Mobile firms urge caution on 3G

Wooing customers to next-generation mobiles will be a challenge, but there is no need for pessimism, say industry experts

The mobile industry has moved swiftly to rebut a report that said third-generation mobile operators may struggle to offer the right kind of services to tempt customers to upgrade to 3G.

Tuesday's Financial Times published details of new research into 3G services, which has found that close to half of all current mobile phone users have no interest in mobile data applications.

The research, conducted by mobile consultancy group Detica, also warned that there is no single "killer 3G application" that will entice large numbers of people to embrace 3G. Instead, the study claims, operators will need to create a range of different offerings if they are to successfully target different types of consumers.

Detica believes that UK mobile phone users fall into three categories. Early adopters, who will rush to 3G because it is a new technology, make up 12 percent of current mobile users. A majority of around 46 percent of current mobile users would consider 3G, but would need to be convinced of its value to them.

The remaining 42 percent, Detica feels, will only user mobile technology for voice calls and have little interest in mobile banking or video services.

Given the vast sums of money spent on 3G to date, Detica's findings make gloomy reading. Some in the mobile industry, though, believe that 3G will have a bright future.

Jeffrey Torrance, business manager with Ubinetics, a company that makes platforms for testing 3Gnetworks and devices, told ZDNet UK that it wasn't sensible to expect users to be enthusiastic about 3G before the technology is up and running.

"If you go back to when GSM was rolled out, the question was why upgrade to a digital network when you have a perfectly adequate analogue network? You have to create the applications first and then get people interested," said Torrance.

Another mobile firm, Cerebrus Solutions, agrees that it is wrong to be concerned about 3G applications at this stage.

"It would be absurd say that users don't want 3G before the applications are even available. People need to be able to use applications as part of their everyday lives before anyone can pass judgement on 3G," said Vernon de Silva, vice-president of Cerebrus Solutions.

Hutchison 3G, the new entrant to the UK's mobile market, is expected to launch its 3G services before the end of the year. Vodafone, O2, T-Mobile and Orange are expected to follow suit in 2003 and 2004.

According to iTouch, which develops wireless applications, mobile operators must learn from the success of i-mode in Japan -- which means concentrating on making sure 3G networks function properly, that it's easy for services to be billed, and that customers are offered decent 3G handsets.

"The market has taken off in Japan where the handsets are compelling, the network technology works and the mobile operator passes a large proportion of the billable revenue to the content and service provider," said Avi Azulai, managing director of iTouch.

"I agree completely with the report's findings that state that content must be compelling and that the range of services must have a local influence or offering," Azulai added.

In general, the mobile industry does not have a great track record of delivering compelling applications, or of accurately predicting what users will want. WAP, which was meant to be an important step towards bringing the Internet to mobile phones, flopped badly despite being pushed hard by many operators.

The success of text messaging, meanwhile, which has generated significant revenues for operators, was largely unexpected.

The survey was published as mmO2, which runs Europe's first 3G network on the Isle of Man, announced its 3G pricing scheme. The pricing is expected to anticipate what mmO2 will charge through its O2 subsidiaries for 3G in countries like Ireland, the UK, the Netherlands and Germany.

O2's 3G Business package provides 100MB for £80 a month, charging 50 pence for each extra megabyte on top of that. Four hundred emails, 100 emails with attachments, 500 Internet pages, and 10 video clips would amount to about 113MB and cost about £86, O2 said.

The 3G Consumer package costs £25 a month for a fixed download of 20MB and £1 for each extra megabyte. One hundred emails, 10 emails with attachments, 4MB of game-playing data use, 200 Web pages, four downloaded music tracks and three video clips would use about 39MB and cost £44.


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