3G – chance for take-off in mobile business

3G – chance for take-off in mobile business (16 November 2001)

• The internet and mobile telephony are set to merge increasingly thanks to UMTS (Universal Mobile Telecommunications System). It became clear early on that UMTS, also known as 3G (third-generation mobile phone systems), would be a key technology for profitable markets of the future.
• The telecommunications business is international, and dominated by companies that operate internationally. All contenders pursue global strategies – in which the German market plays a central role owing to its sheer size and its geographical location.
• Now that the German authorities have permitted closer cooperation in setting up networks, the costs will probably be up to 40% lower than the earlier estimates of roughly EUR 6 bn per network. The amortisation period for the telecoms investment will be correspondingly shorter than the originally estimated 15 years.
• It is expected there will be shortages of fully functional handsets, highly specialised personnel and special electronic components for the networks.
• UMTS technology offers some major advantages that can be demonstrated under laboratory conditions but which it will not be possible to use fully in the mass market in the medium term. In the transition from the second to the third generation of mobile phones, GPRS (General Packet Radio Services) will help to familiarise customers with the new types of service.
• There is a need for services that emphasise the specific advantages of mobile phones and complement conventional wired services. The more advanced versions of SMS (Short Message Service), location-based services and mobile electronic payment systems hold great potential. However, personalised offers of information will probably generate less turnover than simple voice services until 2010.
• While the new technology opens up an enormous spectrum of possibilities, product developers must never lose sight of the consumer. A service will only be a financial success if customers are entirely satisfied with the combination of content and technology. Business models stand a particular chance of success if network operator, content providers and manufacturers of terminals coordinate the steps they take. It is not certain that UMTS will be a success in m-business, but there is a strong chance.

For in-depth analysis of ‘3G’, see the Deutsche Bank Research

E-conomics.