TELECOMS & MOBILE
ENN Year in Review: Wi-Fi, picture phones offer a port in the storm
27-12-2002
by
To reflect on the wireless industry in 2002 is to recollect a series of failures and disappointments. For the most part, the last 12 months have been brutal for most wireless firms -- except those dealing in Wi-Fi.
The prediction was a bold one. In his keynote speech at the 802.11 Planet Conference in December, Wi-Fi Alliance Chairman Dennis Eaton forecast that the wireless technology known as Wi-Fi would be "bigger than Budweiser" by 2006. Wi-Fi, let's remember, is a technology that's used to create small but fast wireless data networks. How can it possibly become better known than one of the world's biggest brands?
Simple: Wi-Fi lets users log on without plugging in, and in a world where so many people want to be on-line constantly, Wi-Fi is spreading like wildfire. Airports, hotels, cafes, offices and hospitals have already spent billions to give the public or their own staff Wi-Fi access, and sales are set to grow at a compound annual rate of 30 percent. Dublin already has an estimated 400 Wi-Fi networks, and public hotspots are coming on-stream, including one at the Four Seasons hotel and others to be rolled out by O2 and Eircom.
If only 3G, long thought to be the be-all and end-all of wireless, could have performed so well. By the end of 2001, prospects for 3G were already dim, and few thought the situation could get any worse. They were wrong.
KPN, Telefonica, Sonera, MobilCom and DoCoMo all posted massive write-downs on their 3G investments. DoCoMo alone wrote off USD4.7 billion in its 3G assets, mostly in Europe, and its own 3G business (FOMA) has performed well below expectations with just 149,000 users, less than half of the firm's revised user target of 320,000 for March 2003. Meanwhile MobilCom flirted with liquidation, before the German government promised to bail it out, while Quam, also in Germany, failed altogether.
In Ireland's 3G beauty contest this year, licences went to Hutchison, O2 and, after a delay that must have made Telecoms Regulator Etain Doyle sweat, Vodafone. But it now looks like the billions that were paid for licences elsewhere may have dealt a death blow to 3G before it gets off the ground.
It wasn't all bad news, of course, with Mobilkom in Austria launching the first commercial 3G network in Europe, apart from the O2 3G test-bed network on the Isle of Man. Sonera too lit up its 3G network, but it has yet to make it available to consumers even though it was set to do so before the end of 2002. Hutchison 3G, which officially branded itself "3" in 2002, made a number of announcements and appeared as confident as ever, possibly the only 3G operator expressing such exuberance.
"3G has been all ups and downs this year," says Paolo Pescatore, a senior analyst at research company IDC. "On one hand you have firms handing back their licences, or asking for more time to roll out their networks, and on the other are positive signs from firms like Hutchison." Pescatore says that regulation in the sector has seen its ups and downs as well. "The regulators seem to understand what the telecoms are going through and so they are being flexible by letting them share 3G networks and extending the terms of their licences." He noted however that although licence terms were eased in 2002, regulators are not showing much flexibility on deadlines.
SELL THE APPS, NOT THE TECH
In late 2001 and early 2002, Europe's operators, after the failure of WAP, knew they might see GPRS suffer the same fate. So they took a page out of the book of telcos in Japan and Korea: they decided to sell applications, like multimedia messaging (MMS) and mobile games, not abstract technologies. By the end of year, picture messaging and downloadable Java games, not to mention polyphonic ringtones, were available just about everywhere in Europe, and by all accounts sales are brisk.
Could easy-to-use, consumer-centric apps be a preview of 3G? Although Pescatore doesn't go so far as to say "yes," many other analysts do. Pescatore says that despite the burgeoning success of applications, there will be hurdles to surmount in 2003, most of which relate to billing, network interoperability and helping customers make smooth transitions from 2G to GPRS.
But to make the change, the first thing new users will need is a new handset, preferably one with a camera, if the phone makers have their way. According to Strategy Analytics, about 16 million camera phones will be sold globally in 2002, mostly in Japan during the third quarter. Other sophisticated handsets came to the fore this year, including O2's PDA-phone hybrid, the XDA, although its sales in Ireland are slightly behind expectations.
Indeed sales of these advanced phones this year will be crucial for GPRS or 3G to be a success. But as far as predictions for next year are concerned, experts and analysts say by Christmas 2003, users in Ireland and elsewhere can expect phones and networks that can handle video clips. Indeed all indicators show that the mobile operators and phone makers are finally maturing -- but whether customers are ready to mature with them remains to be seen.
Using the subject line to get noticed: Denise Cox argues that to get results you have to make every word work in a subject line.
