Pricing and fast networks may help 3G thrive
Perhaps the best thing that can be said about 3G is that it is getting better - but how quickly depends on where you are.
In Hong Kong, where four 3G operators have launched services, the W-CDMA technology remains the preserve of niche early adopters.
Japan can offer some comfort, however, as 3G handsets are finally flying off the shelves. NTT DoCoMo is adding 1 million Foma customers a month and forecasts that its users will double to 24 million by March next year.
At home, the most aggressive operator and first to launch, Hutchison Telecommunications, has gained 25,000 subscribers since the end of April for a total of 325,000.
NTT DoCoMo also had an inauspicious 3G start, taking two years to get its first million customers after launching in October 2001.
The question is whether 3G will quickly become mainstream elsewhere, too, or whether Japan - the home of i-mode and mobile gadgetry - is offering something different.
If it is, the 3G Reality Centre at the Alcatel-Fujitsu joint venture Evolium - which makes solutions for NTT DoCoMo - would surely be the place to look. Here, video conferencing, video voice mail, music downloads and buffered football clips are shown. Many of these services are similar to those Hong Kong operators can offer.
The explanation for the upsurge in users by DoCoMo is far simpler: old-fashioned price cuts rather than revolutionary new applications.
In February, the Foma 700i series handset was launched at just US$200. That would be a bargain in Hong Kong, where later generations of handsets have being going up, not down, in price.
The reality appears that without offering services that make a quantum leap, charging stiff premiums over existing handset prices is a stretch, no matter how much more they cost to build.
Another consideration for operators wanting to shift new handsets is that the window for upgrades could be small if the industry is really promising an altogether better technology. That is, a 3G upgrade to add more speed called high-speed downlink packet access (HSDPA), or 3.5G for short.
Much of the early running on HSDPA has been done by NTT DoCoMo, which has been field-testing networks since October last year.
Takashi Nara, Evolium Japan chief executive, said trials showed HSDPA could achieve a round-trip time or latency of 75 milliseconds against 200 milliseconds for 3G.
'This is as important as higher throughput speed to give the user an enhanced experience,' he said.
Users should now notice an improvement comparable to jumping to DSL from fixed-line dial-up internet access.
HSDPA would allow mobile operators to go after fixed-line broadband customers as well as voice. In Japan, this is particularly important as fixed-mobile convergence is already proceeding apace.
But while HSDPA may be a no-brainer for 3G operators, for subscribers the maths is less clear cut.
For one they will need hardware, rather than just a cheap software upgrade. Michel Levy, vice-president of mobile marketing and business development at Alcatel, said: 'HSDPA will be backward compatible with 3G, but you will need to upgrade your 3G phone to benefit from the enhanced speed.'
Just what the upgrade will look like is also uncertain. Mr Levy said it was best to think of mobile devices as handsets and laptops converging.
These are expected to arrive with 3.5G next year - large enough to do justice to the enhanced graphics for internet browsing and video streaming while still managing voice which remains too great a proportion of revenues at 80 per cent.
