3G VIEWS AND OPINIONS
The first 3G network is on air, but where is the industry's self-confidence?
By Petri Possi
Finally the first 3G WCDMA network launched three weeks ago in Japan. After a very low-key start, NTT DoCoMo was selling 2000 subscriptions per day during first couple of days, even when the phone prices were high. The Japanese operator has announced quite modest sales targets and telecom operators and analysts are anxiously waiting for clues as to how 3G market will take off. At least South Korea shows some positive signs, with cdma2000 networks having over one million customers and 3G applications successfully running, but investors are still nervous.
Most 3G operators still need to raise more capital to build their networks and in Europe some 3G operators are renegotiating their license agreements to limit the cash outflow. One license has even been given back to the government. The world's short-term economic outlook does not look good and layoff announcements in telecom industry are almost daily occurrence. To add insult to injury, you can read news articles every week, by “know-it-all” telecom analysts, that operators paid too much for their licenses. Of course, without any enlightenment of how the telecom industry should be turned around. With hindsight, it is always easy to criticise the situation, but very few suggestions have surfaced of how to build a 3G business case successfully. But the worst thing is that operators seem to have totally lost confidence in the market and themselves.
When times are tough, new industry leaders will emerge, so how will the turn around come? The 3G saviour will be the several killer applications that are focused towards different customer segments and create a positive spin for the industry and new services. First, there is a lot to be learned from WAP. The WAP application agreements that GSM operators demanded from companies to get into their portals were not attractive for content providers and if you were not in their portals, you did not have a chance. Some operators only allow one type of application (like games) or services (like search or email) in their portals. An airtime revenue sharing scheme is that best you can expect when selling WAP content to operators. WAP also got constant bad press and that did not help either.
In the 3G world, operators have to be more content industry friendly and let the killer applications have a chance. And no, voice and email will not be killer applications, because those will not make people buy 3G phones or significantly increase traffic. Voice will be a good cash cow, but the real growth is in higher speed data content. Operators will have to implement micro billing, create fair and friendly revenue sharing and content provision agreements, find global content providers, as well as a wide range of local e-commerce partners. Creating this in their own portals and letting other services hook onto their platform will set the scene for future killer applications. Some 3G operators cry that “we are not in the billing business” or “we need to control the content”, but they should concentrate on getting the cyber-air-space ready to enable high speed infotainment to evolve.
In the Internet world, tens of killer applications (not email) have made a lot of money for their creators and ISPs. Companies like Ebay, Amazon, AOL or Yahoo, or services like gambling, gaming, music and adult content have all created traffic and revenues. People with a good idea and with the right pricing and marketing, created killer applications. In the GSM world, SMS became a killer application when messaging was free or almost free. Because of that, it turned into a very popular service and once the price of the service went back to normal level it became a killer application.
What will be the 3G killer application? Your 3G mobile is a videophone, TV, radio, small wearable computer, game console and platform, high speed Internet, music player or even any imaginable remote instrument or tool. It also has a built in virtual LAN, home environment (even when roaming) and accurate location information. Having a choice from all of these options, operators will not have to worry what their killer applications will be; they can choose them with the correct pricing. All the free brainpower and creativity that is available after Internet companies have gone bust, should help to ignite the 3G content.
It is easy to see music videos and their global release events becoming killer applications. Betting and gambling with live events via phone can be made big. Adult content companies have already announced their interest in 3G. 3G can be made as a new info/advertisement media from online cook-book videos to exercise videos and from religious ceremonies to financial content push broadcasts. Anything “On-Demand” or pre-subscribed push content can make it big! Even web surfing can be made a killer application if the price is right. The cost of services will decide which one will be a killer and which one will be a dog.
In venture capital meetings a couple of years ago, everyone was sure that they had the potential killer application. Where has all that creativity gone? In conferences and exhibitions, so many top telecom industry people tell audiences that they do not know what the killer application will be. It would be nice to see a few more vendor, operator or content company CEOs stand up and shout “We are creating killer applications!” How? Because they have suitable terminals, the right content, the correct pricing policy and agreements with several network operators for world wide pipe and most importantly because they have the confidence to make it happen. A well-known fact is that the best way to predict the future is to create it, and for that you need a lot of self-confidence.
P.S. Mobilecom is making big announcements and stands out in a crowd. - ed
- Petri Possi is an independent wireless network consultant. He has over ten years experience in a wireless industry working with network planning companies, infrastructure vendors and mobile operators. You can send him feedback through firstname.lastname@example.org
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