GENEVA—Europe’s mobile users will likely wait much longer than expected for next-generation cellular, as the daunting implications of full-scale third-generation (3G) deployment are finally brought home to the region’s 60-plus operators.
With many players already having committed hundreds of millions of euros to securing national or even pan-European Universal Mobile Telecommunications System (UMTS) footprints, the prospect of a comparable bill for infrastructure buildout combined with spiraling content development costs, unresolved technical glitches and worrying question marks over handset availability seem to have unleashed a virtual epidemic of 3G cold feet.
Not so long ago, before an industry-wide reality check wiped millions off the market value of many of Europe’s big players, launch of commercial UMTS services was confidently forecast for early 2002. That schedule’s now looking highly unlikely, although most operators are doing their utmost to fudge launch dates for fear of precipitating another stock price freefall.
Germany’s Mobilcom, Swiss incumbent Swisscom, Finland’s Sonera and the three Belgian operators—Mobistar, KPN Orange and Proximus—have been among the first to publicly announce delays, with services now not expected until at least the middle of next year. Others, like industry heavyweights Telecom Italia Mobile (TIM), BT Cellnet and Deutsche Telekom’s T-Mobile, are resolutely refusing to be drawn on a firm date, stating only that services will be available when the technology—and the market—is ready. Privately, however, most admit that widespread take-up of 3G technology is highly unlikely before 2004 or even 2005.
“The timescale is undoubtedly being pushed back,” says Philip Taylor, senior analyst with The Yankee Group Europe in London. “For many, there’s a legal obligation to have some 3G infrastructure in place, but most will do the absolute minimum required by the regulator.”
Instead, operators are suddenly working hard to talk up GPRS, once dismissed as a poor cousin to “real” mobile data services and launched without much fanfare by most players during the course of the past year. To date, take-up has been painfully slow, with U.K. consultant Analysys putting total users for the whole of Western Europe at a mere 1 million at end-2001. While operators point the finger at handset shortages, analysts are more inclined to lay the blame on a desultory approach that has seen many providers favor pared-down services with lower-than-optimum data rates, while at the same time conspicuously failing to come to grips with key issues like international roaming, data-oriented billing and the development of compelling content to drive customers onto the networks.
That scenario looks set to change dramatically this year, with GPRS poised to enjoy a new lease on life not merely as a 3G precursor, but as operators’ principal revenue-generating mobile data platforms, at least in the short- to medium-term. “GPRS has a long future in front of it,” confirmed Jake Saunders, director of The Strategis Group in London, “because it’s here and because it works. For all the hype, 3G remains just a promise.”
While early GPRS offerings have focused tightly on the business market, where the killer app was reckoned to be behind-the-firewall access to corporate data and e-mail, 2002 should see a concerted effort to roll out consumer-oriented content in the form of pay-per-view video and audio clips, multimedia messaging, and interactive online gaming.
One operator gearing up for an intense consumer marketing effort this year is Deutsche Telekom, which showcased an impressive range of consumer content services at its annual press jamboree in Berlin the first week of February. Speaking at the event, T-Mobile Chief Executive Officer (CEO) Kai-Uwe Ricke proclaimed 2002 “the year of GPRS,” adding that 2.5-generation (2.5G) networks will carry the lion’s share of mobile data traffic for at least the next two years, while at the same time serving as a crucial “live” testbed for new applications and billing models.
Elsewhere in Europe, the urgent quest to win GPRS subscribers has spawned TIM Photo Album from Telecom Italia Mobile, which lets users exchange personal photos, and soon, full streaming video. BT Cellnet, which was the first operator worldwide to launch GPRS, is meanwhile counting on Research in Motion’s Blackberry mobile e-mail device to spur demand for faster bit-rate services. With around 50 corporate customers now signed up, the company is aiming for “hockey-stick” growth in coming months as roaming agreements with 100-plus operators around the world finally fall into place. A broader mix of services is also being developed to address the consumer segment, with a strong focus on messaging and entertainment, confirmed BT Cellnet spokeswoman Caroline Viska.
The new service paradigm afforded by GPRS naturally also means radical new consumer access devices, hence the rapid emergence of ultra-light, low-profile phone/personal digital assistant (PDA) hybrids featuring full-color touch-screen technology to simplify Web surfing. For handset manufacturers, most of whom are struggling in the face of near-saturated markets and shrinking per-unit margins, a shift to advanced mobile data services well ahead of 3G offerings could be a god-send. Ericsson is already optimistically predicting a GPRS-led increase in handset sales of 10 percent during 2002, while innovative Korean developer Samsung said it expects to ship around 8 million GPRS handsets between now and 2003, for a 10-percent share of the European market.
For operators, meanwhile, conjuring a success out of once-neglected 2.5G networks suddenly seems crucial. “Service providers must move ahead very fast if they’re to overcome the perceived failure of WAP (the Wireless Application Protocol) and ready the market for UMTS,” said The Yankee Group’s Taylor. “Issues like roaming and billing, left to languish unresolved in the 3G frenzy, need to be urgently addressed if 3G is to realize its potential and justify its enormous license fees.” GW
