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High spirits abound but 3G ship is yet to sail
Fri Feb 27, 2:40 PM ET

By Chris Nuttall

The luxury yachts and cruisers lining the harbour in Cannes last week were bobbing billboards and floating hospitality suites for the biggest names in the mobile telecommunications sector, the fleet's size flagging the improvement in industry optimism.


Attendances at 3GSM in Cannes, the industry's annual summit, were up 30 per cent on a year ago. The GSM Association was celebrating signing up the billionth GSM subscriber, and the promise of much-delayed next-generation 3G services seemed about to be realised.


"2004 is gearing up to be the most exciting year in some time," said the normally unexcitable Nokia (news - web sites) chief executive Jorma Ollila. "The most important development in 2004 will be the commercialisation of 3G.

"3G will be an enabler, bringing many new opportunities."

The latest statistics justify the upbeat atmosphere at the conference. The figures show the industry returned to growth in 2003 after subscriber numbers fell in 2001 and 2002.

There were 1.4bn users of mobile phones at the year-end, 72 per cent of them using the GSM system and 13 per cent on CDMA (news - web sites), whose powerbase is in the US.

China is the largest market and India and China are expected to account for 25 per cent of the world's subscribers by 2008.

The Chinese ascendancy was confirmed as one industry executive after another visited the table of Zhang Ligui, president of China Mobile, which is the world leader with 150m subscribers, to pay court during the GSM Association's awards dinner. The evening then climaxed with his acceptance of the top Chairman's Award for his contribution to China's economy and the global success of GSM.

The GSM world is embracing W-CDMA as its preferred 3G standard and the conference heard that NTT's DoCoMo (news - web sites) in Japan, the first to launch a network, was finally gaining traction with 1.9m subscribers by the end of the year.

3G, which makes higher data speeds and richer multimedia services possible, is seen as unleashing a wave of services that will increase average revenues per user (arpu) and the proportion of revenues earned by data compared to voice.

Handset makers are also benefiting from the data revolution. More fully featured camera phones are boosting average selling prices.

"Imaging is today the most successful application," said Mr Ollila, adding that Nokia's 6600 camera phone had become the world's best selling "smartphone" with 2m units sold since its debut in October.

Almost four out of every 10 phones sold worldwide bears the Nokia brand but the market leader is facing challenges from many other manufacturers and from software giant Microsoft in the fast-growing smartphone category.

Its battle with Microsoft concerns whether Windows or Nokia-backed Symbian will dominate as the operating system for the new phones. It is also involved in a branding tussle with the operator Vodafone over whether the 3G phones it supplies will be more recognisable as Vodafone Live! handsets than as Nokia ones.

At 3GSM, the fight with Microsoft intensified as Nokia announced a Communicator product with IBM that would challenge Microsoft in the corporate world it dominates, while the software maker announced significant new smartphone releases with Motorola.

The tough relationship with Vodafone was exemplified by Arun Sarin, Vodafone chief executive, who conceded only through gritted teeth that it would use Nokia 3G phones and made strong criticisms about overheating, bulky and power-hungry 3G phones.

Doubts over the quality of new technology were the clouds on the horizon at Cannes. Mr Ollila was enthused by push-to-talk, a kind of voice version of SMS texting or instant messaging, which he predicted would be a standard feature on all phones in the future.

But the industry is waiting with bated breath to see if acceptable 3G phones will be available in bulk by the fourth quarter for the anticipated launch of some 26 networks.

UK-based MMO said 3G would not "get real" until 2005 and questioned the ability of Bluetooth and WiMAX technologies to provide faster speeds and acceptable quality over short and long ranges respectively.

This is a source of considerable frustration for European operators, with networks and products and services available but no phones ready to start recouping the billions they have spent on 3G licences.

For them, the boats may be in the harbour but the 3G ship has not yet sailed.

http://story.news.yahoo.com/news?tmpl=story&u=/ft/20040227/bs_ft/1077690759831