3G industry hits back against death notice

Rather than being a millstone, 3G can keep mobile operators afloat if they use it to offer innovative new applications, claims a 3G wireless technology firm

The suggestion that mobile phone network operators should consider ditching their plans to launch 3G services has been firmly rejected by UbiNetics, a 3G wireless technology company.

Bjorn Krylander, chief executive of UbiNetics, insisted this week that 3G has the potential to save mobile phone companies from collapse or takeover in the next few years. According to Krylander -- formerly a director at Ericsson -- 3G is here to stay.

"To call on mobile operators to abandon their licence obligations and get out of 3G altogether is an overreaction. The fact of the matter is that the 3G genie is out of the bottle -- this technology is here to stay whether we like it or not," insisted Krylander.

"With voice revenues expected to peak and then fall within the next year, operators urgently need to find a way to make up for these losses. High-value data services are already helping some operators increase average revenue per user. For example, mmO2 recorded 50 percent growth in receipts from its data offering in the company's latest earnings announcement," Krylander added.

Krylander was responding to a research note published earlier this month by Datamonitor, in which analyst Nick Greenway said that it would be cheaper for some licence-holders to return their licences than to launch 3G services.

"It is a crisis, a long drawn-out death! -- No financier, venture capitalist or enterprise would consider investing in something with payback 'somewhere in the next three to eight years'," wrote Greenway in the note.

"Besides, operators will not be around if it takes them any more than three years to gain some sort of return. With junk status ratings; share-prices with possibly another 10 percent to fall; industry Rights Issues looming; massive over-expectation of potential MMS revenues; and discussion of technologies capable of leapfrogging 3G altogether, it could be the beginning of the end for some," Greenway added.

As a developer of 3G testing and measurement equipment and reference designs, UbiNetics is reliant on mobile operators continuing with their 3G plans, and Krylander was dismissive of Greenway's views.

"The huge short-term investment required to build-out the networks will inevitably precipitate some consolidation amongst operators -- but that is no reason to write-off 3G as a whole," insisted Krylander, adding that 3G gave operators the chance to stand out from the crowd by offering innovative and popular new services.

"There will be rich rewards for those operators that play the long game and successfully launch commercial third-generation phone services; the alternative is a rapidly contracting industry," added Krylander.

Greenway's comments have been widely covered in the media, with some reports claiming he was urging all 3G operators to return their licences. Greenway told ZDNet UK that this is not what he wrote, and pointed out that such research is written so as to be "deliberately inflammatory".

"Datamonitor is in no way suggesting that 3G will not succeed," Greenway said.

Greenway does believe, though, that many 3G operators will struggle to develop a revenue stream from their 3G services within the next few years -- and without this they may be unable to service the debts built up acquiring 3G licences and building network infrastructure.

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