3G - now is not the time to give up

To say the appetite for mobile data isn't there is harsh...
Written by silicon.com staff, Contributor on

To say the appetite for mobile data isn't there is harsh...

Should we be preparing a eulogy for 3G? If that's what you're looking for, you've come to the wrong page. But a pull-no-punches note from an analyst house has, over the past few days, demanded a re-evaluation of the business case for 3G mobile services. Let's consider some of the points.

That telcos the world over are taking a huge gamble with 3G is of no question. It's a subject that has been dissected and analysed in hundreds of publications, research notes and beyond. Proper return on investment analysis, however, is a little harder to come by.

The trouble is judging 3G ROI is a hard call. The analyst sparking off the RIP 3G debate, Datamonitor's Nick Greenway, contends pay-back of three to eight years isn't good enough. And sure enough, good VCs would want returns on their monies faster.

But consider some licences, for example those in the UK, run for 20 years - would significant returns on investment be deemed a failure if the money started pouring in after 10 years? Hopefully not.

The danger is that some operators never make it that far. Those around the world without access to ongoing financing - from markets, fail-safe parent fixed line telcos or even benevolent governments - may find waiting for the right handsets (in volume) or content people will pay for, tips them over the edge. The era of large telco failure has already dawned, after all.

Yet to say 3G simply won't work is wrong. Fixed broadband wireless via Wi-Fi is no replacement, not even on a data-only level - anyone remember Rabbit phones? Neither are ad hoc mobile-to-mobile peer-to-peer networks nor Ultrawideband.

And to say the appetite for mobile data isn't there in the right numbers is harsh. Sure, poor pricing and offerings for 2.5G services spanning MMS and more has hurt the industry but, again, it'll mean tough times for some operators rather than all those betting billions on 3G.

Operators have made plenty of mistakes and government auctions have cost the wider economy billions. But 3G will make it. Most consumers will never hear anything marketed as such - thankfully - but it's no time to give up the ghost.

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