SingTel: 3G started with a bad name

SINGAPORE--The mobile industry had placed big bets on 3G services despite not knowing enough about what the technology would entail in the future, admits SingTel chief.

Lee Hsien Yang, group CEO of Singapore-based regional telco SingTel, said no operator really understood the future of 3G.

Yet, they invested a lot in the technology and speculated on what the future might hold, he said, noting that the industry was "guilty of not guessing correctly the future potential of 3G".

"Naturally when we do that, many [winners of 3G licenses] were inflicted with the winner's curse", Lee said, during the 3GSM World Congress Asia conference here. He noted that in Europe, some 3G licenses--of which operators paid billions of euros--did not translate to actual services.

Some operators consolidated their networks with others, and created "unusual cooperation arrangements" because of financial pressures, he added.

"So, 3G started with a bad name," Lee said. "It created problems, and tarred the rest of us."

Nonetheless, he noted that parts of the 3G industry have been vibrant, particularly in Japan and South Korea. These markets provide good learning points for 3G operators elsewhere.

"If you have an industry structure which didn't see new entrants coming in, and didn't have to pay horrendous amounts for licenses, [3G] is actually a sensible investment decision," he said.

Also, as long as high-speed cellular networks are backward-compatible with existing infrastructures, Lee said that "customers do not really care if the underlying network is CDMA2000, HSDPA, or whatever alphabet soup you want to put in front of them."

"They just want a service with good coverage that works," he said.

Lee, however, remains optimistic on the future of 3G services. He said it was a matter of time before the market starts to grow its subscriber base, scale, handsets and content. "It will take time and will take cooperation across the industry," he noted.

"The media likes to paint the industry in black and white terms," Lee said. "It wants to say that there are good guys and bad guys…but there's a lot to be said in this industry for finding ways to build value together--not in an anticompetitive sense, but in a way to make the right decisions."

For example, he said, the SMS (short message service) market did not really take off until operators allowed messages to be sent across rival networks and at a right price that people would pay for. To tap on such opportunities, operators may have to make some "not obvious" choices, he said.

For the industry to grow and succeed, Lee noted that industry standards need to be established and adopted, even if operators may have "the desire to have wall gardens and proprietary interfaces".

"This is where the work of the GSMA (GSM Association) and operators can help to coalesce around norms, make [mobile technology] easy to use, grow data as a proportion of revenues, and invest in what I believe to be a bright future," he said.

3G for all
Separately, the GSMA announced today that 12 mobile operators spanning six continents are spearheading its "3G for All" campaign, which aims to make 3G mobile services accessible to a wider user base.

Under the initiative, manufacturers are expected to produce a 3G cellphone that can support advanced services, such as high-speed Internet browsing, mobile TV and instant messaging, and costs significantly less than a low-end 3G handset today.

In the first phase of the campaign, Cingular Wireless, Globe Telecom, Hutchison 3G, KTF, MTN, Orange, Smart, Telecom Italia, Telefonica, Telenor, T-Mobile and Vodafone, will select a flagship 3G handset on which they will push their services to the mass-market. The 12 mobile operators collectively serve 620 million subscribers.

GSMA said this program will help the winning handset vendor achieve the economies of scale in manufacturing, logistics and marketing, necessary to make 3G phones much more affordable.

Craig Ehrlich, chairman of the board at GSMA, told reporters today that proposals have been received a few days ago from handset makers, but he declined to reveal further details. The winning handset will be announced at the 3GSM World Congress in Barcelona in February 2007.

Rob Conway, GSMA's CEO and board member, said: "In order to accelerate the take-up of 3G services, people need to have a 3G handset and we have to make it more affordable for them."