Rather, according to some analysts, the heat is only likely to intensify. And nowhere more so than in the 3G space.
International Data Corp. reckons the arrival of nationwide third-generation infrastructure and services in late 2005 will see the 3G user base skyrocket from just under 300,000 this year to 3.55 million in 2008. This will be a prelude to the next generation of wireless, 4G, in which all wireless standards can interoperate with one another, allowing users to experience what IDC calls Always Best Connected mobile computing.
There has been plenty of action on the 3G front in recent times, with Telstra's board reportedly green-lighting a limited third-generation network aimed at the regional and business markets and Vodafone signing a contract with Nokia for its network, expected to be operational next year. The carriers are, of course, trailing the lead of Hutchison, which has made significant market inroads in building residential subscriber numbers on the basis of some extremely competitive pricing.
However, your correspondent remains to be convinced that the billions of dollars being invested in 3G will secure the business required for all the telecommunications players to turn a profit in that sector over the next few years. While Hutchison is improving its position, it is competing on price rather than the range of services offered by 3G. Vodafone, for its part, is currently battling market perceptions of weakness in its existing business strategies -- exemplified by a high customer churn rate -- before it even kicks off into 3G. In addition -- and admittedly, this comes from highly unscientific, anecdote-based evidence -- mobile customers generally still seem unconvinced that the capabilities offered by 3G is something they really need.
NB: Several readers have come forward with their views since this commentary was originally published in
"The smaller the company size, the more 'lukewarm' they become. For instance, 60 percent of small firms (fewer than 100 employees) said 3G is 'not relevant at all,' compared to 28 percent among medium (100-499) and large firms (500+).
"Also, it's worth pointing out that despite spending billions of dollars building Australia's first and so far only 3G network, Hutchison 3 ended up competing on 2.5G (in fact 2G) capabilities - i.e. cheap voice and SMS plans. Their challenge is to turn those big spenders they have attracted through the AU$99 capped call plan into mobile data users, and moving up the value chain from purely consumers to business users". -- Warren Chaisatien, Senior Analyst, Wireless & Mobility, IDC Australia
3G has fast enough data rates to compete with ADSL. Unfortunately data rates can still be measured in 10's of dollars per MB.
The fact is that if you were doing a phone rollout with todays technology, you wouldn't go to the expense of running a copper wire from the telephone exchange to every home. The mobile phone network is extremely economical. Landlines could piggy back on the mobile infrastructure. They could have mains powered signal amplifiers, better arials (which could be mounted on top of buildings in the CBD).
My guess is the 3G network does not have a high speed backbone. I strongly doubt that each 3G user could simultaneously download through the network at broadband speed without affecting each other. As such they actually don't want a lot of data, they want to charge a lot of money for as little service as possible.
It is just like an SMS. 160 bytes sent for 25c, compared to voice calls which are around 3000 bytes per second. If voice calls were charged at the same cents per byte as SMS, we would be paying about $140 per 30 second interval. Furthermore, SMS are not time critical. If the network is congested, the SMS can be delayed until there is some bandwidth. If we didnt expect a voice service, the networks would rather we all just sms each other. It is less cost to them.