GPRS Gets a Boost from 3G Delays

Continuing delays in the launch of 3G services by mobile operators across Western Europe will result in a much wider window of opportunity for GPRS technology, according to a new report released this week by Analysys.

The report forecasts that revenue from GPRS subscribers will grow from US$17.5 billion in 2003 and peak at US$85 billion in 2006, before beginning its inevitable decline as customers move from GPRS to UMTS.

"Only Hutchison 3G, Manx Telecom and Mobilkom Austria had launched commercial 3G services in Europe by the end of September 2003," said Ariel Dajes, co-author of the report. "As a result of the widespread delays in UMTS launches, by the end of 2003 the total number of 3G subscribers across Western Europe will be a mere 1.3 million."

Operators have cited financial and technical reasons for delaying the launch of their UMTS services, including difficulties in obtaining mast sites, problems in sourcing 3G handsets, and unproven demand for 3G services, says Analysys. However, the delays have provided a significant boost to the revenue potential of GPRS.

"All operators in key Western European markets have launched GPRS services, and most now also offer multimedia messaging and downloadable games," added Ariel Dajes. "Although initial take-up of GPRS services was low, improved service packages for consumers and businesses are now accelerating growth. Vodafone live!, for example, had signed up 2 million customers by the end of July 2003."

The report states that even by 2005, 3G subscriber numbers in Western Europe will remain extremely small, with just over 20 million active mobile subscribers using a 3G service. By then, Italy will remain the country with the most 3G subscribers in Western Europe, followed by the UK and Germany. However, Analysys forecasts that UMTS subscribers and revenues will start to escalate from 2006.

"We expect to see a noticeable shift from GPRS to UMTS beginning in 2006," commented Katrina Bond, co-author of the report. "By 2008, 61% (204 million) of Western European mobile subscribers will be using a 3G device, and UMTS will be the dominant mobile technology as customers using 3G will generate revenues of around EUR82 billion."

The delay in 3G launches not only extends the opportunity for GPRS, according to Analysys, but also gives public wireless local area networks (WLAN) a greater opportunity to take hold. Analysys forecasts that in a country such as Germany, as much as 5% of non-voice revenue from large corporations could be lost to public WLAN by 2008. However, it also points out that much of this revenue could still be retained by mobile operators that embrace public WLAN and offer it with cellular access services."

Posted to the site on 15th October 2003