Diversification helps spread 3G investment

Building and supporting a 3G business can be a costly affair, but one Hong Kong-based operator copes by relying on other lines of business to cushion the investment.

SINGAPORE--Investing in 3G networks is a costly affair but having other lines of business can help defray cost, according to a telecom analyst.

Hutchison Whampao, a Hong Kong-based operator with 3G business mainly in Europe, is a "poster boy of 3G deployment", said Alan Hellawell, Asia associate director of telecommunications research, Lehman Brothers.

"3G is not a cash-generating business yet," he said, adding that the next-generation cellular network is a large investment. Hutchinson, however, has been able to invest in it by leveraging on the company's cash cow, its port and infrastructure business. "Diversity is helpful in funding (3G)," he said.

Success can also come from providing content that users can quickly and easily access, according to Damian Reid, executive vice president of Orange Group. The UK-based operator launched its first 3G service across Europe in July last year. Its French office currently has 110,000 3G subscribers.

"The phone is (getting) smaller and more powerful while content is (now) able to leverage on the fast speeds of the network," Reid said.

Subscribers are drawn by 3G's ability to support quicker downloads, and provide games, entertainment and video-calling capabilities.

To succeed, content must be popular across a broad range of user groups, he added. And it must be packaged so that users can "find it, buy it and share it within a couple of clicks", he said.

"The appetite for mobile data is growing," he noted. "3G is changing the relationship of people and mobile phones and the way they use (the phones)."

In France, 40 percent of Orange's 3G customers subscribe to watch TV live on their mobile phones. Reid considers this service offering one of the company's most successful 3G rollouts, with each user spending an average 25 minutes per month viewing mobile TV content.

Gregory Teo is a freelance IT writer based in Singapore.