Euro Carriers: 3G's Not Ready

Any remaining hopes of an imminent Europe-wide rollout of 3G services were quashed this week, after two of the region's major carriers declared that the technology just isn't dependable enough to be used in the field yet.

Speaking to delegates at the quadrennial ITU Telecom World shindig in Geneva, the heads of Vodafone Group plc (NYSE: VOD) and mmO2 plc stated that their third-generation universal mobile telecommunications system (UMTS) networks would only be launched when services were deemed to be fully reliable.

“We have seen from some of the early launches of 3G that it just isn’t ready yet,” commented mmO2 CEO Peter Erskine. “The handover between 2.5 and 3G doesn’t work. There is no point in launching technology before customers are ready to use it. We will launch 3G when it is going to be commercially good for our shareholders and customers. We are certain 3G will be big. The question is, when?”

Vodafone also disappointed industry watchers hoping for clearer insight into timetables, as new CEO Arun Sarin proved unwilling to commit to a launch date. “We are addressing the software and hardware needed to make sure that when we launch our service, it works,” he explained.

Sarin added that Vodafone will launch 3G networks only when they can “outperform” today’s 2.5G services, which are based on GPRS (general packet radio service) technology. “Unless we can delight our customers, we have little incentive to migrate them to 3G.”

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.] GPRS is a packet overlay for the GSM network that enables somewhat faster data transfers, usually in the range of 20 kbit/s to 40 kbit/s.

These disheartening comments follow downbeat forecasts for the 3G market released earlier this week by Analysys Research Ltd. Its report states that even by 2005, 3G subscriber numbers in Western Europe will remain extremely small, with just over 20 million active mobile subscribers using a 3G service.

“As a result of the widespread delays in UMTS launches, by the end of 2003 the total number of 3G subscribers across Western Europe will be a mere 1.3 million,” adds Ariel Dajes, co-author of the report, entitled "Western European Mobile Forecasts and Analysis 2003-2008."

Hutchison 3G Ltd. remains the only high-profile European carrier to have commercially launched so-called “next-generation services,” despite a catalogue of initial problems with the technology (see 3G Powers Renege on Deal, Hutch's Nokia Network Woes?, and 3G UK Cries for Help).

— Justin Springham, Senior Editor, Europe, Unstrung

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