After a long delay, new-generation mobile phones have finally become a mass-market reality in Europe. But the new 3G phones are likely to face some tough competition.
Four years after Europe's leading mobile phone operators splurged more than EUR 100 billion on new third-generation licences, the long-delayed new era in wireless technology is slowing cranking up with the recent launch of a batch of new 3G services on the German mass market.
"For us, 3G is no big bang. For us, it is an evolution," said Vodafone chief Arun Sarin.
Many analysts are also sceptical whether UMTS will turn into a gold mine for the industry overnight.
But European operators such as Vodafone, T-Mobile, Hutchison 3, Telefonica Moviles and Telecom Italia Mobile are hoping for a major boost to their business later this year as more handsets come on the market and 3G services are rolled out across the rest of Europe.
This is particularly the case, as a flood of new handsets offering features such as bigger screens and longer battery life are launched on the European market in the coming months.
Many market observers believe that handsets are the big market drivers with a report by a UK-based research group Analysys forecasting that there will be 5.3 million 3G subscribers in Europe by the end of the year. This will grow to 240 million by 2009, the research group says.
Some analysts also believe that the switch to 3G mobile phones is likely to be a smooth handover as consumers trade up their old phones for new equipment.
It, however, could be hard sell. A recent survey by London-based HI Europe found that mobile phone users in Europe were satisfied with their current technology and not interested in 3G.
But then the 3G industry has been along a very rocky path to reach this point. Hopes about a booming consumer potential market for new generation mobile phones have long since faded with several European licences having been returned to the regulatory authorities.
What is more, the rollout of the 3G services comes as the telecom sector is still struggling to put the New Economy slump behind it and the flop of WAP services.
Meanwhile, Europe is battling to drag itself out of three years of economic stagnation with high unemployment and talk of welfare cuts hitting consumer confidence.
Nevertheless, the industry is confident that it is now on an upward curve with its 3G business saying that the new generation mobile phone market is growing at a faster pace at this point in its development than GSM. Launched over a decade ago, GSM now has more than one billion customers.
The industry is also waving off any competition from new possible rivals such as WLAN.
A survey of German companies' mobile computing plans released ahead the launch of 3G services showed that interest in WLAN or Wi-Fi services far outstrips that in UMTS.
It suggested only a handful of businesses involved in information technology saw an early need for UMTS, whereas five times as many were eager to develop their use of WLAN, or Wi-Fi services.
But the 3G industry insists that WLAN and UMTS are to different systems that gradually business will come around to see that the two systems complement rather than compete with each other.
Subject: Life in Germany, 3G mobile phones