3G still to win hearts and minds?

commentary Saturation of the Australian marketplace with mobile devices early next year is, analysts claim, unlikely to slow the pace of innovation and competition in the wireless sector.Rather, according to some analysts, the heat is only likely to intensify.

commentary Saturation of the Australian marketplace with mobile devices early next year is, analysts claim, unlikely to slow the pace of innovation and competition in the wireless sector.

Rather, according to some analysts, the heat is only likely to intensify. And nowhere more so than in the 3G space.

International Data Corp. reckons the arrival of nationwide third-generation infrastructure and services in late 2005 will see the 3G user base skyrocket from just under 300,000 this year to 3.55 million in 2008. This will be a prelude to the next generation of wireless, 4G, in which all wireless standards can interoperate with one another, allowing users to experience what IDC calls Always Best Connected mobile computing.

There has been plenty of action on the 3G front in recent times, with Telstra's board reportedly green-lighting a limited third-generation network aimed at the regional and business markets and Vodafone signing a contract with Nokia for its network, expected to be operational next year. The carriers are, of course, trailing the lead of Hutchison, which has made significant market inroads in building residential subscriber numbers on the basis of some extremely competitive pricing.

However, your correspondent remains to be convinced that the billions of dollars being invested in 3G will secure the business required for all the telecommunications players to turn a profit in that sector over the next few years. While Hutchison is improving its position, it is competing on price rather than the range of services offered by 3G. Vodafone, for its part, is currently battling market perceptions of weakness in its existing business strategies -- exemplified by a high customer churn rate -- before it even kicks off into 3G. In addition -- and admittedly, this comes from highly unscientific, anecdote-based evidence -- mobile customers generally still seem unconvinced that the capabilities offered by 3G is something they really need.

NB: Several readers have come forward with their views since this commentary was originally published in Wireless Technology newsletter yesterday. Here is a selection of your comments. We welcome any feedback to any of the commentary posted in ZDNet Australia's   newsletters.

  • "I absolutely agree with you that users need much more convincing before they jump on the 3G bandwagon. A recent IDC survey conducted in 1Q2004 of approx. 250 Australian decision makers found that about 80 percent of companies in this country do not believe 3G capabilities (live video calling, high-speed transmission of multimedia contents and apps) will be critical to their business operations.

    "The smaller the company size, the more 'lukewarm' they become. For instance, 60 percent of small firms (fewer than 100 employees) said 3G is 'not relevant at all,' compared to 28 percent among medium (100-499) and large firms (500+).

    "Also, it's worth pointing out that despite spending billions of dollars building Australia's first and so far only 3G network, Hutchison 3 ended up competing on 2.5G (in fact 2G) capabilities - i.e. cheap voice and SMS plans. Their challenge is to turn those big spenders they have attracted through the AU$99 capped call plan into mobile data users, and moving up the value chain from purely consumers to business users". -- Warren Chaisatien, Senior Analyst, Wireless & Mobility, IDC Australia

  • "Agree, apart from video and games what does 3G offer the AVERAGE business subscriber?".

  • "There is one major factor looming in the back ground that will cause a great deal of damage to 3G and Wi-Fi and that is Wi-Max as it will kill the investment people are putting into so called hot-spots that are costly and not universal in nature for the user".