Claus Mortensen, Research Analyst, European Team, is currently working on analysis of the current position of UMTS in the cellular market.
EMC's UMTS Status Update tracks UMTS launches and handsets, as well as, licences fees and infrastructure contracts, and is backed by EMC's comprehensive research programme tracking cellular operations worldwide.
For more information on EMC's UMTS Status Update see: For more information on EMC's UMTS Status Update see: http://www.emc-database.com/website.nsf/index/UMTS_intro
Presenters and speakers at the Paris UMTS Conference, which took place on 3 and 4 October 2002, expressed a general consensus that the market will not see a full-scale commercial UMTS launched (referred to as Big Bang launches) in the coming years. Instead, operators will perform slow phased roll outs, complementing GPRS, as market demand for data services evolves, and as fully functional dual-mode handsets become available.
Uptake of data services
The biggest obstacle to the future success of UMTS, seems to be making customers become willing to use, and to continually pay for the use of data services. The industry has not produced the 'killer application' everyone was talking about during the 2001 UMTS conference. This year, several speakers were urging operators not to ignore voice component in UMTS, one speaker even called it the only killer application of 3G for years to come.
The other part of the process is to make customers actually pay for data services. The speaker from Siemens France said that the Monaco trial had not produced an application that would make customers pay more to use it. On the same note, lessons can be learned from the launch of GPRS in Slovenia. Mobitel Slovenia launched GPRS in June 2001, with a three-month free trial. When the operator started charging for the service, usage fell to about 8% compared with the previous month. Usage is now slowly on the increase.
Yet another example of slow, or failing uptake in data usage, seems to be sha-mail in Japan. One presenter claimed that only about 10% of pictures taken with camera handsets in Japan, are actually transmitted over the network. This could serve not only as a warning about future use of UMTS services, but also as a indication about what can be expected from MMS in Europe. Several speakers pointed out that it took several years for SMS to become the success it is today. Even though MMS is being heavily marketed by operators across Europe, interoperability issues, few and expensive handsets, may mean that MMS generated ARPU won't take off until 2004 or 2005. One speaker warned that MMS is largely over-marketed, and this could result in MMS becoming what he describes as the new 'WAP disaster'.
Handsets
The availability and stage of evolution of handsets, was one of the dominant topics of the conference. The non-availability of handsets was still to some extent, blamed for the present delay in the deployment of UMTS services. An actual example of this is the Monaco 'friendly user' trial, which has been halted until user-friendly handsets are to become available.
Another issue facing the handset manufacturers is that the certification scheme is far from ready. The scheme is due to start in March 2004, for the March 2002 version of release 99.
Network planning issues
Several operators presenting at the conference said that they are re-using existing GSM sites, and turning them into combined GSM/UMTS sites. This can ensure a speedier rollout, as fewer planning permissions are needed for new UTMS base stations. Some speakers, however, stressed that relying too heavily on re-using GMS sites, could cause problems due to the differences in characteristics between UMTS and GSM. One such characteristic is 'cell breathing', which causes problems when planning a UMTS network. Cell breathing, means that the geographical area effectively covered by a W-CDMA cell, changes with the amount of traffic in the cell. This can potentially result in dropped calls for users in the cell's periphery.
Edge
In spite of the conference title, CDMA and 1xRTT were referred at times. Australian Telstra described its dual migration plan for its GSM and CDMA networks, with EDGE possibly being deployed on GSM. AT&T Wireless also expressed plans for deploying EDGE, together with some South American operators. A quick survey among European operators in the conference suggested that EDGE is not seen as a feasible migration path in Europe.
Conclusion
Despite all the problems highlighted by speakers at this year's UMTS Conference, the overall mood among delegates seemed to be one of cautious optimism. There seemed to be a predominant feeling that even though we're not 'out of the woods' yet, the worst is over.
The players in the market now seem focused on getting on with the work of making UMTS function properly, getting the handsets to market, and eventually commencing rollout of networks – albeit in a more cautious way than they had originally envisaged.
The issues to be dealt with that were highlighted at the conference were; Interoperability issues, availability of dual-mode handsets, development of services and applications, and the question of how to make customers interested in using and actually paying for data services.
Put simply, this means that many of the fundamental requirements for making UMTS a success, still need to be resolved.
