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3G Tuesday, 1 May, 2001, 19:30 GMT 20:30 UK
Mobile phone revolution on hold
Will new mobile phone services revolutionalise the internet?
The next generation of mobile phones promise to revolutionise the telecommunications industry.

The new phones will allow high-speed internet access, and will free the web from its link to the personal computer.

But less than a year after mobile phone companies paid hundreds of billions of dollars to buy the rights to operate so-called third generation mobiles, there are serious doubts about the viability of the new services.

Will customers pay premium charges in order to access online services like news, shopping, and music-on-demand?

And can the telecoms companies themselves afford to roll-out the new system of third-generation mobiles, which requires a huge investment in new networks?

Debt problems

The biggest problem for the mobile phone operators is the huge amount of debt they accumulated in the process of acquiring the licences for 3G phones.

That has caused them to delay plans to launch the new services, and to look for partners among their rivals in building the infrastructure.

BT is the company with the biggest debt problem, but Germany's Deutsche Telekom and France Telecom are also under a huge debt burden.

BT is planning on scaling back its international investments, selling stakes in Japan and Spain, while Deutsche Telekom is still trying to break into the fragmented US market.

Technological breakthrough

The new generation of mobile phones will allow high-speed internet access because they use packet technology, breaking up the signals into tiny bits to allow them to carry more information.

As a result, connections will be always on, and the speed of data transmission is dramatically increased, allowing video streams to be sent online.

All these extra tasks will put something of a burden on the handsets, which will need larger screens and more battery power.

Personal digital assistants like the Palm Pilot or Handspring Visor will become more common for people who want to make use of the mobile internet.

Popularity

But it is unclear just how popular the new services will be.

In Japan, where a popular service called i-Mode already exists, text messaging is the most common use, while ordering tickets is made easy because the cost is added to your telephone bill.

Even Japan, however, has had to delay the launch of its first true 3G services which were scheduled to begin this summer in Tokyo.

European 3G services are probably several years away, and even then, the first services will be limited to major cities.

And in America, so far telecoms companies have opted for a less technologically advanced standard which is more compatible with existing mobile phone systems.

The disappointing roll-out of WAP services in the UK, which use existing technology to provide limited internet access to mobile phone customers, have proved a warning shot to companies that the next phase of the mobile phone revolution may well be delayed.


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