Use of 3G (third-generation) mobile services in Europe and the U.S. still lags behind their adoption in Japan and South Korea, but use should grow significantly around the world this year, research company TeleGeography reported this week.
About four years after the earliest 3G services were launched by Japan's NTT DoCoMo in 2001, there still are only about 30 million users in the world, TeleGeography reported in GlobalComms, its online encyclopedia of telecommunications, according to a company statement Monday. However, the company expects worldwide 3G users to double this year.
The 3G technologies, namely WCDMA (Wideband Code Division Multiple Access) and CDMA2000-1x EV-DO (Evolution-Data Optimized) boost users' mobile bandwidth to between 300K bps (bits per second) and about 2M bps from the typical dialup-like speeds of 2.5G technologies such as GPRS (General Packet Radio Service). This boost opens up room for faster content downloads, games, location-based services, enterprise applications and other uses.
In Japan, 12.5 percent of mobile customers use 3G, and in South Korea, that figure is just over 16 percent, but even in those places the mobile operators have incurred heavy marketing costs to generate demand, said TeleGeography analyst David Leach. TeleGeography is a division of PriMetrica.
"It isn't yet a bed of roses, still, in those countries," Leach said. One snag in Japan was that customers were not happy with battery life and reception in the first generation of 3G handsets, though they seem to be happy with the latest phones, he said.
In Europe, some mobile operators are pushing 3G by subsidizing it, offering good deals on voice minutes and incentives to use the advanced data services for which 3G was designed, Leach said. He used as an example the strategy of Hutchison Whampoa's British and Italian carriers, Hutchison 3G UK and H3G SpA. Even with those subsidies, only 4 percent of mobile users in those countries are using 3G, he said. Adoption of 3G in Europe was stalled by overhype followed by the bursting of the telecommunications bubble, plus an initial shortage of handsets, he said.
U.S. adoption lags farther behind, with fewer than 200,000 3G users, a tiny fraction of a total mobile customer base of more than 182 million. Slow action by the Federal Communications Commission to make more spectrum available, along with the challenges of merging mobile operators, have delayed 3G deployment in the U.S., Leach said. In another jumbo cellular market, China, the government's delay in allocating licenses has held up the introduction of 3G, he said.
In addition to regional barriers to adoption, it's not clear what advanced service, if any, will drive a large percentage of users to pay for 3G anywhere, Leach said. Downloads and transfers of ring tones, songs, pictures and video, as well as interactive gaming, location-based services such as directions, and remote home monitoring are among the services that have been seen as major drivers. "There isn't really yet any kind of killer application," Leach said.
However, despite a slow start, subscriber growth is promising, he said. For example, Hutchison 3G UK had just 210,000 3G subscribers at the end of 2003 and a year later had reached 2.5 million subscribers. And whereas there were only 13 launches of 3G services in 2003, there were 45 launches last year, 32 of them in Europe, he said. Carriers and retailers such as the U.K.'s Carphone Warehouse Group expect sales to increase at the year-end holidays, according to Leach.
"It seems as if the industry and its channels are gearing up for something big this year," Leach said.
Meanwhile, mobile phone use as a whole grew rapidly in 2004 in many developing countries. The fastest growth was in Iraq, where mobile licenses were issued in late 2003. The number of subscribers rose 1,757 percent to 1.2 million users in 2004, according to TeleGeography. Other hot spots included Nigeria (up 170 percent), Pakistan (up 139 percent) and Russia (up 104 percent).
In some countries, cell phone penetration has actually topped 100 percent, the company said. For example, Germany's has reached 105 percent and Luxembourg's has hit 135 percent. This is probably due to some subscribers having both a work and a personal phone, and in the case of Luxembourg may involve frequent visitors to the tiny country who maintain local mobile accounts there.