I was recently invited to a workshop discussing how mobile operators could 'negotiate' 3G licenses with regulators. I initially thought that this was perhaps something still lying around from the (seemingly ages ago) days of the auctions but the need is still as present as ever, with new complexities such as mast sharing and license sales added to the mix.
To many, the need to argue with the regulator shows that the mobile operators are having to be coerced into offering 3G, and will resist it every step of the way. They have some strong arguments; the relative failure of 3, the delays of operators, the launches so 'soft' that they barely exist, a sudden interest in EDGE, the return of licenses, and the pessimism from many in the mobile industry over the success of 3G. But these arguments tend to ignore the history of mobile, and indeed the lessons from NTT DoCoMo. Soft launches are more than a token attempt to show 3G commitment, they are a precursor to full deployment.
PCMCIA Cards and Caution
History suggests that mobile operators are tentative and cautious. They like tests and trials. In Portugal, it is a trial for Vodafone staff and selected business partners and customers to use 3G in Lisbon and Oporto. In the UK, Vodafone has started a trial of its 3G Mobile Connect Card for laptop PCs. In Germany, it is a trial for T-Mobile to allow customers to use its 3G network but not offer 3G phones. This year will be characterized by soft launches, which are barely more than trials. As ever, the exact situation will vary from country to country.
But this is the way of the operators. As they gain more experience of 3G, overcome problems and get handset availability, they will move to fuller commercial launches in 2005. There will be positives and negatives to hurry them along. The positives include the additional ARPU possibilities and new services. The negatives may often be stronger factors, such as regulators, competitors (particularly if 3 can improve as early indications of its UK pre-pay suggests, or mirror its performance in Italy into other markets) and the threats to the traditional mobile voice and GSM markets. Some regulator concessions will happen - such as the deployment delays allowed in the Czech Republic - but these will tend to be limited. History shows that mobile operators often respond to negative pressure, and they quickly copy each other - if 3G works in one country, other operators will want to emulate it.
These soft launches by European operators, partly enforced by regulator deadlines, are often all that the carriers feel they can reliably offer at the moment. As issues such as handset avilability and network performance are resolved, then they will offer ever broader services. Although some operators used the 3GSM Congress to blame the handset vendors for slowing down 3G deployment, there is clear commitment from the major devicemakers to be ready for a 3G Christmas.
Continue Learning by Example
NTT DoCoMo has shown how the path from initial difficulties to strong growth can be achieved. From 3,000 new users in the month of December 2002, it attracted 255,000 new subscribers in December 2003. Subscriber numbers are about to top two million. NTT DoCoMo has also responded to criticism on such issues as pricing, coverage and handset battery life and weight. Service availability is to be expanded to more than 99% of the population by the end of March 2004. All new handsets now weigh less than 130 grams and offer continuous stand-by time of at least 300 hours. Pricing has been reduced and simplified.
Some of the other Asian markets have also taken on a more optimistic view of 3G. 3 Hong Kong started its 3G service at the end of January, and attracted over 80,000 registrations in advance of the launch. In China, large scale trials are expected to take place in the second half of the year. One of the major issues surrounding China remains whether it will adopt its own version of 3G, known as TD-SCDMA. Local opinion suggests they may well go their own way and try and protect local vendors.
The supposed battles between 3G and GPRS, EDGE and Wi-Fi will increasingly be seen as the coming together of complementary technologies. The news that TeliaSonera will deploy 3G in cities and EDGE outside makes total sense - its not a 'defeat' for 3G.
Nokia recently stated that it believed there would be more than 50 commercial W-CDMA networks alone by the end of 2004. Undoubtedly, some will barely deserve the description 'commercial' but it's a start. And 2005 will be the year when people stop doubting the commitment of mobile operators to 3G.