The gleaming ads on the Victoria station concourse were impressive: huge, colourful and straight to the point. They boasted of the latest offers from Three, the third generation mobile network. And yet, most people passed by without even raising an eyebrow.
This sums up the story of 3G in Britain so far. Launched a year ago by Three, a joint-venture between Hong-Kong?s Hutchison Whampoa and Japan?s NTT DoCoMo, it was heralded as a revolution: it allowed video messaging, high-speed Internet access and a host of glitzy features. A year on, it has barely ruffled feathers in the mobile industry.
At the last count, Three had 361,000 subscribers - only 6.5 per cent of a 55 million strong market. It lagged far behind newcomer Virgin Mobile (3.7 million) and leader Orange (13.2 million). Its first year has been marred by problems that were not totally unexpected.
Three gambled on an early launch even if the technology was not ready: the network was still being rolled out and coverage was limited. The aim was to steal a march on potential rivals. As a ?green field operator? (one not owning an existing telecommunications infrastructure), the company had to build an entire network from scratch. Teething problems were inevitable but they turned into a nightmare.
The first customers found themselves with bulky handsets, high tariffs, billing errors, inexistent video content, poor reception quality and lousy customer service. The adventurous souls wanting to jump on the Three bandwagon were often told that handsets were unavailable due to confusion with suppliers.
Fast data transfer speed
Many have scoffed at Three?s tactics, but the company is being taken seriously again. With customer numbers stagnating at the turn of the year, it doubled its offer of handsets, slashed prices of both phones and tariffs, extended its network, improved content and launched a prepaid service. Three?s foray into the ?Pay As You Go? market is highly significant. Prepaid has been the traditional motor behind the vertiginous rise of mobile phone subscribers and accounts for 65 per cent of UK cell phone users.
Up to now, 3G has been marketed as a brand. Then again, 3G is a term that means nothing to most people and experts believe it is time to communicate the benefits to the public instead of playing with jargon.
?Operators should steer clear of communicating 3G as a technology revolution - the mistake made with WAP - and instead focus on services and applications that offer genuine quality, productivity or lifestyle improvements,? says Surinder Siama, associate director of HI Europe and author of a study on attitudes towards 3G. In the survey, 52% of respondents believe the industry ?has completely failed to explain what 3G is about and why it is worth having?.
The fast data transfer speed of 3G mobile phones is set to transform the way we work. At the moment, it is capable of 370 kilobits per second, which is comparable to broadband Internet and seven times faster than conventional dial up. Such a speed on the move is convenient for business users - a mobile operator?s most profitable and least price-sensitive market segment and a logical consumer of the advanced data services that are now available on 3G.
By enabling lucrative new data services, the mobile industry would be able to compensate for declining revenues in voice calls forced by fierce competition. To illustrate this point, Vodafone dipped its toe into 3G in March with a phoneless launch, selling 3G laptop cards. Simply plug it into a portable computer and you can surf the net at high-speed.
?Content is key in mobileland. The key is to offer personalized content with greater immediacy than is available elsewhere,? says Julian Weston of iTouch.
3G?s multimedia capabilities will help unlock the market. Content will centre on the killer application: mobile video. A shape of things to come is Three?s live video mobile channel showcasing breaking news, sports, music videos and film clips. Three and Vodafone already have exclusive mobile rights to the FA Premier League. In Japan, digital television will be available on third generation handsets next year.
In the UK, p*rn is being touted as a potential saviour for 3G. Adult services have a proven track record of drumming up big business with new technologies. A well-known industry statistic is that adult chat services account for 70% of revenues from even the black and white 160 characters of SMS. However, the visual element has always been missing. Until now?
Making technology more appealing
Music is also expected to motor 3G. Ringtones already represent a substantial market. Worldwide sales reached Rs 100 billion last year, up 40 per cent from 2002. They do not only outstrip legal Internet downloads but also overtake CD sales. In Britain alone, the ringtones market was worth Rs 5 billion last year. The music industry believes that a quarter of sales will be mobile downloads by 2006.
All operators badly want 3G to be a success. True, they paid £22.5 billion to get the licences through the government?s open auction but another reason is that the hop to 3G is not optional. It is obligatory because the current GSM networks are fast approaching saturation. Migration is a must as 3G can increase capacity twelve-fold.
The shift to 3G will be gradual and conducted with less razzmatazz than Three?s 2003 launch. Industry sources believe in a ?stealth introduction?: 3G will be rolled out in a smooth, seamless transition. Competition will provide more handsets, services and tariff options, making the technology more appealing to customers. The technology has got such a bad name that the networks will impose their own brands.
?People do not care what kind of technology they are using. 3G is an enabling technology, not a service, so we won?t market 3G per se,? explains Julian Horn-Smith, Vodafone?s CEO.
The hype will fade but this time next year, expect consumers to turn their heads and learn about new media services on the go as mobile operators? 3G adverts jostle for space on that same concourse.
