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Thursday, 10 October, 2002, 22:43 GMT 23:43 UK
3G profits 'a long wait'
Japanese 3G phone
3G operators could take years to make money
Mobile phone operators are being too optimistic over the popularity of new third-generation, or 3G, technology according to research group Forrester.

The company suggests that unrealistic expectations from 3G licence holders means they will have to triple their user numbers to break even within the next five years.

Instead, Forrester suggests that a more likely date to make profit from 3G is 2014, seven years later than hoped.


In our view, operators are dreaming

Forrester

The research is the latest blow to the mobile operators, some of whom spent vast sums of money on the 3G licences only to find the services met with little enthusiasm.

Slow take-off

Forrester says there are a number of key reasons for the slow take-up of the new style phones.

Complex technology coupled with the difficulty in creating suitable handsets, could mean delays in the new phones reaching customers.

In addition, Forrester said "historically, European customers have been slow to adopt new services".

The group estimates that only 10% of mobile users will use the new technology by 2007, a fifth of the figure projected by operators.

This suggests the industry-wide payback from investing in the new licences would not materialise until 2014.

"In our view, operators are dreaming," said Forrester.

Increased competition

The leaders in the race to break-even will be Finland, France, Italy and Switzerland, according to Forrester.

Finland will benefit from zero-cost 3G licences, while the relatively few competitors in Italy and France will help their operators meet targets.

However, the UK, Germany, Spain and Portugal will be lucky to make a profit before 2015 suggests Forrester.

"All four countries will see an increase in the number of competing operators in the 3G era, requiring higher customer-acquisition spending and greater handset subsidies," said the group.

See also:

19 Aug 02 | Technology
26 Aug 02 | Business
10 Aug 02 | Technology
06 Aug 02 | Business
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