Next generation or no penetration?

Being involved in the technical research domain I often find myself questioning emerging services from a consumer perspective rather than what my background may suggest. Yes, those who know me will agree I am opposed to many of the services that have been rolled out or thought of. My opposition is usually from an ethical or sociological standpoint and doesn’t always gel with my interests in developing the technologies to enable such services.

However, my big question (and has been for a while) is, what about 3G? Are we setting ourselves up for a next generation flop or a next generation boom? I had the good fortune of attending a great conference last year in Dallas, TX on the subject matter of IP operations and management. At this conference were a number of guest speakers from NEC, Alcatel and Nokia. I remember the issue being raised by the Nokia speaker about the drop-off in the telecommunications market and the reasons that were given. I however, had some different views on the subject and discussed them with him further.

I couldn’t help but wonder if the drop-off as it was put was not actually a physical decline as most people would have us believe but rather a slowing down in the exponential growth of mobile communications that we have experienced over the past number of years. People sometimes forget that not that long ago mobile phones were a luxury item and very few people had a personal phone. With the advent of GSM and new price plans developed by operators to increase the market; mobile communications suddenly became available to the public. Prepaid services then further increased the market hold by making mobile communication available to the younger generations and today most children from the age of 12 upwards have mobile phones. The market has become saturated and it is very difficult to increase sales in a saturated domain unless you can offer something that people really want.

As time rolls out ahead of us we must examine and test the current environment. GPRS (AKA 2.5G) hoped to deliver what WAP never could. An always on connection to browse the internet via your mobile phone. However, price plans and arguments over what to charge for delayed the provision of the service to a large extent. Today we are standing in the face of 3G just months after the rollout of MMS picture and sound messaging on most networks. These handsets are extremely expensive and the service itself is not practical and bears little more than novelty value. In the UK Vodafone and Orange report only selling 150,000 MMS capable handsets by the end of last year (source: Irish Times). This is a very small amount of sales in such a large market as the UK.

The vast majority of these sales are accounted for by novelty value as I said. People get taken up with fads and neglect to find a practical usage for the expensive services they subscribe to. Most times it is the unfortunate failing of human nature to “one-up” on peers by having such devices. Advertising campaigns for these new handsets are very costly, often being endorsed by admired sporting figures. It is hard to see, based on the uptake of the service i.e. handset sales, how the operators are going to recoup the investment in R&D. It is a fact that SMS and voice calls have been hugely successful for people to communicate with each other. This is proof that different methods of communication have been succesful.

However, I do not see why people will need to pay for overly expensive services such as those proposed by 3G. I for one will never watch a movie on my phone, play games over the network, nor will I ever feel the need to use many of the other so-called next generation services. For now I remain cynical yet inspired by the technology. It’s great to investigate these technologies and make the most them but I fear that humans, as a society and having a thirst for value, will decline on the offers made by 3G until such time the services can be offered at minimal cost. Tariffs usually decrease with the volume of service users but if operators are forced to decrease tariffs in order to entice a take-up of the service, it might be disastrous for the companies involved and may result in a large amount of lost revenue. Whether or not 3G makes it is probably a foregone conclusion. It is unlikely that it will fold away to nothing but I imagine that the uptake will not be anywhere near what operators are hoping for. Without ending on a negative note, not all is lost if the correct measures are taken and people can avail of novelty services at realistic prices. At the moment this is not happening and the results are obvious.