When will 3G make it big?

When will 3G make it big?

There seems to be no escape from the UK's first third-generation mobile phone service. Ads for Hutchison's 3 are plastered over billboards and websites and are constantly popping up on the TV, taking advantage of the fact that the new brand is the first service of its kind in the UK.

As so often happens, third-generation mobile phones started being hyped way before the launch of the first service and within the next few years we can expect to use them for everything - from watching movies to tracking down our pets.

But maybe it is time for a small reality check. Mobile operator  MMO2 plunged £102m into the red after paying too much for 3G licences at the height of the telecoms boom although it still believes the technology has a good long-term future.

Retrospect has taught us that the media industry generally has a tendency to get ahead of itself - remember the WAP-hype, anyone? We often over-estimate the speed of change while underestimating the nature of those changes, and although it's important to embrace both change and new technology, it's also all about perspective.

A few months on from the launch of 3, questions need answering. From a consumer standpoint, the tariffs are high and the handsets are clunky. There are also 2.5G services doing roughly the same job, albeit slower.

Although there are no official figures, speculation has put Hutchison's initial UK sales at around 20,000. Although it got off to a slightly bumpy start, with reports of customers having to wait a month between signing up for the service and actually getting their handsets, it now seems in full swing, providing video phone calling and messaging, as well as video content such as downloadable highlights of Premiership matches.

 

First to market, first to trip up?

Insiders at 3 are coy about future plans for the operator, which is showing no signs of slowing down its advertising campaign.

It is important to remember that 3 started from scratch in the UK with no existing UK customer base to rely on, putting it at a distinct disadvantage to the UK's existing four mobile phone networks.

Cynics might also argue that being first to market is a weakness rather than strength for the company - it gets to be the first to make mistakes from which its predecessors can learn.

That said, there are already a number of 2.5G offers out there in the consumer market that rival 3's. None of the UK operators are expecting to launch their 3G offerings until 2004 at the earliest and at the moment are concentrating on extracting more revenue out of existing customers with the introduction of intermediate services such as Vodafone Live, which already boasts more than a million customers, and Orange's SPV (sound picture video) phones.

These packages offer punters compelling services, including picture messaging and video downloads. In fact, the only thing they do not offer that consumers can only get via 3 is live video calling and video messaging.

Leigh Terry, OMD's head of online, thinks all 3G needs is time. "People gravitate towards technology, some sooner than other. But ultimately everyone follows suit. See the video recorder, CD player, microwave or mobile phone," he says. But he warns that it won't happen overnight, adding: "We are still very much on the road to 3G. Successful launches of propositions such as Vodafone Live! are certainly paving the way. People are actively wanting, using and critically not being disappointed by the current services available. There is no reason why, so long as consumer expectations are met with good delivery, it should not carry on unabated," he says.

 

One per cent take up

Predictions from Forrester Research are fairly conservative and point to a slow uptake of the new technology - estimates say only one per cent of the UK will have bought into 3G by the end of next year, rising to 10% by 2007. That said, most people already know someone with a picture mobile phone, so it does seem as though it is just a matter of time.

Will Collin, a partner at Naked, which handles the media strategy for 3, says that third-generation technology promises to change the way we use our gadgets.

"In the long term, it's going to accelerate the importance of mobiles as the primary source of communication for everything."

Collin does not think the growth of 3G will impact heavily on other media pastimes such as watching TV, listening to the radio or reading newspapers.

"It will add to our existing media habits, partly because you can use it during 'dead time', such as when you're on the bus or waiting to get your hair cut," he says.

OMD's Terry agrees: "People may get some sports news or see a couple of goals or a news headline, but I can't imagine it will stop people buying a newspaper for the in-depth analysis rather than just a headline, or not want to watch the highlights or entire game rather than just a goal."

So whereas it is not time to throw out your newspapers, televisions and radios just yet, change is definitely afoot and mobile communication promises to be as much about what we can see as what we can hear.

Senior media figures gaze into their crystal ball:

Will Collin, partner at Naked, 3's media strategy agency:

"We'll see 3G functionality going into products we perhaps didn't expect to see. Our cars will contact our homes to let them know when we'll be back."

Andy Sloan, managing director of All Response Media:

"The processing power of the average mobile will be similar to today's PCs. They will serve as a phone, but with video conference; a wallet that will allow instant electronic payment; and a walkman that will play video as well as music."

Yates Buckley, technical director at new media agency unit9:

"The future phone will be your technological equivalent of a Swiss army knife and will include strange relics of function like the toothpick and the tweezers which no one uses anymore."

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