EU phone chief warns on 3G delay

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Europe’s hard-pressed mobile phone operators have a long wait ahead of them before their massive investments in next-generation mobiles bear fruit, the European Union’s top telecoms official has warned.

In an interview with German news magazine Focus, Enterprise and Information Society Commissioner Erkki Liikanen warned that a boom in 3G phone sales was unlikely before 2008.

“The New Economy has produced plenty of hot air, and that has slowed investment in the telecoms sector,” he said.

“We will have to wait at least five more years for a real boom in UMTS.”

UMTS is the acronym used by Europe’s phone companies for third generation services.

Five years ago, the picture looked very different.

At that point, the technology boom – the New Economy mentioned by Mr Liikanen – was well under way, and researchers around the world were rushing to develop systems which would transform mobile phones into hand-held data centres.

With mobile phone use soaring, the thought that people would pay extra for high-speed data seemed entirely uncontroversial.

The billions spent by each big operator on licences for 3G services were substantial, but with growth assured the heavy debt burdens were seen as necessary.

But now the picture is very different, as a mature mobile market has coincided with an economic downturn.

Telecoms comapnies across Europe have been forced into humiliating selloffs of assets accumulated in the 1990s to pay down the licence-related debts.

Some say governments should not have seen the radio spectrum auctions of 2000 as a revenue-raising opportunity, while others blame the European Commission for not imposing a common set of rules across Europe.

Mr Liikanen was keen to refute this accusation.

The EU had wanted harmonisation, he told Focus, but “the member states fought that tooth and nail”.

As for the services themselves, Mr Liikanen is far from being the first to doubt early demand.

Prising 10 or 20 euros more a month out of customers for services they feel they may not need looks like more of a challenge.

The technology has also proved problematic, delaying launches across Europe till 2003 at the earliest from previous, more optimistic forecasts that networks would be operational by 2001.

The operators themselves are happy to push back the dates, so as to spread the massive amounts of money they have to spend on new network equipment over a longer period.

And takeup in the technology’s only real rollout to date, gadget-loving Japan, has been disappointing.