Future of 3G Bleak DownUnder


Despite all the buzz around 3G Wireless, a research note from the Australian Parliament paints a rather bleak and dismal future for 3G services and the entire mobile sector. The note warns that four of the major wireless players including Vodafone will have to first recover their $1.17 billion investment in spectrum, before they can even start thinking about their mega-billion dollar capital expenditures. There are only 500,000 3G users in that country. As the carriers push 3G, they are also at the risk of cannibalizing their 2G services which for now are footing the bill for everything. The researchers note that instead of fancy services like DVB-H, aka Mobile TV, the future of 3G might be in simpler more easier services. Like GPS, photo taking, stereo sound and music. “Cheaper alternatives such as free Internet, for real time or deferred content downloads, may challenge the use of 3G by consumers,” they say. How does this correlate to US? I think we are going to follow the same patterns here in the US as well. I think the $25 unlimited high-speed access on our phones will be enough for carriers to boost their ARPU from around $50 a month to $75 a month. After that it will be simpler services like photo blogs, GPS, and SMS-based search that will drive incremental dollars. Multimedia content on the phone is far from a slam-dunk. What do you think?

Link: Australian Parliament Research Note. via Resource Shelf.


John Thacker

That is, unless the GSM carriers “get a clueâ€?.

Well, the backwards compatibility is *so* much easier for CDMA. UMTS uses W-CDMA as its air interface, which is quite different from TDMA-based GSM. That’s why some of the GSM carriers had “throw out your old 2G phone, get a new 3G phone” plans, and why rollover between UMTS and GSM networks was so bad at first.

Jesse Kopelman

The funny thing about AU is you already have Unwired and Personal Broadband offering services that do a lot of what 3G is supposed to do. While both of these services may not support the mobility that 3G can, they have much better latency and uplink capability than current generation 3G. I would think that most of the people a voice carrier would hope to attract by upgrading to 3G are already Unwired or PB customers, so right off the bat the carrier will face a less than optimal ROI for the upgrade. At the same time, they better do it, as Unwired and PB can already support VoIP and there mobile capabilities will only improve with time.

Marcelo Lopez

I agree wholeheartedly. As a matter of fact, I’m a fair bit more militant about it. As a GSM subscriber, I’ve seen my mobile carrier cater to the LCD (Lowest Common Denominator ) of users. While I applaud Verizon for bringing EVDO to “the masses”, $59 for a 700Kbps service that isn’t totally fleshed out ( yeah right ), I have to turn to the GSM carriers ( and YOU know who YOU are ), and say “Well ?? What are you waiting for ? A sign from the heavens ?”.

I presume to think that these carriers are concerned more for the “nickel and dime” method of profit earning, than the “If you build it, they will come” method. In the end, it’s the consumer who gets short changed, as I think that unless high speed broadband wireless access is made available to all, uniformly, then you’ll see migration back and forth by users who are ever vigilant for the best deal. Each demographic, and there are scores of them, are looking for different solutions to their “stay in touch” needs. Are we to assume that people that like to sms and mms do NOT want to surf, or vice versa ? Of course, not, that’d be silly.

The carriers ( especially the GSM ones ) should take a long, hard, cold look at what they’re doing to fragment their customer base, and realize that eventually the costs of maintaining infrastructure will be outweighed by costs of managing the customer base, because of attrition. Especially here in the US, where it seems that the CDMA camp has started to realize that people might actually WANT to read RSS on their converged devices.

Wish us all luck, I don’t see it looking like too smooth of a ride in 2006/2007 in the US wireless market. That is, unless the GSM carriers “get a clue”.

Or to beat a cliched phrase down a bit further…..

“It’s about being connected, stupid”.

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