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Euro 3G's License Lunacies

Light Reading
LR Mobile News Analysis
Light Reading
12/29/2003

A further round of ills this past week for Europe's ailing UMTS (Universal Mobile Telecommunications System) industry has ensured that 2003 will be remembered for its 3G flops, as ongoing license debacles continue to hinder regional rollout of the high-speed wireless networks.

UMTS is the 3G upgrade to the GSM standard, using a wideband-CDMA air interface on top of the GSM core network to increase voice capacity and boost data-transfer speeds to a possible 2 Mbit/s. [Ed. note: Maybe if you're standing rilly, rilly close to the cell site. Like, on it. With your tongue pressed against the aerial. Dressed in tin foil.]

Following reports in October that Tier 1 carriers Vodafone Group plc (NYSE: VOD) and mmO2 plc both consider the technology too unreliable at present to justify commercial launch (see Euro Carriers: 3G's Not Ready), Hungary [ed. note: it's next to Romania, apparently] has now become the latest European country to push back massively on 3G rollout plans.

Despite telecoms minister Kalman Kovacs stating last month that a tender for UMTS licenses could be announced early next year, government officials last week admitted that a tender for third-generation services will now not be issued until the end of 2004.

The move is a blow to a country where 3G services have been touted as a potentially serious money spinner. Over 70 percent of the population own a mobile phone, and a recent Reuters report states that the Hungarian government expects 15.4 billion forints (US$71.98 million) in revenues from the sale of up to four UMTS licenses.

Germany [which, lest we forget, belatedly invaded Hungary in March 1944] is also experiencing a serious case of the 3G jitters. License holder MobilCom AG has handed back its UMTS license to telecom regulator Regulierungsbehörde für Telekommunikation und Post (RegTP) (see Mobicom Returns UMTS License). The regulator will also recall the license held by failed 3G venture Quam (owned by Telefònica Mòviles SA and TeliaSonera AB [Nasdaq: TLSN]), which has frozen all rollout plans and is therefore unable to meet coverage requirements (see German 3G Player Folds).

Telefònica Mòviles itself is currently in something of a pickle with its European 3G investments and is attempting to dig itself out of a deep financial hole (see Telefònica Plots 3G Escape). Last week the company sold its Austrian 3G operation to Mobilkom Austria AG & Co. KG, marking the first sale of UMTS spectrum in Europe (see Móviles Sells Austrian 3G Arm).

These latest developments are indicative of the shrinking 3G carrier market in Europe and general lackluster demand for such services (see Europe's 3G Shrinkage). Early entry Hutchison 3G Ltd. has already admitted it will fail to hit its original subscriber acquisition targets, confirming analyst beliefs that the company's initial goals are waaaay off track (see Hutch's Subscriber U-Turn).

— Justin Springham, Senior Editor, Europe, Unstrung

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