3G woes: Should handset makers or network operators take rap

We've heard the hype about UMTS, how third-generation mobile technology will change our lives. We've also heard how 2.5G technologies can bring us many of the benefits of 3G. So what are we waiting for? Mark Graham asks who's to blame for the delays - handset manufacturers or network operators.

Why rush to watch the game on your 32-inch widescreen TV when, using your mobile handset, you can be alerted to goals - and then see them - on the bus on the way home? Okay, there are some obvious reasons, but the main one remains that this scenario isn't yet feasible. After several years of hype, users still waiting for widespread mobile data and multimedia services are justified in wanting to know who's letting them down. The blame falls squarely at the feet of the handset vendors and "always has", according to Simon Buckingham, director at Mobile Lifestreams. History has proven this, he said. For example, WAP-enabled mobiles had to be recalled in their early days. However, he acknowledges 3G is a very sophisticated technology and a number of different factors come into the equation for handset makers. Producing batteries that can provide more energy is one problem, the availability of chipsets to support high-bandwidth communications is another. He added: "The handset makers are nowhere near as quick as networks when it comes to implementing new technology." This opinion is backed up by a look at NTT DoCoMo's 3G launch in Japan at the end of May. This trailblazing roll out (BT Cellnet's on the Isle of Man isn't quite on the same level) only sees two of the original eleven handset makers who signed up as suppliers come up with the goods. Keiji Tachikawa, CEO of DoCoMo, said contracts had been signed for the launch of 16 handsets but only four will now be ready on time. NEC will provide one model and Matsushita three. Nokia and Ericsson, who have been working in conjunction with DoCoMo over the past few years, are clearly absent. However, according to Paul Brandwood, VP for wireless internet at Nortel Networks, the Japanese handset makers have had a head start because they have the core technology that will be part of these devices under one roof. "NEC makes screens, for example," he said, pointing out the company doesn't have to rely on others to provide them. Where does this leave the European handset makers? According to Hubert Patijn, the head of mobile practices at designer Citria, it isn't in their interests to push for a 3G rollout at this stage. He believes first of all they will mass release 2.5G GPRS (General Packet Radio Services) devices and gauge their performance while keeping an eye on the Japanese market before releasing their own 3G UMTS devices. But fingers have also been pointed at network operators. It is significant that Japan's DoCoMo paid significantly less for 3G licences than its European counterparts. In Europe around $100bn has been paid with Germany and the UK alone stumping up more than $50bn between them. Mike Grant, head of mobile communications at Analysys, said: "The auction was right at the peak of the stock boom. The government couldn't have chosen a better time." Citria's Patijn echoes this, saying because European operators paid so much they are now short of the funds to enable the whole 3G process. What's more, because European telcos' bank accounts are so overdrawn and the US slowdown is starting to spread globally, it is difficult for them to borrow further to build costly next-generation infrastructure. Declan Lonergan, Yankee Group Europe director of wireless/mobile, believes that because of this it makes a lot of sense for telcos to share resources. Joining forces would make network roll out cheaper and easier for operators to meet licence signing obligations. For example, in the UK 3G services must reach 80 per cent of the public by 2007. BT Cellnet, Orange and Vodafone have all stated they are considering this option. "For financial and environmental reasons it certainly makes sense," said a BT spokesman. The situation is such that the European Commission may yet get involved. The EC wants EU member governments to consider allowing operators to share networks and defer payments for 3G licences because of the high debt levels. According to press reports, both Deutsche Telekom-owned One2One and Vodafone have held secret meetings with the UK government to discuss these very concerns. So it isn't easy to point the finger only at the handset makers or operators. They are both delaying the process for a number of reasons, but the bottom line is that roll out of 2.5G and 3G networks will be gradual. Even DoCoMo, still on track to launch services in May, admits devices won't immediately exploit the speeds allowed by the advanced technology. They will be several times less than the hyped bit rates. This is all against the backdrop of a fairly saturated mobile market in many countries, and Analysys' Grant thinks this will contribute to the slow roll out. With this in mind, he said it is simply a matter of operators slowing introducing new technology and services when they and handset makers are ready to roll together. A combination of hype, cost and a looming recession is affecting both handset makers and network operators when it comes to 3G. That's small consolation to many end users. Looks like rushing home for the game is still the best option. Mark Graham