Telcos admit fears over 3G licences

Telecoms operators have admitted that their £68bn investment in third-generation (3G) mobile technology could end in "disaster" because services won't live up to the hype.

Jorg Kramer, group leader of new technologies at Vodafone Mannesmann's Mobilfunk division, said: "I have the fear that it perhaps will be a disaster. I suspect that we don't have the time, the manpower, or perhaps even the money to deliver the full potential."

In a series of auctions across Europe this summer, carriers spent billions capturing allegedly lucrative licences for future 3G mobile phone services. 3G promises the delivery of high bandwidth to mobile devices, but cracks are now starting to appear as telcos try to work out what exactly they've paid all that money for.

T-Motion, the mobile services arm of Deutsche Telekom, has said that 3G pricing is likely to be double that of current phone costs. "Our estimates show we will need to double income per capita simply to pay for the licence and the construction of the network," said Dirk Hemmerden, the company's director of product development.

Eddie Murphy, a senior consultant with telecoms consultancy Analysys, said: "It will be a lot harder to make a profit from 3G than GSM [global standard for mobile communications]. It's a real leap of faith that they will be able to get the profits from the customers."

Vodafone denied that there will be a problem with 3G rollout, but confirmed that much has still to be worked out. "We wouldn't have paid that much money on a licence that we couldn't put into operation. But we really have no idea how it will be priced because it is so far down the line," said a spokeswoman.

"We have spent £6bn on a licence and you have network costs on top of that, but as to how that pans out we haven't made any decisions yet," she added. Vodafone admitted, however, that handset availability could be a real problem.

BT plans to roll out 3G in early 2002, but said that no pricing decisions have yet been made. "We are talking about a long-term licence for 19 or 20 years. Getting the money back immediately is not a top priority," the company said.

Kramer later denied that he had made the comments last week at a user conference held by telecom equipment supplier Comverse.

First published in Computing

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