and cultural aspects are well understood,” commented Evelyn Goh, Singapore-based analyst with Gartner.
While countries with high cellular penetration rates, such as Japan, South Korea and Singapore, are likely to be pioneers or early adopters, other countries like Thailand, the Philippines, Malaysia and China will most likely constitute the second wave as demand for second-generation (2G) services in these countries is yet to be fully met.
In fact, the outcome of 2.5-generation (2.5G) deployment is very critical. “If 2.5G is poorly received by consumers, operators will find it increasingly difficult to justify a business case for 3G. Negative consumer perception of WAP (the Wireless Application Protocol) could also easily spill over to subsequent generations of cellular technology,” said Goh.
Singapore, Hong Kong and South Korea plan to launch commercial services early in 2002. Malaysia will decide by end-2001 which companies will be allowed to operate 3G networks. Taiwan has plans for an auction in October, while Hong Kong is still debating its timing. In the Philippines, leading operator Globe Telecom recently signed a contract valued at US$310 million with Nokia to expand its GSM network “to be 3G ready.”
The Thai state operator ACT Mobile said its 1900 MHz service will be ready in the third quarter of 2001, and 3G services will be introduced in 2002. In India, the regulator is preparing a paper on timing, number of operators, methodology for spectrum allocation and priorities for 3G spectrum.
Experts also have a word of caution. “Unlike DoCoMo in Japan, cellular operators elsewhere have yet to discover compelling wireless Internet applications to attract consumers in droves. Lack of handsets could also delay the emergence of 3G in the region,” predicted Goh.
