3G dial-up still on hold
The next few years could show that 3G, or UMTS, technology will not be needed as soon as anticipated since services now available, including multimedia messaging service (MMS), offered by Polska Telefonia Cyfrowa and Polkomtel as of last June, could prove to be the final mobile technology that users need, some industry experts say.
The country's telecom and post regulator (URTiP) earlier this year pushed ahead the start date of commercial UMTS, or universal mobile telecommunications system, service from the beginning of 2004 to 2005 at the request of the country's three mobile operators.
Meanwhile, the new MMS, which uses general pack radio service (GPRS), also called 2.5G, can transfer short 15-second movies, photos, graphics, melodies and ringtones up to 50 megabytes via mobile handsets.
"MMS is the final technology that we will need," said Robert Maciejko, vice president of The Boston Consulting Group in Warsaw. "It's not clear whether we will need 3G today because GPRS is fairly cheap in sending picture messages and mobile ringtones, and will be cheaper in terms of infrastructure and usage costs."
GPRS is a speedy transport layer used for advanced data transmission services from mobile phones via PCs or palmtops. It is offered by PTC and Polkomtel as well as PTK Centertel and is used mainly by corporate clients who need to transmit documents and data and access their corporate e-mail accounts while on the road.
But when UMTS will ever see its heyday - or even its launch - in the country is another matter with the three mobile operators pressing the regulator for a second rollout delay. While UMTS will allow access to Internet transmissions via mobile handsets and enable video telephony, always-on gaming and video-camera monitoring, it still has no proven useful applications. Though it's just getting off the ground in a few countries, UMTS technology is still largely unavailable. Handsets are nil. And there are no infrastructure applications or UMTS content yet - seemingly placing it on the same starting path as the ill-fated WAP technology.
"It's unclear today that we will ever need UMTS in Poland
since there are very few things to do while moving at high bandwidth," Maciejko said. "None of it exists today, such as games and videos while being in motion, such as in a car."
The outlook for 3G in other countries could indicate its demand here. Aaccording to a recent report on mobile phones by A.T. Kearney, 66% of mobile users in six European countries - the UK, France, Spain, Sweden, Germany and Italy - said they were aware of 3G's capabilities, but only 29% said they would upgrade.
Furthermore, more than a third, or 36%, of those surveyed in the total 15 countries covered by the report, said cost was the most important factor in preventing them from upgrading to 3G, while another 36% said they didn't need or understand what the technology could do for them.
"There's no killer application; there's no reason to use it," said Antoni Mielniczuk, director of public affairs and corporate communications at PTC. "If you need to transfer data, use GPRS - it works perfectly." Of the three nationwide mobile operators, only PTC has conducted test trials of UMTS, transmitting a slow television broadcast and a movie via mobile handsets in different cities.
Industry experts also argue that Poland's is unprepared to introduce 3G due to the country's low mobile penetration rate of 32%-33%, which would offer a limited market for UMTS. They also point out that some countries with penetration rates more than double Poland's have still failed to launch the service.
"Even countries with bigger penetrations and numbers of customers cannot launch these services," said Mirosław Bielicki, Polkomtel's vice president and information technology director.
Experts draw attention to the fact that the implementation of 3G requires high average revenue per user, or ARPU, which the country's mobile operators would need to double from their current levels. Huge costs for infrastructure upgrades - estimated at around E1 billion-E3 billion per operator - with no guarantee of returns on investment are another factor that will likely lead to a further delay of the launch of UMTS, they said.
And average mobile users with limited disposable income won't commit serious expenditure for pricey handsets, possible high service costs and unnecessary features they don't need, industry experts added. The most vital applications users want are access to e-mail and the Internet, which they can get with the GPRS platform.
Although PTC and Polkomtel were two of the first wireless operators worldwide to introduce MMS, the service is still in its early stage and will take about two or three years to reach the same usage level as the popular short message service, or SMS, which has become a massive hit in Poland as elsewhere. According to a recent report by Taylor Nelson Sofres, 83.3% of Polish mobile phones were used to send text messages between January and June.
Bielicki calls MMS the "first promising technology enabled for users after SMS," but few can afford to pay zł. 1,000 for one of two MMS handsets currently available on the market, although the price is expected to drop by about half in the coming months. Polkomtel anticipates about 10,000 users by year-end, but is betting that by 2004 its MMS and SMS services will together account for 20% of its revenue.
Others like Przemysław Spangierski, a principal responsible for the communications and media practice at A.T. Kearney in Warsaw, argue that UMTS is a necessary service, although it will take some time to come to the market.
"The capacity to manage data matters, and the new UMTS terminals will be able to deliver much-needed abilities," he said. "Even if it takes longer, it doesn't mean that we need 3G services overnight, but it's a good time to start thinking about it."
So to what extent will the success of MMS determine the outcome of 3G?
"I don't think there is a determination in there, but a lot of lessons to be learned from the development of MMS," Spangierski said. "It might very well be that MMS takes longer to develop while UMTS brings dramatic changes."
Still, the three mobile operators will not abandon their plans for UMTS, even with an additional rollout delay granted by the URTiP, since they are obliged by their license terms to provide the service commercially.
"The only question is when?" said PTC's Mielniczuk. "Within five years? Ten years?"
