U.K.: Road to 3G strewn with obstacles

Analysts identify a long line of hurdles that U.K. network operators must negotiate before third-generation mobile services reach ordinary callers.

LONDON--High-speed mobile Internet services might not become widely available in the United Kingdom until 2006, making it harder for third-generation (3G) license-holders to begin recouping their considerable investment in the technology.

According to Credit Suisse First Boston (CSFB), 3G won't become a U.K. mass-market service for another five years. In a new report, the global investment-banking firm predicts that the likes of Vodafone, Orange and O2--formerly BT Wireless--will have to overcome a number of tricky challenges before they can launch 3G services.

CSFB believes that it will take until 2004 for 3G handsets that appeal to the average consumer to reach the shops. Cost is one significant factor. "It seems very likely that for some years the 3G device will be too expensive for any but the higher end customer," says the CSFB report, which predicts that these early models will retail at around £320 ($470).

The report also warns that it will take time for manufacturers to develop handsets that have sufficient battery life and that are small enough for modern users. It is unlikely, after years of increasingly smaller and sleeker mobiles hitting the market, that users will be keen to own a device that resembles the hefty mobile phones of the 1980s.

CSFB identifies other problems. Vodafone has already warned that its 3G service will offer 64kbps data transfer rates--much slower than previous industry marketing hype has suggested. Consumers are less likely to see this as a reason to upgrade from their existing device.

Some operators have recently launched GPRS services, which are seen as a stepping-stone to the high-speed world of 3G. However, CSFB predicts that it will not be easy to make devices that will work on both GPRS and 3G.

Constructing the networks won't be easy either. Many more base stations will need to be erected if operators are to offer reliable services. However, CSFB believes that concerns over possible health dangers from mobile masts will make it hard for companies to find places for their apparatus.

One suggestion is that operators could save money, and limit public concern, by sharing masts. However, according to CSFB, there are complicated problems to overcome--one more reason why it could take longer than many hope for 3G to take off.


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