High prices and low demand stall mobile Internet

The massive fees paid by mobile service providers for 3G licences are holding back the roll-out of high-speed mobile data...

The massive fees paid by mobile service providers for 3G licences are holding back the roll-out of high-speed mobile data services. But despite current inertia the business needs to plan its mobile data strategy now. Antony Adshead reports.

Mobile access to the Internet was once thought to harbour great promise. Improved data services provided by mobile networks would allow consumers and business users alike to benefit from all the wonders of the Internet without having to go near a phone socket.

Since the dotcom bubble burst there has been an eerie silence from network providers on the subject of next generation mobile services but this is beginning to change.

The first tariff for third generation (3G) mobile services in the UK was announced last week by MM02. At the same time Hutchison said it would have its 3G service up and running by the end of the year. The news should produce a call for rejoicing as the 3G revolution gathers pace, but dig beneath the headlines and the picture is not so bright.

MM02's prices have caused concern among analysts, who fear that if 3G charges are set at such high levels they will both restrict demand and be insufficient to allow providers to recoup the huge investments made when mobile operators spent £22bn on 3G licences. Lack of investment by suppliers could mean services will simply not be available.

It was estimated that on MM02's tariff, consumers - a mass base of whom will be needed to support a general 3G roll-out - would have to pay about £44 per month, while business users would see charges of about £80 per month. The providers are caught in a cleft stick - it has cost them so much to buy the licences that they cannot afford to roll out services at an attractive price.

Meanwhile Hutchison's predicted launch of 3G services in November is itself a postponement from an expected summer debut - technology problems were cited.

Nigel Deighton, vice-president for mobile business at Gartner, said, "Network infrastructure is not a problem. The real issue is handsets - there needs to be more than just one type from one provider available and they need to be able to roam. Power and battery life has also proved to be an issue in Japan.

"Financially, many operators are being forced to cut down on costs by renegotiating contracts with suppliers and are having to slow down their roll-out plans," Deighton said.

In a gloomy foretaste of likely demand a survey by consultancy Detica found that 40% of users had no interest in doing anything other than talking on their phones while a Gartner analyst spoke in the Wall Street Journal of "limited" market opportunities for smartphones that could make full use of mobile data.

But despite the grim forebodings of recent news, analysts are convinced that the enterprise can make use of 3G to equip mobile workers with access to business applications. Business can already take advantage of some mobile data services with general packet radio system (GPRS), the so-called 2.5G mobile network.

Dick Clark, managing consultant at consultancy Hyperion, said, "We are already seeing mobile e-mail, calendar and workflow-type apps. In the first instance people will use these simpler types of applications, often through a PDA [personal digital assistant]. Looking forward we will see more bespoke applications."

Clark envisages that, for example, travelling sales staff will be able to enter data into customer relationship management systems remotely and elicit a rapid response, providing customer histories and other data. Fleet-based working, such as logistics, is another area which can benefit from fast data services, especially when add-on services such as location data become available from network providers.

Location-aware services could be applied to all mobile telephone-based systems as, by definition, a device must be locatable to a cell for traffic to be delivered to it. This is a rather imprecise method - probably suitable for some fleet applications - but there are more precise techniques available such as triangulation based on cell location and add-on global positioning system (GPS) capability.

Combining location-based technology with the ability to send data is likely to produce the ability to verify a signature for goods taken on a handheld device in time and by location. For some companies, knowing the whereabouts of their goods, vehicles or people at any time could dramatically increase efficiency, but such services are in their early stages.

Despite the promise of the applications which will be possible in a 3G environment, for many business users the lesser bandwidth of 2.5G technologies such as GPRS is sufficient and available now, allowing the enterprise to experiment with deploying a mobile extension to its IT system.

Organisations should not wait for 3G, said analyst group Ovum - business should begin to formulate mobile strategies for 2.5G (GPRS) networks now. The massive bandwidth promised by 3G is more than is needed to run many business applications. GPRS offers speeds comparable to a 56kbps modem now and businesses can take advantage of it by tailoring enterprise software for delivery over the medium.

Such trials do not come cheaply - the preparation for enabling a mobile workforce is like the submerged portion of the iceberg. "Most enterprise applications are not suitable for wireless access and are not helped by the lower level of reliability of connection and narrow bandwidth," Deighton said. "To make such things suitable for mobile use a layer of messaging-based middleware is needed between the apps and the device - and implementing this is a non-trivial exercise."

But it is an investment IT departments should not seek to avoid if they are to deliver the potential competitive advantage to the business, said Deighton. "The important thing is that as the pulse rate of business increases the enterprise needs to work faster. What took a week 10 years ago now takes an hour. That means that at some point the business will need mobile technology. It is not an easy step to take but IT directors need to be thinking about how to make that step now and running trials."

Wireless generations - the story so far
  • 1G The first generation of mobile telephony systems (1G) was analogue and was introduced in the late 1970s and early 1980s.
  • 2G Starting in the 1990s, second generation (2G) systems began to use digital encoding. The de facto standard for Europe and North America has been Global System for Mobile Communications (GSM) which has been used for voice and data, largely in the form of Short Message Service (SMS), despite Wap's attempt at bringing the Internet to GSM. Data transmission rates for 2G are about 9.6kbps
  • 2.5G With third generation (3G) systems expected to appear later this year but maturity of markets some way off, some so-called 2.5G techniques give higher speed data for enhanced e-mail and Internet access. These technologies include packet enhancements for GSM such as general packet radio system (GPRS) and enhanced data rates for global evolution (Edge). Data transmission rates for GPRS are nominally 115kbps while Edge claims up to 384kbps.
  • 3G The 3G is defined by the International Telecommunications Union under the IMT-2000 global framework and will manifest itself as UMTS in Europe and CDMA2000 in the US. 3G is specifically designed for high-speed multimedia data and voice with bandwidth of up to 2mbps promised.

What do you need?
Infrastructure requirements to implement mobile applications:

  • Messaging middleware to translate enterprise applications into a suitable format for the mobile device

  • A mobile gateway to serve the applications out to the devices

  • Leased fixed line to network operator - the physical medium

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