3G is here, analyst says

Third-generation (3G) telecommunication networks are a reality, but data revenue may lag for years to come, an industry observer said last week.

Speaking at an event sponsored by telecommunication vendor Qualcomm Inc., Andrew Seybold, editor-in-chief of Forbes/Andrew Seybold’s Wireless Outlook, said that telecommunication service providers’ belief that data revenue will increasingly replace voice revenue is incorrect. “When I look at the world for the next three to four years, I think they’re wrong.”

Seybold explained that data revenue continues to be incremental, generally accounting for little more than 15 per cent of total revenue, even for companies with significant data services such as Japan’s NTT DoCoMo Inc., whose I-Mode multimedia service is one of the most successful services of its kind in the world.

He said that three things will drive 3G growth: applications, devices, and pricing. “It’s no longer technology, it’s down to marketing, it’s down to applications, and it’s down to what people will pay for,” Seybold said.

Seybold also said that code division multiple access (CDMA) technology, of which Qualcomm is a leading developer and proponent, was the most cost-efficient way to upgrade to 3G. Offering an U.S. example, he said that Sprint PCS upgraded from CDMAOne, an earlier variant, to CDMA2000, produced by Qualcomm, and that it cost them US$700 million and took six months. By comparison, AT&T Wireless was moving to a Global Standard for Mobile communications (GSM)/General Packet Radio Switching (GPRS) system, and that it was costing US$4 billion and taking 18 months to complete the upgrade.

Late Adoption in Hong Kong

Qualcomm recently opened an office in Hong Kong to serve clients both locally and in Southeast Asia better, the company said.

However, 3G has yet to arrive in Hong Kong and is not expected to launch locally until next year. Last year’s 3G auction provided for four licence holders: Hong Kong CSL (jointly owned by Australia’s Telstra and Pacific Century CyberWorks), Hutchison 3G (Hong Kong) (jointly owned by Hutchison Whampoa, and Japan’s NTT DoCoMo), SmarTone 3G (wholly owned by SmarTone Telecommunications Holdings), and Sunday 3G (Hong Kong) (wholly owned by Sunday Communications.)

Hutchison Telecommunications (Hong Kong) Ltd. launched the world’s first commercial network based on CDMAOne technology in 1995. However, adoption of the format has been poor, given greater roaming capability in Asia on GSM, coupled with more attractive, lower cost GSM handsets.

Hong Kong has also been slow to adopt 2.5G services and advanced mobile devices has been slow, despite one of the highest per capita penetrations of mobile phones in the world.

For example, according to Sun Microsystems Inc., only two Java-enabled phones are currently available locally. Java phones allow user not only to download programs and reduce network latency, and some applications can be used even without a network connection.