Cost blamed for gloomy global 3G outlook

Despite heavy promotion by operators and vendors, the number of phone users looking to take up 3G services has dropped in the last year, a study shows
Written by David Meyer, Contributor

Cost is making 3G a low priority for mobile phone users around the globe, a study has revealed.

A report by market researchers TNS shows that the number of people aspiring to buy third-generation phones has dropped from 7 percent in 2005 to 4 percent in 2006.

While 20 percent of mobile phone users worldwide now have 3G phones, less than half of those use any of their advanced functions, such as video calling and high-speed Web surfing.

The survey shows that 23 percent of people interviewed cited cost as the main block to using 3G, with a further 22 percent put off Wi-Fi capabilities for the same reason. Cost also proved discouraging for 21 percent of users when it came to downloading music tracks to their mobiles, and 23 percent in terms of surfing the Internet.

"Cost is the quick fix solution, especially among those services already found interesting by consumers, such as music downloads and realtime TV," noted Hanis Harun, global director of TNS Technology on Wednesday. Only 9 percent of the 21 percent of people with mobile TV-capable phones use the service.

Harun said operators were to blame for this slow uptake because "despite widespread publicity about cost-effective service packages… [they are] are still not giving their customers what they want — and people are having to purchase 3G packages that don't suit". He said the study showed flat-rate 3G packages to be the most popular, but added that "many customers are being forced into paying per kilobyte used or paying each time a service is used — which is not popular among consumers".

Other factors, such as network speed, screen size and battery life, were also identified as notable issues, but much less so than cost.

Ofcom's annual report into the communications market, released in August, showed that 3G has been somewhat of a failure in the UK, with none of the four major operators having as many as a million 3G subscribers. The regulator's report also revealed that those who had taken up the service were mostly ignoring its advanced features in favour of more traditional voice and SMS uses.

And in July, Vodafone was forced to deny it was giving up on recouping its huge investment in 3G — a gamble made by all operators — after it slashed subsidies for third-generation handsets.

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