3G mobile technology: what's in it for you?

The brave new world of the advanced, third-generation (3G) mobile phone service has arrived. About two years later than it was meant to, 3G mobile services finally became widely available in Europe at the end of 2004.

But several questions remain for many people: is this technology all it's cracked up to be; and what will 3G services mean for consumers who are, after all, the key participants in its success?

In this feature, we take a look at what all the hype is about and find out if 3G is truly here and, more importantly, whether it is for you.

The story so far
In a frenzy of commercial hysteria, Europe's mobile phone companies collectively bid more than €100bn for licences to offer 3G services. At the time of these auctions in 2000, the mobile industry talked up 3G as a major breakthrough which would allow users to download videos, web pages and other content at up to 2Mbps - faster than many broadband connections.

Today, however, most of the operational 3G networks in Europe run at less than one-sixth of that theoretical speed. Now, with a bit more caution in their approach, mobile service providers talk about 3G as an evolution, rather than a revolution.

Nevertheless, even though commercial 3G services have now become widespread, it is clear that the technology remains a work in progress. 3G networks do not always work well inside buildings because walls interfere with the signal. Even outdoors the user experience on the network can feel ponderous and, like any wireless technology, 3G can also be a big drain on battery power.

These drawbacks could curb customer use of services like video calling, or streaming of video, audio and television clips.

As the global mobile industry gathered last year in Cannes for the annual 3GSM World Congress, the mood was upbeat about the future performance of 3G networks and the accompanying services.

The reason for the optimism was a wide range of handsets and new software applications being presented. These would, we were told, take advantage of newer, faster 3G standards with the ability to boost download data speeds to up to 3Mbps, thereby creating a much more satisfactory user experience when downloading applications as well as a richer platform for multimedia content. But these improvements remain at least two years away.

Back to the beginning
Once the preserve of 'yuppies' and businessmen, the mobile phone has achieved virtual omnipresence in Europe and most of the industrial world. Last year the phone industry celebrated signing its one billionth subscriber and is well on its way to a second billion: not bad going for an industry that is only around 15 years old.

"The mobile phone industry has come a long way from its early days," said Tony Fish of AMF Ventures, who has worked in the mobile market since 1990. "First we had analogue phones and networks. That was when you would see people carrying those horrendous bricks around and the call quality was very inconsistent."

But the move to a digital platform technology was when the real expansion came. The arrival of a second generation (2G) Global System for Mobile (GSM) communications enabled cheaper, higher quality services and mass-market adoption.

In less than 10 years since the first GSM network was commercially launched, it has become the world's leading mobile standard, spanning over 200 countries. Today, GSM technology is used by more than one in six of the world's population and it is estimated that at the end of January 2005 there were over 1.2 billion GSM subscribers worldwide.

2G services enabled millions of people to begin using mobile voice services as operators sought to drive mass-market growth by discounting the price of new mobile phones and enabling users to pre-pay for their network coverage rather than making them sign a yearly contract. The GSM standard facilitated a 14.4Kbps data transfer rate which was originally regarded as sufficient only for voice calls.

However, as more people became users, operators noticed a sharp rise in the numbers of SMS texts being transmitted over the network. Initially intended for network engineers to use, SMS enabled people to send messages to other users over the same network.

When the operators introduced interconnections between rival service providers, SMS usage took off at an exponential rate, providing users with their first experience of a mobile data service, and the mobile boom truly started.

The growth in chargeable text messages sent across the four UK GSM network operators demonstrated an astronomical appetite for text messaging that showed no signs of slowing down - and it still doesn't to this day.

"Text messaging went from strength to strength, culminating in the landmark monthly total for August 2001 when Britons broke the billion [text message] barrier for the first time," explained Mike Short, chairman of the Mobile Data Association and a vice president at O2.

By December 2004, the total number of text messages sent every month had reached 2.4 billion - the highest monthly total ever recorded, according to figures released by the Mobile Data Association (MDA).

Person-to-person texts sent across the UK GSM network operators in December alone showed an increase of 26 per cent on the total sent during the same period in 2003, with 78 million messages being sent per day, the highest average daily figure yet recorded. A new annual record was also set, with 26 billion text messages sent throughout 2004.

Coinciding with the growth of SMS usage, the mobile industry also began to see a much more modest rise in the number of people accessing mobile internet sites, or Wireless Application Protocol (WAP) sites, from their mobile phones.

In November 2002, 366 million WAP page impressions were recorded across the four main UK networks. By the same time in 2004, this figure had risen to 1.1 billion.

Much of this growth in WAP page impressions was aided by the arrival of the next stage in GSM evolution. Throughout 2001, operators began to roll out improved networks using a technology called GPRS (General Packet Radio Service). This technology is a non-voice service that allows users to remain permanently connected to the network at the equivalent of dial-up internet access speeds.

What this meant was that GPRS was able to introduce new applications that had not previously been available over mobile phone networks. Fully enabled, the internet applications on the computer desktop were now possible on a mobile device, from web browsing and chat to the delivery of multimedia messages (MMS) and colour-enabled phones.

Other new applications introduced for GPRS included file transfer and home automation - the ability to remotely access and control in-house appliances and machines.

Is 3G hot or not?
In the face of enormous consumer scepticism, mobile network operators are trying to remain optimistic about the prospects for 3G services. These services, we are told, will revolutionise the way we work and live, creating a high-speed, easy-to-use link over which we can send and receive messages, pictures, information, entertainment and other advanced services, including, of course, the ability to have a voice conversation.

Steve Jones, author of 3G Launch Strategies: Early Adopters - Why and How to Make Them Yours, suggests that we won't be seeing any large scale take-up of 3G yet but that the numbers will grow if the service providers target users correctly.

"The essential factors needed to encourage mass market consumer take-up of 3G services won't exist for some time but targeting the early adopter sector at launch will build a strong foundation for the success of 3G," he said.

Until now, most of the marketing of what mobile networks have to offer has been focused on the phones themselves. This is likely to continue, with consumers ever more fashion-conscious in their choice of communication tool.

However, before persuading them to part with £500 for a 3G device and £60 per month for the contract charges, mobile operators must first succeed in persuading them that these tools will add real value to their lives in the first place. The secret here lies in the marketing of those services and the role that operators play in providing content.

"The success or failure of 3G services will be determined by what role the mobile operators decide to play in the mobile market," explained Avi Azulai, managing director of iTouch UK, a mobile content aggregator.

"Key to 3G's success is that the technology works properly, handsets are user-friendly, content is compelling and the services can be billed properly."

Uncertain services
Apart from the 3 network, which was launched back in March 2003, the other four mobile operators' 3G launches will be complete by mid-2005. Vodafone launched its consumer 3G Live! service last November, Orange followed in December and O2 launched its offering in January. Only T-Mobile remains and it is widely thought to be close to launching soon.

3G coverage remains patchy, with services only available in cities and the more densely populated suburban areas. However, this situation is set to improve dramatically throughout this year as operators ramp up their base station deployment throughout the country.

In the short term 3G will mostly enable the same applications and content available on the current networks to function more effectively, providing consumers with a significantly better experience, according to Helen Wylde, head of corporate marketing at O2.

"The initial stage of 3G will be more about speeding up the performance of basic applications like email, web browsing and content downloads," she explained.

Video calling and downloads are the main multimedia offerings available via 3G that were not previously available. Both Vodafone and 3 offer Premiership football highlights at 50p per download or a £15 monthly subscription for all you can watch.

Mobile operator Hutchinson 3G UK has announced that more than 10 million music videos have been watched by customers on their mobiles since the launch of its video jukebox service six months ago.

Hutchinson 3G UK has also entered into an agreement with Sony BMG Music Entertainment UK to allow music videos to be downloaded or streamed to their video mobiles. At the time of going to press, Sony BMG artists such as Destiny's Child, Lemar, Manic Street Preachers and the Zutons were slated to be added to the video jukebox service, with more big names in the pipeline.

Of course, services like these don't come free, and 3 UK is charging £1.50 per music download, a substantial sum by any measure.

Another concept tipped to do well over 3G is games. The mobile games sector has witnessed incredible investment over the past year as downloadable Java-based games challenge messaging services as the chief revenue source for mobile data.

"There's a lot of experimentation going on now," explained Brian Greasley, chief executive at mobile games developer Digital Bridges, which publishes mobile versions of EA Sports titles like FIFA Soccer and Tiger Woods Pro Golf.

"The games industry is fantastic at eating bandwidth and 3G allows us to create 'fatter' content. All current mobile games are less than 100Kb in size. 3G allows 250-500Kb sized games which introduce better graphics, better streaming and better audio."

However, Greasley remains cautious about his 3G expansion plans for the company, saying that innovative working 3G content is still two or three years away. "It's not going to be mass market before then and I won't switch my research and development there until 3G is mass market."

The future is multimedia
Mobile music continues to be a hot topic for discussion within the industry. Just about everyone believes that offering music on a handset is a no-brainer. With the success of portable music players such as the Walkman or Apple's iPod, there is little reason why consumers will not love audio on their phones.

Microsoft has jumped onto this bandwagon already and has licensed parts of its Windows Media platform to Nokia for use in its phones. The Finnish handset manufacturer has also expanded its mobile media partnership with Microsoft rival Real Networks by announcing it will use Real's media platforms for its new online mobile music service Loudeye.

Lee Joseph, general manager for Real's mobile business in Europe, claims that his company saw the potential of 3G when it was building its internet business.

"We asked mobile operators why they were spending money on 3G licences and they told us it was because of video and audio streaming. We've proven that consumers are prepared to pay for digital music, we've consulted with operators and now we are building the eco-system," he said.

"The perfect mobile music service will be subscription-based, with music streamed to the device. Once higher download speeds arrive and digital rights management [DRM] improves, content owners will be able to tap into 'super distribution' of their content via mobile networks. The difference will be that with DRM, the content owner will retain control over it and be able to charge for repeated use."

Not just yet
For now, the real benefits of 3G remain a year or two away, both in terms of range and quality of service and also pricing and quality of coverage. Early adopters are likely to be the business community, and sales of 3G data cards for notebook computers are doing very well. This is all fine and good for business, but what about the mainstream consumer?

"3G provides a platform to enhance customer experience," said Hugh Griffith, head of data at O2. "It has been restricted by existing technology but richer multimedia content, in particular multi-player gaming, is now arriving. Over the next two years there will also be a big increase in content providers."

3G looks promising, much like a freshly bottled wine. You like the look of it and you're certain it'll taste good, but not until it's fully matured, so you leave it on the shelf for a few years till its ready. And in this spirit we say that today's 3G harvest has a bit of maturing to do, so don't break out your corkscrew just yet.

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