3G delays will cost firms millions

Every second represents a loss in third-generation rollout delay scenario, says Lucent's Erickson

Delaying rollout of third generation mobile networks even by two weeks will cost firms millions, warned Lucent's vice president of marketing Scott Erickson today.

Erickson was speaking at IDC's European Telecoms Forum in Rome where the general mood about 3G is far more optimistic than recent gloomy predictions for the technology. Industry analysts have previously suggested the huge price paid by operators could bankrupt firms before they have to chance to roll out services and some are predicting that the current tech slump could lead to delays in rollout.

Erickson is not of that school of thought, believing that a company has the chance of making $5bn (£3.5bn) profit over ten years from 3G. But rollout is crucial and the roadmaps set for this should not be altered he warned. "A two week launch delay could cost a potential £7m and a three month delay could cost £40m. The speed of deployment is very important," he told gathered delegates in Rome.

The biggest challenge facing 3G providers will be making sure they understand the business case, have solid plans for services and know where the customers are going to come from. The 3G landscape is going to be hugely competitive as players vye for market share and try to increase the amount of money each customer is spending on mobile services, predicts Erickson.

Customer care will be vital as consumers get to grips with the multimedia possibilities of their new 3G devices. While operating costs will account for just 30 percent of the money providers need to lay out to get these services available, customer care, advertising and interconnect costs will account for a huge 70 percent of operators rollout costs.

Product manager for Ericsson Carl-Johan Ivarsson is optimistic about the future of 3G. "We actually have consumers out in the streets who say they are waiting for UMTS," he said. Ericsson is hoping to capture half of the 3G market and intends to start rolling out services in the first half of 2002.

There was also renewed optimistism for UMTS's poorer cousin WAP. While speakers admit that so far the technology has been a failure in Italy, one of IDC's analysts was keen to defend the protocol. Tim Sheedy said i-mode has in Japan.

According to IDC, nearly a quarter of European businesses currently deploy WAP services and another nine percent are planning to do so within the next 12 months. It will be as a business service that WAP's future is brightest suggests Sheedy.

Sheedy is also confident that m-commerce, already being written off by some pundits, will come into its own. He predicted m-commerce will be worth $30bn by 2004. Moreover a third of mobile users -- around 114 million of them -- wil be connecting to the mobile Internet by this time he said.

Banking will become the most ubiquitous m-commerce service predicts Sheedy with MP3 rapidly becoming the sexy killer app. "Anyone not looking at this market is a fool," ascerted Sheedy, adding that m-commerce will more than pay off the huge 3G debts telcos have recently accumulated.

Take me to the ZDNet Road to 3G News Special.

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