Not one operator around the world has rolled out third-generation services yet, but discussion of fourth-generation technology is already under way. An industry that began offering a basic communications tool is evolving into something much flashier, much more futuristic and certainly more exciting.
Japan, the country that will be the first to have 3G services, has begun a standardization process for 4G technology, which could offer data speeds of up to 30 Megabits per second or even higher. That compares to the paltry 2 Mbps of 3G services.
Japanese officials predict 4G service launches in 2007. Ericsson, the world’s largest wireless infrastructure provider, also has 4G plans, with expectations for operational 4G networks around 2010 or 2011.
So is 4G discussion good news for 3G operators? The 3G companies, which have just paid significant amounts of cash, are planning to spend even more on infrastructure, are raising their debt ratios to uncomfortable levels among the financial community and are anxiously awaiting handsets for these services, would most likely prefer the focus to remain on the here and now.
That is because knowing 4G is just around the corner makes a mobile carrier’s long-term business plan even more critical. Better not take too long to turn a profit, with new and improved technology possibly less than 10 years away.
So how will 3G and 4G operators make money? From high-speed mobile data connections, of course. A report from J.P. Morgan Securities and Arthur Andersen predicts the wireless data market will be worth more than US$82 billion in Europe alone by 2010.
There is no doubt the potential for data services via mobile phones is huge. But in addition to all the Internet applications, people will still use a mobile phone just to speak to someone else. The same survey estimates the wireless voice market in Europe in 2010 will be US$73.6 billion.
So even by 2010, when wireless data will be in full swing and 4G services could be available, voice will still account for nearly half the revenue from mobile services in Europe. How many operators can afford to ignore the voice application?
Some users in 2010 might want just a voice plan. Maybe they do not travel, so there is no need to check e-mail away from their offices. And if they rarely travel, they probably know their city or neighborhood so well they do not need location information or concierge services. Perhaps they simply like to talk. Talking is a very basic and effective form of communications.
In fact, some wireless technology users in 2010 will still not have their own landline phones, let alone 3G handsets. Maybe they will just want one mobile phone to share with others in their village, as discussed in the rural markets focus in this issue (see page 14). These users most likely will not need e-commerce applications, just a strong RF signal.
So although data opportunities are enormous, exciting and potentially lucrative, sometimes it pays to remember the basics. The wireless technology cycle could go full circle.
