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Friday, September 03, 2004

Vision, meet reality - On 3G rollouts

The Economist reviews the state of progress in 3G rollouts all over the world and starts with a recap of the promise -"The 3Gdevice will function as a phone, a computer, a television, a pager, a videoconferencing centre, a newspaper, a diary and even a credit card...it will support not only voice communications but also real-time video and full-scale multimedia. It will automatically search the internet for relevant news and information on pre-selected subjects, book your next holiday for you online and download a bedtime story for your child, complete with moving pictures. It will even be able to pay for goods when you shop via wireless electronic funds transfer. In short, the new mobile handset will become the single, indispensable “life tool”, carried everywhere by everyone, just like a wallet or purse is today". Today,Greater emphasis is being placed instead on 3G's ability to deliver cheap voice calls—for as well as being able to support faster data downloads than 2G networks, 3G networks provide vast amounts of voice capacity (typically three times as much as a 2G network) at a lower price (typically a quarter of the cost per minute)By offering large bundles, or “buckets” of minutes as part of their monthly tariffs, operators hope to encourage subscribers to use their mobile phones instead of fixed-line phones, and even to “cut the cord” and get rid of their fixed-line phones altogether—something that is already happening, particularly among young people, in some parts of the world. In America, for example, where large bundles are commonplace, subscribers talk on their phones for 700 minutes per month on average, compared with 100 minutes per month in Europe, where call charges are much higher, notes Mark Heath of Analysys, a consultancy. Since 3G networks offer voice capacity at a quarter of the cost of 2G networks, it ought to be possible for operators to offer larger bundles at a lower price per minute and still make money.On of whether 3G will succeed, for 3G is a range of technologies that makes possible all kinds of new services. In Europe, 3G's main impact may simply be cheaper voice calls; in America, 3G may have most appeal to road warriors who want broadband access wherever they are; in the developing world, 3G could help to extend telephony and internet access into rural areas; and in South Korea and Japan, 3G might even—shock, horror—live up to the original lofty vision for the technology. The switching on of 3G networks around the world is not the end of the saga; the story continues to unfold.

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