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Our 3G phone plans - are they really viable? Or are we staring at a catastrophe?

Just how commercially sensible are our plans for universal mobile (UMTS) or third-generation phone networks? A report from PA Consulting offers hope; but only by admitting that there is a problem.

Just how many mobile phones can we really expect to see sold when EÅ­rope goes third generation? It's a very important question; it has to be a very, very big number. And there are signs that it's going to be hard to achieve.

The market for mobile 3G devices has to be huge for several reasons. First, the people who run the 3G networks have sunk vast fortunes into paying for the licences needed to operate them. Next, they have to find more money, to build the network of antennae masts and switches. And third, the phones are, still, incredibly complex and hard to build, and won't be cheap enough to afford until millions are sold. So they'll need cash up front to subsidise the early prices.

The advantage of 3G is that, in theory, you can get an unlimited number of channels onto a single base station.

With ordinary GSM phones, there's a strict limit on the number of people who can use the network; each base node can handle only eight subscribers at a time. If you want to handle more phones, you need more nodes. However, with 3G, the multiplexing system is far more sophisticated; the more phones you add, the harder it is to pick the signal out from the noise, but that's all that happens; more noise. As long as your wireless can sort signal from noise, you just keep adding more subscribers.

In theory, this means you don't need as many base stations. In reality, there aren't enough mast sites. For the first few years of 3G, most 3G users will be out of range of a 3G mast, and will "drop back" to ordinary GSM usage. There aren't enough mast sites.

Not only are the sites expensive to build, but there's a growing reluctance by local aÅ­thorities to have them at all. "Not in my school, not on my office, not in my back yard!" say citizens, anxious about their property values; and the civil aÅ­thorities, lacking competent scientific and legal staff, are avoiding the problems of reassuring their citizens by simply doing nothing.

Various solutions are being offered; in Germany last year, the Government decided that competing phone networks did not have to build their own base stations, but could share masts. That helps a lot! - but it still leaves a problem.

Hints of desperation are showing, as the aÅ­thorities in charge of phones try to work out just how they are going to build the future high-speed mobile data networks, and start looking for solutions to unexpected problems. The time may be at hand when EÅ­rope has to start making contingency plans for alternatives to the 3G networks it has gambled so much money on.

An example of the hard work going on behind the scenes would be the report in Electronic Times

Here, technology has been announced which allows one base station to serve a lot more phone users. "In the UK, that could mean cutting the number of additional base stations needed for 3G to 21,000," says the report. "Last year, UK-based research company Analysys said that 35,000 basestations would need to be installed in this country."

Great news. But it gives some idea of the scale of the investment needed, and illustrates why The Mobile Campaign wants to see personal wireless systems used alongside the official networks.

For example, a Bluetooth access point in the home, connected to the Internet, would make an ordinary GSM phone capable of sending and receiving data at 512 kilobits per second, or thereabouts. That's at least three times the most optimistic estimate of the data rate of 3G networks.

And of course, the cost of sending voice over the Internet Protocol is trivial. If you are permanently connected to the Internet with a cable modem from NTL or Telewest, or if you have ADSL, phone calls can cost literally trivial amounts to anywhere in the world.

Look at the costs of outfits like CallServe who already offer cheap calls over the Internet to subscribers, to get some idea of what 3G networks could be up against.

And it isn't just a question of cost call. A Bluetooth unit in a phone uses a tiny fraction of the electric power that a GSM transmitter needs, meaning that the phone can be much lighter for the same battery life.

Third generation networks are facing serious competition, and it will be some time before they serve anybody except large cities. Perhaps we should face the fact that many subscribers won't want to wait for high-speed mobile data, not that long?