European Trio Unwraps 3G

Europe’s ailing 3G industry received a much-needed boost today, as three of the region’s leading players offered a clearer indication of when they'll launch next-generation W-CDMA networks.

Orange SA (London/Paris: OGE), KPN Mobile, and Telefònica Mòviles SA have outlined their plans for commercial W-CDMA launches within the next twelve months, with the Spanish carrier spearheading the charge.

The W-CDMA air interface is part of the Universal Mobile Telecommunications Standard (UMTS), adopted as the European 3G standard. Used with existing GSM core networks, W-CDMA-compliant handsets and base stations can potentially increase wireless data transfer rates to a maximum of 2 Mbit/s.

Telefònica Mòviles España intends to provide 3G coverage in "52 provincial capitals in Spain” by the end of this year as part of a pre-commercial launch, prior to a full launch in 2004, according to a company statement today (see Telefònica Mòviles Pushes UMTS). This equals 1,100 base stations in operation, with between 7,000 and 8,000 deployed by 2005. Earlier this year the carrier announced its intention to invest €1 billion (about US$1.17 billion) on 3G infrastructure in the next three years.

Orange meanwhile has hinted that it could become the first U.K. incumbent carrier to launch 3G services, following a refusal from rivals Vodafone Group plc (NYSE: VOD) and mmO2 plc to specify timescales for rollout (see Euro Carriers: 3G's Not Ready).

Speaking at his company’s third-quarter financial results announcement today, Orange CEO Sol Trujillo told analysts that the carrier has a commercial launch planned for the U.K. in the third quarter of 2004.

“We will continue to acquire sites so that by the end of 2005 we cover maybe two thirds of our market,” he stated. “We intend to be very aggressive. We believe the technology is getting ready and that by the time we are ready to deploy we will have solved most of the issues evident today.”

Various media reports claim that Orange France will roll out 3G services at the same time as the U.K. subsidiary, while Belgium and Switzerland will launch in the fourth quarter of 2004.

Dutch carrier KPN Mobile has also stated that it will start testing UMTS services through various pilot projects in partnership with The Hague City Council, Siemens Netherlands, the Rotterdam Port Management, and Eneco Energie. A widespread introduction of 3G by KPN is expected in mid-2004, based on a budget of €1.5 billion ($1.75 billion).

So, far, Hutchison 3G Ltd. remains the only high-profile European carrier to have commercially launched 3G services, against a backdrop of industry skepticism over the long-term revenue potential for the technology.

— Justin Springham, Senior Editor, Europe, Unstrung