Half of mobile users will switch over by 2010...It will be another five years before 3G is adopted by half of mobile users in Europe.
According to analyst JupiterResearch, by 2010 there will be 184 million subscribers with 3G multimedia handsets in Europe - up from 5.1 million last year.
Thomas Husson, mobile analyst at JupiterResearch, said that while mobile phone penetration has almost reached saturation in many European countries at a much faster rate than any other previous technology, 3G will take longer than expected.
"Mass market adoption of multimedia 3G services, the next stage of the mobile revolution, has yet to take off at the same rate, hampered by the limited availability of small phones, lack of appeal around existing 3G services, incomplete network coverage and expensive, non-consumer oriented data tariffs," he said.
Operators are taking different approaches to 3G, with Vodafone and Orange pushing ahead while O2 and T-Mobile have chosen to 'soft launch' their offerings, he said.
The analyst house also predicted SMS revenues for operators will decline - from €15.1bn in 2004 to €12.7bn in 2010. As a result operators will have to reduce their dependence on SMS for data revenues and boost content services such as ringtones and games if they want to improve return on 3G network and licence investments.
Mobile messaging will remain the dominant data service - accounting for 68 per cent of data revenues by 2010 - driven by new mobile messaging services such as MMS, email and instant messaging.
"Whilst the 3G market matures, operators will not be able to rely on SMS revenues alone. Given their significant investment in 3G networks and licences, mobile operators must look to diversify and grow their revenues by harnessing new services and offering compelling content for an increasingly sophisticated consumer," Husson said.