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Honeyball: 3G "will never happen" - a conspiracy of silence?

Does anyone really believe that 3G will ever happen? I don't - the more I think about it, the more I am convinced that there is a conspiracy of silence going on. Here's my thinking - I might be completely wrong on this, but see what you think.

A couple of years ago, there was a licence spending frenzy by the big telco companies. We were still in the dot-com boom madness, and the amount that the telcos coughed up was staggering. Over 20 billion pounds, with half payable up front and the other half payable during the life of the 10 year contract.

The basic idea was that internet services on cellphones would generate enough extra traffic or revenue possibilities that the licences would make money.

There is, however, an almost endless list of major flaws in the argument. Firstly, there are no online services which people want to buy at present. Just mention the word "WAP" and users fall about laughing. If WAP was supposed to be the great revenue platform, then the telcos were even more stupid than I think they actually are.

There are no online services at all, either for smart phones, for PDAs connecting via Bluetooth and GPRS, or even for a laptop user. None, nada, zilch. So the revenue opportunities here are currently zero.

Yes, there are the tools available now to write Internet based services that people will want to subscribe to. Microsoft has just shipped Visual Studio .NET, and Sun are still pushing ahead with Java. Unfortunately, developers cannot create a compelling solution within 10 minutes of installing the development toolkits.

We are looking at a timescale of at least 2 years before anything of any credible use will be available. Add in a year to try to pursuade the users that they really need to buy into this, and you will see that we are suddenly almost at year 6 of the 10 year licence. Are we to believe that the telco's can recover their upfront spend within the last 4 years of the licence? No, that would be incredible.

Worse still, there is no 3G infrastructure in place. And when it happens, or rather when it might happen, it will be limited to cities or so I hear. There are no masts in place, no hardware, no deliverables. There are no phone handsets, no smart PDAs. And there is no sign of anything coming within the next two years either, in any credible form.

So we have no hardware, no infrastructure and no compelling software solution. It's not looking good, is it?

In the meantime, the telcos are rolling out GPRS which sits alongside the existing GSM network. The cost of implementation is tiny, and it only requires the telcos to wake up to the fact that we will not pay a per megabyte monthly charge but need an ongoing fixed fee pricing structure. The hardware exists for GPRS today, and it supports the concept of push technology, which is the Holy Grail of 3G - the internet "cloud" can inform you of updates, new information, cinema ticket opportunities rather than you having to continually request updates.

I cannot reconcile the differences in my head. GPRS works, and is here today. The hardware exists, and has near complete national coverage. All we need are the online services, which are some two years out. Please find me a place in this argument for 3G, because I cannot.

The inescapable truth is that 3G is dead in the water, and will never be implemented. There isn't the time, and I can't see the immediate revenue opportunities to make the necessary hardware deployment pay for itself. The users will not be forced into buying hardware that does nothing that their new GSM/GPRS doesn't do. Especially since their 3G phone service will have to fall back onto GSM/GPRS technology outside of the major conurbations.

The bottom line is that the industry was suckered into coughing up a one-shot industry tax in the form of the 20 billion quid. This was mostly caused by a complete lack of understanding of Internet, usage patterns, the development process and the capabilities of the technology both at the time and within any viable timeframe. Couple that to the inevitable corporate willy waving whereby each major telco was determined to outbid each other in a fit of board level bravado.

The net result? Nothing of value to the customers, a 20 billion pound tax bill back to the government, and a telco industry which raised the money by persuading the City that they knew they were doing.

Anyone with half a brain can see the flaw in that argument.