Despite the recent flurry of negative research surrounding the third generation (3G) mobile phone services, a new report released today claims that the sector can be a great success, so long as operators move along and launch their services soon.
The report, from consultancy firm
The Thinking Box, says that postponing 3G’s launch will “trigger a vicious circle for the mobile industry in Europe,” by allowing a rival mobile data system called GPRS to gain breathing space in the market and become a rival to the 3G platform.
This warning comes after 3G operators have been very slow to roll out what was until recently hyped as the mobile revolution that would see an end to the telecoms operators’ financial woes. However, it has gradually become clear that high costs, lack of a ‘killer app’ and lucklustre consumer interest have all hampered growth of the platform (see Insight Analysis: 3G Promises Unfulfilled).
A recent report from Forrester Research warned that 3G operators can expect to wait about twelve years before they see a return on investment for the high prices paid for the communications licences (see 3G Operators Face Long Wait For Profits). In a survey, Forrester found that European 3G executives believe that penetration could reach 50% by 2007; Forrester says that this is ‘misplaced optimism’.
However, the average of Thinking Box’s forecasts also puts penetration at 50% of European mobile users by 2007; the most optimistic outlook puts the figure at 75% penetration by this time, whilst the pessimistic model suggests just 15%.
Peer to peer communications are key The Thinking Box says that it is communications from person to person that really capture the public’s interest, rather than applications which link with a brand, a service or a piece of content. Accordingly, applications that are based on self-generated content will meet with ‘instant success’, says the report.
“In 2007, we believe that mobile phones will be still mainly used for the same reasons as today – communicating with other people,” reads the study. “However, applications based on interaction with a third party, provided they are intelligently selected, promoted and managed, will be the cherry on the cake, adding a crucial extra 15% – and more beyond 2007 – to mobile operators’ turnover,” says Thinking Box.
The report forecasts that average revenue per user (ARPU) will have increased by 150% by 2007, with mobile instant messaging replacing SMS and video calls also set to capture consumers’ attention.
The technology is likely to be driven by operators that do not already have a GSM network to run and promote, such as Hutchison 3G. “Because 3G is their sole source of revenue, they will be very aggressive, especially regarding price. Like it or not, competitors will be obliged to follow and even be forced to adjust their strategy,” says the report’s author Christophe Cauvy.
