Austria Claims Euro 3G First

The hills are alive with the sound of UMTS! Telekom Austria's wireless operator Mobilkom Austria has "launched" the first national 3G network in Europe and has an unidentified number of users trying out services on its UMTS network with singlemode 3G handsets.

Although the operator will not specify how many devices it has managed to lay its mitts on, it says they come from three sources -- Qualcomm Inc. (Nasdaq: QCOM), LG Electronics Inc., and Sony Ericsson Mobile Communications. That's the official line. In addition, add Motorola Inc. (NYSE: MOT) to the mix -- according to Motorola, that is. "Our handsets are among those being used," says a spokesman for the handset vendor that, along with NEC Corp. (Nasdaq: NIPNY), is supplying dualmode terminals for Hutchison 3G's upcoming "phased rollouts" in the U.K. and Italy.

Mobilkom has also been testing dualmode handsets from Nokia Corp. (NYSE: NOK), according to reports.

But although there are people using the network -- "friendly" users, which means Mobilkom staff and the employees of its content, equipment, and handset suppliers -- this is not what Unstrung would call a real launch. For that, you need to have phones in the shops that anyone can buy and then use on a 3G network. That, according to Mobilkom, will come in the first half of 2003, when the handsets are of sufficiently "good quality, variety, and number," says Johanna Sekya at Mobilkom.

So it's down to the handsets again, as the carrier claims that its live UMTS network now covers 25 percent of the population, and that it could do a proper commercial launch of 3G today if it had the terminals.

Mobilkom's CEO, Boris Nemsic, says the operator invited the 3G phone suppliers to test their devices on its live network, but that it has "very specific requirements for the terminals," which sounds as if it could hold things up a bit. The main demand is that the handsets should move seamlessly among GSM, GPRS, and UMTS. A press spokesperson at Mobilkom obligingly clicked around on her phone listing all the things it could do, which is basically the collection of bells and whistles UMTS has been promising for the last hundred years [ed. note: feels like that sometimes]. She described it as a "multifunctional terminal."

The live network, from "nearly" 1,000 base stations, covers all the major Austrian towns with the exception of Salzburg. The network is a mixture of Nortel Networks Corp. (NYSE/Toronto: NT) and Ericsson AB (Nasdaq: ERICY) infrastructure, both of which have supplied core and edge kit (see Mobilkom Launches UMTS and Ericsson Lauds Mobilkom Launch).

So what's with Salzburg? Well, local rulings there insist that radiation from masts should not exceed 1 milliwatt per square meter. The good citizens of Salzburg object to ugly towers and are also concerned about potential health risks. Hence the coverage hole.

Mobilkom's full rollout -- by 2010 -- is expected to cost between €600 million (US$585.71 million) and €700 million ($683.26 million) and should be financed from the carrier's own cash flow, Nemsic said. He also stressed to reporters that he expects the company to continue to be profitable even once UMTS services are launched, though he was coy about pricing structures. Mobilkom has said, though, that it expects the UMTS devices to cost end users between €800 ($780) and €1000 ($976) initially (after subsidies!), but that the prices will fall to between €300 and €400 ($292 to $391) by 2004.

So, for those with a handset that works, what's on offer? Hannes Ametsreiter, head marketing honcho at Mobilkom, told the media: "We are betting on the added value of real-time information. Our users will, for example, be able to check traffic reports and alternative routes on the spot. Entertainment is covered by cooperation with the international agency for sports rights, ISPR, and by deals with film providers. All the goals of the Austrian football league can be seen almost live -- we now have the time lag down to two minutes -- via UMTS mobiles. Because of our share of the business customer market, we are the most interesting partner for content providers. We will make use of this advantage for our customers."

— Ouida Taaffe, special to Unstrung
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