UMTS services are set to revitalise the mobile industry and boost the revenues of European operators but a degree of patience may be required. This is according a new study from market management consultants Arthur D. Little and the Paris brokerage Exane.
The report,
Back in the Road: But Who’s Got the Mapâ‚Ź picks up on a common theme claiming that operators have been overconfident in expecting mobile multimedia services to have an immediate impact. Consumers remain unconvinced about the necessity of the new technology and the study says that the introduction of colour screen handsets and mobile messaging services (MMS) that rely on GPRS will not alter average revenue per user (ARPU).
MMS is not predicted to take off until the start of 2004 and European operators are encouraged to increase the penetration of SMS in countries, such as France, where it is lower than average and encourage subscribers to make more use of text messaging.
European ARPU is expected to edge up from â‚Ź30 to â‚Ź32 in the next two years but the mobile operators face competition from fixed-line operators who are preparing the roll-out of wi-fi hot spots that will allow people to get fast wireless access to the internet in public places (see WLAN Set To Augment 3G Revenues).
Moreover, the operators will not directly benefit from the increase in ARPU as premium SMS services, external GPRS traffic and access to content all involve payments to third parties.
Future of mobile technology Universal Mobile Telecommunication Services (UMTS) are seen as a godsend in that they offer exceptionally fast data transfer rates and video although there is uncertainty over the level of demand for these facilities and the amount customers will be willing to pay. As a result, UMTS is likely to be rolled out gradually, starting with densely populated urban areas where there is the heaviest network congestion.
The report says that the success of MMS depends on the flexibility of operators who need to ensure that services are interoperable, not only between mobiles but also fixed-line internet. They also need to offer favourable terms to service and content providers and subsidise handsets to encourage consumer take-up.
The UK remains the most attractive market for mobile operators in Europe and the arrival of new UMTS players, such as Hutchison 3G, is likely to intensify competition still further (see Hutchison Brings 3G To The UK). Mobile data services could lead to changes in market share and there is speculation that operators with a subscriber base of less than 10% of the population may be squeezed out of the picture.
There is considerable industry anticipation over the prospect of mobile e-mail but the report claims that it will be 2005 before SMS and MMS services are supplanted. This is because the necessary handsets will take time to penetrate the market and are likely to be too expensive for young users in the near future.
