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News
Issue #2002 - 21
(June 2002)
(Updated June 5, 2002)
MARKET
OUTLOOK & TRENDS
Bad News for 3G Wireless Telecoms
Two independent sources
paint a less than rosy picture of the short-term prospects for
third-generation networks.
The World Markets Research Center (WMRC) recently published a
report that says revenues from 3G telecoms services are likely to be
far lower than the market had expected. The report follows an
article by ShareCast that outlines predictions proposed by the
brokerage firm Nomura Group, essentially saying that the roll out of
3G services later this year will be plagued by a cheaper and more
flexible alternative, namely wireless LANs.
The World Markets Research Center
The WMRC doubts that the demand for the new data services, in
which European wireless operators invested billions, will not
generate the revenues to allow operators to recoup their investment.
Voice, not data, will remain the main application for new networks,
the research center predicts.
"Despite the new services 3G can offer, traditional voice calls
will still account for the majority of 3G revenues at 61.8 percent
(and 73.4 percent of total mobile revenues). Voice calls will
account for half of 3G revenues in Finland and the U.K., which are
both seen as early adopters of other services such as SMS, Web
access and infotainment."
Prediction Highlights
- Western Europe 3G subscribers will number 84.1 million by 2007,
generating revenues of $36.3-billion.
- Only 27 percent of all mobile subscribers will purchase a 3G
phone by 2007.
The Nomura Group
While major mobile operators jostle among themselves for
subscribers, they should be on the look out for U.S. tech giants the
likes of Intel and Cisco, which Nomura says have the potential to
make 3G largely redundant.
Nomura analyst Keith Woolcock told ShareCast, "Intel’s
mission is to dramatically bring down the cost of WLAN chips so that
they can be crammed into most devices." WLAN chips will be
"more power efficient so that they can fit into small
battery-powered devices. Therefore, within a few years, WLAN will be
built as standard into PDAs and some mobile phones."
Woolcock and his colleagues believe that the next few years will
prove that 802.11 can develop faster than 3G. Techniques such as
packet relay will enable large mesh networks of 802.11 base-stations
to be built to cover high-density areas like London and New York.
Voice will also be carried increasingly over 802.11.
If the WMRC’s and Nomura’s predictions are correct, or even
close, it will be bad news for wireless operators.
For more information: http://www.worldmarketsanalysis.com/wm3g/3G_readmore.html
http://www.nomura.com
(Additional Source ShareCast
MobileInfo.com’s Comments & Advisory: It
appears that forecasting 3G problems has become a favorite pastime among
research writers. Unfortunately, it is not as simple as what these reports
lead you to believe. The world is neither purely white nor purely black. The
only two findings which we agree with are that 3G networks will not meet the
levels of growth and prevalence as was originally forecast by wireless
infrastructure vendors and that WLANs will be important components of future
wireless infrastructure. In fact, we fully support emergence of hybrid
networks as the way of the future. WLANs have certain strengths for sure but
you would not install WLANs on highways and out in the boonies. Therefore,
there is a legitimate role for 3G for truly mobile needs. There are serious
challenges with WLANs in carrying voice with same level of reliability and
inter-connectivity as current voice networks do throughout the world. Let
WMRC researchers predict how will the interconnected WLAN infrastructure
emerge? Let WMRC figure out how and when will the billing, content
management and m-commerce payment systems on a pure-WLAN infrastructure
work. It will be a while and by then, technology would have moved ahead. We
would then feel silly making predictions about a ten year old technology.
Finally let us not call for only 3G or only
WLAN infrastructure but a hybrid infrastructure with sealmess roaming
between the two.
Note: This news release may contain forward-looking statements. Readers should take appropriate caution in
developing plans utilizing these products, services and technology
architectures. All trademarks used in this summary are
the property of their respective owners.
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