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There's life in the old 3G dog, yet!

by Manek Dubash | posted on 21 June 2007


If a technology doesn't prove itself, the habit among industry watchers is to write it off, often within an unfeasibly short space of time.

Manek Dubash

But has 3G reached a stage of venerability that allows observers, such as your correspondent, to presume that the early stages of 3G's death throes cannot be far away? Is it, as Churchill once sonorously intoned, not the beginning of the end but the end of the beginning?

Some might say so. Evidence this week comes from one of the industry's biggest players. Vodafone cut its rates for mobile data by a huge percentage, with the monthly tariff for 3GB of data tumbling from £45 to a far more reasonable and acceptable £25. Apart from the obvious savings to be had by Voda's 3G customers, the move tells you something about the state of the market.

The only conclusion to be drawn is that Voda had to cut its rates in order to retain customers. 3G technology hasn't been the huge success that its proponents had hoped. Much of this is down to the fact that coverage is patchy at best, and paying through the nose for a non-guaranteed service just isn't a hobby in which most users are prepared to indulge. And it was expensive, adding insult to injury.

Much of this was down to the mobile operators' need to recoup the huge investment, not in infrastructure, but in 3G licences. But the gamble hasn't paid off. Voda's still losing money, the quality of its mobile data services are poor to average, and the customer base hasn't grown.

What's more, WiFi coverage and usage have grown, becoming increasingly attractively priced -- unless you're in a London hotel -- but other than that often free, and is fast. Coverage is nowhere near as universal as its advocates would have you believe but, where there's coverage claimed, broadly speaking you can get a working signal.

So the time has come for Voda to cut 3G tariffs to drive up usage and gain customers in advance of the arrival of WiMax, the technology on which more observers of the telecoms industry are assuming will become the elusive 4G.

4G claims to offer high speeds, and wide coverage -- both highly attractive attributes. And as long as the mobile operators can afford to uprate the backhaul networks to their base stations, which is by no means a done deal, then WiMax could prove to be the right choice.

Voda's move has thrown the cat among the chickens. Its top speed mobile data product has now reached maturity and looks unlikely to be developed further. Instead, the price is falling and people are looking to the next big thing -- probably to be supplied by a new generation of mobile operators.

If Voda wants to stay in the game, it had better ensure that it either becomes or retains a stake in one of those new operators.


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