Global consultancy PricewaterhouseCoopers, casts doubt on the
future of 3G mobile services in its latest technology forecast for
the mobile Internet sector.
PWC predicts that 2.5G mobile technology will continue to define
the direction of the mobile market while 3G remains only "a long
term view".
Eric Berg, editor in chief of the 12th annual Technology Report
said 2.5G would be "where the big news will come from for the next
2-3 years".
"There will have to be a slight increase in tariffs to support the
new 2.5G services, but this will be significantly less than the
move from 2.5G to 3G services," Berg said.
The detailed, 1000-page report, covers 2001 to 2003 and includes
interviews with Alan Harper, strategy director for Vodaphone, Dr
Keijo Tachikawa, president and CEO of NTT DoCoMo, and senior
representatives of Ericsson, Siebel, and Openwave.
PWC predicts that by 2002 more users will have access to the
Internet via WAP-capable devices than wired devices. Even though
adoption will be high, Berg said; "There will be no single killer
application, but instead a collection of well-executed applications
created for 2.5G, that will drive demand."
Berg believes the arrival of 2.5G services such as GPRS will solve
many of the traditional problems associated with WAP, a view echoed
by Vodaphone's Alan Harper. "I think WAP was over-hyped. It has as
done a lot of damage to the industry [and] a lot of damage to user
confidence," Harper said.
Harper believes the poor design of early terminals and application,
combined with expensive by-the-minute billing, disenchanted a lot
of users very quickly.
However, he maintains that WAP with always-on GPRS can be
effective.
The PWC report claims messaging, entertainment and location-based
services will be the key driving forces behind adoption of new 2.5G
services. Paul Rees, an analyst with PWC Global Telecoms predicted
that the business model used by NTT DoCoMo's I-mode service in
Japan would be a template for many European operators.
I-mode charges between 10-30p for a range of services such as
checking bank balances, e-mail access, online games and telephone
directory searches.
"NTT have successfully used a low-cost service to buy a large
customer base," said Rees, but for him a key question remains: "Do
they make any money from their I-mode service?" PWC said the
figures were hard to ascertain and many analysts suggest not.
The PWC report underlines the need for European carriers to
demonstrate how they will generate revenue to pay for 3G licences
and the large capital expenditure required for installing
infrastructure and subsidising handsets.
With 3G a potentially crippling burden, Rees said, "To get to 2.5G
is far more attainable for the telecom sector and we believe that
we will see consolidation to just five major carriers in Europe
over the next 3 years."
Will Garside