Half of 3G firms will go bust within a year

Fifty per cent of companies exhibiting at this year's 3GSM World Congress in Cannes will go bust in the next 12 months, and those most at risk are the wireless content providers.

This prediction comes from Olav Ostin, UK managing director of global venture capital firm ETF Group. Despite the recent shake up of global tech stocks and the demise of many dot-coms, companies at the mobile conference on the Cote d'Azur this week are still showing confidence in their business strategies. However, Ostin predicted that this confidence won't last. He argued that three quarters of the start-ups in the wireless space will run out of money by the end of the year, and only one quarter of them will find further funding. Ostin said: "Fifty per cent of companies here are going to close down because the market is fundamentally delayed. Companies have spent over £50,000 to be here but have no revenue, and they have no revenue because there is no consumer." Ostin laid the blame for the delay firmly at the feet of the handset manufacturers who have failed to bring out GPRS handsets: "We have the 2G networks ready but can't do anything with them." His sentiment was echoed yesterday by Hans Snook, former CEO of Orange, who also accused handset manufacturers of holding back development of mobile internet services. However, Nokia, which plans to introduce its GPRS handsets "probably" in the third quarter of this year, denied it was suppressing the market. Tomi Ahomen, head of 3G business consultancy at Nokia, argued: "Nokia runs its handset business as a mass market operation - we are waiting for the optimum launch time." When pushed, he admitted that there were engineering complications with the handsets, he even suggested that the roll-out of UMTS handsets would experience a similar delay. "Developing GPRS handsets is very complex and it will be the same with 3G - but we have to build the network first," Ahomen said. Ericsson, who recently announced it plans to outsource all its handset manufacturing, declined to comment.