BT guru pops 3G bubble

European telcos may have backed the wrong horse as they desperately struggle to stay afloat under the financial strain of recent 3G licence payouts.

On BBC2's The Money Programme late last week, BT's former head of technology, Peter Cochrane, said he did not expect third generation mobile phones would ever appear in the UK.

"[The 3G auction process] was really a good study in madness," said Cochrane.

One major problem highlighted by Cochrane was the transition from GSM (Global System for Mobile telecommunications), the current mobile technology, to 3G handsets.

"To make 3G pay, everybody's got to have one and be very avid users indeed," said Cochrane. "I don't see that happening."

Handsets will initially need to operate on both GSM/GPRS and 3G networks to provide a seamless transition to the new network.

Fabulously optimistic though it sounds, a limited testbed of 3G services is expected to kick off in the UK in May.

If handsets are not produced on time in Europe then not only will Europe fall behind Japan and the US in the race for 3G, but telco operators could go under owing billions.

A European Commission paper on the roll-out of 3G services states, "The timely availability of 3G handsets will be crucial."

Cochrane said telecos may collapse under the weight of their arrears, focusing particularly on British Telecommunications PLC's £30m debt mountain.

While concerns continue over the compatibility of European networks with those adopted by other countries, Europe is desperately struggling to meet its self-imposed deadline.

Commercial third generation services, which should bring video and the internet proper to mobile phones, are due in Europe some time next year.

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