[3GScottishUser]

From Guardian Technology (08/06/2006):

1966, England's World Cup prospects were jeopardised by an injury to star striker Jimmy Greaves. This was terrible news for companies such as Philips, which was struggling to convince the British public they needed its new black-and-white TVs. The rest is hysteria. England won the World Cup, and celebrated its sporting prowess by becoming a nation of couch potatoes.
Forty years on, England has a new injured teenager, and marketing people are still trying to persuade us to buy a device to watch the games on. Only these days they're called 3G mobile handsets, and it's operators such as T-Mobile, Hutchison and Vodafone that need a decent England showing, because high-profit items such as roaming charges and ringtones are under pressure, the former from cheaper rivals and the latter from consumer distrust.

Consumers are proving reluctant to subscribe to the services available through 3G networks. Figures from analysts Informa Telecom show that the mobile operator 3 has 3.5 million registered users, but suggest that only a small fraction actively use the 3G elements. A more accurate gauge is probably O2's declared figure of 400,000 with 3G-compatible handsets, from a UK customer base of more than 16m.

In trouble

"3G has been a disaster," said Henk Potts, equity market strategist for Barclays stockbrokers. "That's why Vodafone is in the trouble it's in. [The operators] desperately need new revenue streams."

The handsome profits from roaming charges are being eroded by competitors such as Voipfone, Go Sim and England Calling, which offer savings of up to 80% on international mobile calls. The vast profits made by the ringtone industry - shared by the operators - may also be ending. "The image of the industry suffered as a result of ringtone scams. Something has to close the book on the ringtone, and the World Cup will do that," says Andrew Bud, vice chair of the Mobile Entertainment Forum.

The operators really need a better class of customer, but too many people have painful memories of buying new services on a mobile phone. If they haven't been stung by a ringtone scam, they'll know someone who paid £20 the first time they tried sending or receiving some video.

"The phone industry is still a fashion industry," says Jim Brooks, associate mobile consultant to Cap Gemini. And if Vodafone wants to avoid more "streamlining", then it needs more subscribers who want to watch videos, or publish their own, via their mobile phones.

This is why operators have invested an estimated £50m on World Cup-related marketing. T-Mobile is the official sponsor, and in its native Germany plans to beam live TV footage to anyone who's interested. Operators say users will want to download action replays; T-Mobile is charging UK customers £5 a month for the privilege, while 3 is giving them away.

But, as Rob Bamforth, an analyst at Quocirca, points out, this might not prove a good long-term advert for mobile data. "Why would you want to squint at a credit card-sized screen when the game will be on giant screens everywhere?"

The information services such as news, travel updates and so on could be viewed more on a PC or TV screen. Besides, most of the streaming video content can be viewed on 2G (GPRS) networks.

However, if we don't watch their videos, the operators hope we'll distribute our own. Ownership of video-enabled phones doubled in 2005 - 40% of Britons now own a handset that can make videos, according to JD Power and Associates 2006 UK Mobile Telephone Customer Satisfaction Study. The trouble is, no one is sending videos via the networks. For months the Sun Online has invited readers to send in their video rants, but is yet to publish one. "We hardly ever get any," one staff member said, "and when we do, they're not very good."

There's a lack of trust, according to the mobile management company SmartTrust. "Ninety per cent of people won't send images by phones because they don't know how much they will cost," says Tim De Luca Smith, communications manager at SmartTrust. Of the 10% willing to risk it, 20% are stymied by technical difficulties.

Voice calls and text messages remain the operators' only reliable sources of revenue. JD Power's study found that the average number of calls made on a mobile per week has risen from from 11 to 14, and text messaging is growing at the same rate.

"On days when England play, [mobile phone revenues] will treble," says Anil Malhotra, vice-president of alliances at Bango, a mobile billing specialist. "So you're looking at £6m [in extra revenue] for each of those days."

If England progress, expect those revenue surges to gain momentum, so that even on non-match days the excitement will generate extra phone calls, text messages and even video messages. If England get to the final, Malhotra suggests a possible £100m revenue boost for operators. But as soon as England go out, the extra money will stop gushing in. No wonder Wayne Rooney is under so much pressure to play.

http://technology.guardian.co.uk/weekly/story/0,,1792118,00.html

[Ben]

I just want to pick out "3G has been a disaster," to comment on.

Firstly, 3G has not been a disaster. The networks have certainly made a hash of it though, possibly with the late exception of T-Mobile who lately snuck in under the radar.

Scarce few handsets, poor coverage (still a problem indoors), expensive data charges and generally raw deals on content and video calling have been the 'disaster'. Largely this is all fading into the past.

The World Cup may well turn out to be a huge help for the operators, but regardless of what happens the new handset ranges, services, tariffs and improved coverage will start to make an impact. Quite why it's taking 3G so long to mature is a little beyond me, and definitely a failing of both the networks and equipment manufacturers, but exciting rewards are still there in time.

[Hands0n]

I think the author of the article and a few of those quoted are piping pure hot air, and not very accurate at that!

How can anyone brand 3G a disaster? Was GSM a "disaster" just because it didn't get 100% saturation within the first three years? How many years was it before the analogue ATACS network was shut down?

3G has gone through exactly the same gestation and post-birth pains as any of the GSM or PCN networks before it. The next generation of network will do exactly the same,will that [then] be a disaster also?

If the vendors are pinning their futures on the World Cup how crushingly short-termist is that? What will they do for revenue after the World Cup then? Re-runs? Re-runs of re-runs?

Most of the critical pundits cite screen size of the mobile handsets as a limitation, going on to mention giant plasma screens (as above). But surely the point being missed is the sheer portability and availability of the 3G mobile handset. I am quite happy to carry mine around with me but I would not be at all pleased to have to wrestle my 40" widescreen [if I had one] everywhere I go! So I do feel that any criticism of screen size is entirely specious.

As for mobile ops looking for the "killer app" for video - well the answer is somewhat simple. If you want folk to use Video more for calling and sending then lower the cost and usage will skyrocket. The article rightly makes mention of public uncertainty and mistrust in transmission charges - the mobile ops only have to listen and act, it has been mentioned more than enough times.

I find it quite difficult to let my heart bleed for the mobile operators wrestling with this awful problem of 3G and video services not generating enough revenue. They know the answer [lower charges] but do not have sufficient faith in their own technology to make the brave leap. Shame on them, then.

[3GScottishUser]

I think I have to agree with much of what the article states.

Setting aside my obvious interest in the technology I suspect 3G has been a technology in search of a use since its introduction. Many have been and continue to be confused by 3 (the network) and 3G the technology and the UK has been blessed (perhaps) with some urgency in terms of promotion for commercial reasons. Most customers though I speak to dont care about the technology and buy mobiles for what they do rather than how they achieve it. Arun Sarin (Vodafone CEO) has recently been quoted as saying he and his company is 'technology agnostic', because mobiles are now a fast moving fashion business and to be stuck promoting the wrong handsets at the wrong time can be a big handicap.... just look how many Razr's Motorola shifted over the last year and how many LG Chocolate handsets are now finding a home!!

The author is right. All of the top spec handsets now do video, MMS, and pretty much everything 3G handsets do. The only thing missing in terms of functionality on GSM handsets is videocalling and we all know that its appeal and practical uses are very limited.

Newer 3G handsets look and feel like the GSM range and that bodes well for the technology take-up, but will customers spend extra on the services on offer? Maybe? It'll take a long time to expand the data use and video clips need to be very good to warrant paying for. Mobile TV is attractive but 3G technology is'nt really the best vehicle for broadcasting so whilst some like Vodafone have made a head start, other technology like DAB spectrum and DVB-H might actually make more sense.

I like 3G, but being realistic, apart from the prospect of decent data at reasonable prices (T-Mobile is the only prospect to date) if it had'nt arrived I doubt if I would be that bothered.

Sad but true!!

[Hands0n]

Ah, but is it a "disaster" as the article leads by? I believe the answer is a resounding "No". As for being a solution looking for a problem I do not subscribe to that at all. 3G has its own place in the evloution of mobile communications - its inherent capability to carry a wider mix of traffic delivers to the existing market as well as place itself for the near future periods. Enahancements like HSDPA and onwards will merely increase speeds and capacities. But fundamentally 3G has caused a corner turn that GSM cannot achieve even with its enhancements.

The article makes the same mistake as perhaps a lot of folk in mixing 3G the technology with the applications that are possible over it. As a technology 3G is most certainly not a "disaster" by any stretch.

The 3G terminals (handsets and data cards) were either huge or non-existent to start with. Much the same happened with GSM and that has not turned out to be a "disaster". Within three years the terminals are becoming smaller exactly as did the GSM handsets of old (I have one or two right monster GSM handsets in my box of bits).

The enhanced capabilities of 3G terminals such as Video and higher-speed data are being tacitly restricted by the tariff policies in force which are a legacy (in terms of data at least) from the GSM era. Should the mobile operators open up the market for Video and Data with innovative tariffing (a' la T-Mobile) they may well see an uptake in the use of. The article refers to consumer "mistrust" in terms of how much it costs to use Video services such as Videocall and Videomessage - I am in full agreement with it there. These should be equally tariffed as MMS and Voicecalling to engender their use.

Video broadcast such as MobiTV and Vodafone's Live! TV are in their infancy, and like all such technologies have some limitations. That said, apart from carrying round a portable Casio TV there is little other opportunity available to receive TV broadcast. Even then, those little Casio TVs (and their counterparts) can be horrendous to watch given transmission quality issues. But to be able to view TV on a multi-function mobile handset is not to be dismissed lightly - it is good use of 3G and does not work at all well on GSM. So already and within its current limitations 3G is showing itself not to be a "disaster" at all but an enabler for the World Cup to be delivered to a mobile population unlike ever before! I'm really struggling with "disaster" here, as you can see.

Going forward 3G the network and its enhancements, also the further development of terminals, and the integration of these into devices such as Laptops and no doubt [soon] PDAs will continue unabated. Is this really the embodiment of "disaster"? Are all of these manufacturers, sellers, and customers really that wrong to buy into 3G-based technologies? I, for one, do not think so at all.

How long it will take Data and Video use to expand rests entirely on the price charged to use it. The sooner the mobile operators wake up to this the sooner they will see their revenue take increase, after they radically reduce the price of use to the consumer. Retaining the notion that these are "Premium" services is going to keep useage levels at a stagnant point.

I believe that the point of buying into 3G at this time (and really, ever since it launched) is that here is a new technology that is a logical step forward from GSM. Unless we want to stay stuck in some sort of timewarp there has to be an evolution forward. 3G is that evolutionary next step as GSM hits its own ceiling.

But I also agree that 3G should not be marketed as such because it really is meaningless to the vast majority. The seller factor has to be the applications and services that 3G is able to carry. It is very much like the conversion of 405 line and 625 line TV - both work fine, but if you want colour TV then you have to buy a 625 line terminal. The same is happening right now with HDTV vs 625 line TV - so is HDTV a "disaster" already? I have to change virtually everything to enjoy it, and certainly cannot see it unless I do.

No, 3G is most definitely not a "disaster".

[3GScottishUser]

Just to clarify....

GSM (Digital Mobile Communications) was necessary to provide capacity to make mobile communicatons a realistic prospect as a mass market product. GSM brought us SMS, MMS and latterly enhancements have provided GPRS and now EDGE. Data and even video can be transmitted over GSM quite efficiently on networks that already cover more than 99% of the UK population.

3G is more efficient for sure but as far as the average customer is concerned - does that matter? Most just want to chat and send texts and the occasional picture, maybe stretch to a song download now and again. I suspect the benefits that 3G offers are not that important to most mobile customers and that is the problem for the networks. Mobile TV is a good product benefit but if take-up happens it will bring capacity problems that could kill the networks with the very benefit that is being heralded as the 'killer application'. 3G just is'nt a good 'one to many' broadcast technology as each user uses bandwidth that is bigger than that available on GSM but still limited and it does'nt take many TV viewers to max-out a cell site!!

I cant agree with the HDTV Vs 625 analogy as HDTV is a massive improvement that offers real benefits that one can see instantly in comparison with existing TV. 3G in terms of usage so far offers little in terms of difference for most mobile users, unless they are prepared to pay lots to videocall, pay lots to download video (MP4 & 3GP compressed small screen optimised stuff at that), or need high speed data on the move.

I just wonder when all the dust settles how much additional revenue the mobile operators will make from their massive 3G investments. If they had no legacy GSM to shore up the cost, would they still be trading? Poor Hutchison have had to sell off some of their 'crown jewels' to keep funding 3G.....a blip or perhaps a heavy price to pay for investing in something that offers little more than was available already... time is not on the side of those who's future depends on 3G alone I suspect.

[Hands0n]

Staying with the HDTV vs 625 line TV analogy for a moment. Video, as in broadcast, is not feasible on GSM and so the need is to go to 3G (at least) to receive it. Static video downloads, of course, will work on any medium - even 50 baud telex would do the job if one could wait long enough! But that is not what is being traded on - real time World Cup, Big Brother and other such delights are all being touted around these days. Impossible on GSM.

The point of video to the mobile handset is simply that it can, at last, be done! The alternative is to have nothing, as before. Surely that is what progress is all about. Even if it is not HDTV compliant to the handset, it is nonetheless a valid proposition. Of course, the customer can simply take it or leave it as always. But there are those who will value the capability and it is these that the operators are going for.

GSM, as 3G, simply had to come of course - all things analogue have capacity issues that can only be realistically addressed by digital transmission techniques. And the innovative features of GSM were not taken up until the prices dropped. Recall that each SMS was charged at 60p in the first days of GSM. It was only when the tariff dropped to its current levels that take up took off! The same will happen with Video [message and call] as well as content services [stored and realtime] as and when the prices are reduced to a more commoditised level rather than being at a premium rate.

The capacity issues with 3G are going to be a challenge that the network operators will have to meet, and surely they will in time. But we must not allow the harbingers of doom to prejudice the buying public unchallenged.

In terms of "after the dust settles" ........ this is exactly the same issue that they faced when bringing out GSM to replace ATACS. Noone knew whether the GSM investment was going to pay off - at that time the notion of a nation with up to two handsets each would have been laughed out of the boardroom. Yet that is exactly what we see today, many people carrying dual handsets, and even using them as fashion accessories. For sure, the mobile operators futures are all linked to 3G and the eventual demise of GSM.

If not then (3 years ago), when if ever would be the right time for 3G? As always, there will be casualties but the technology will prevail.

Edit: I should add that the Data aspects of 3G have not been taken up by the large corporates yet. Many SMEs are now playing around with it and with great success (my daughter's company use Vodafone 3G equipped laptops for the higher speeds available). The large corporates are, as ever, playing the usual waiting game, they rarely early-adopt. But when they do, 3G data will become mainstream and our UK mobile network operators are not going to lose a second in pushing the virtues of data over their 3G networks. Other retail aspects of data over 3G have yet to be invented, I suspect.

[@NickyColman]

I think this thread wins the prize for the longest posts EVER. :D

[Hands0n]

Sorry, once you pop you cannot stop :D