BARCELONA (Reuters)—More and more mobile operators are betting on upgrades to their third-generation (3G) networks, hoping to ride a booming market for services such as music downloads and fend off threats from new technologies.
Wireless broadband was a key theme at the mobile industry's biggest annual trade show in Barcelona this week, as one operator after another unveiled plans to roll out HSDPA, a technology that can offer Internet speeds at least four faster than the present WCDMA 3G standard.
"It's not just another buzzword. It is here, it's real," said T-Mobile Chief Executive Rene Obermann, as the Deutsche Telekom unit announced plans to roll out HSDPA in Germany, Austria and the Netherlands during this quarter.
T-Mobile rivals Vodafone and Orange are among many others planning to roll out the technology. Most operators initially plan to launch data cards aimed at corporate users.
Mobile phone services to consumers are set to follow later this year or next year when more handsets become available.
The latest push by operators to lure more customers to higher-paying 3G services comes as rising competition in mature European markets along with falling prices erode existing revenue streams, leaving them with little choice but to look to boost revenues from new services.
SPENT BILLIONS
Operators in Europe spent billions of euros on 3G networks, which they hoped would fetch them many more billions in additional revenues from services such as Internet surfing and video calling.
But take up of these services has proved elusive, and even though the new networks have been around for a few years now, operators continue to depend on voice calls and text messages for the bulk of their revenues.
This is partly because Internet speeds on existing 3G networks are at best only around 384 kilobits per second, while rival wireline technologies offer several times that.
HSDPA, or high speed downlink packet access, could help mobile operators offer speeds of 1.8 megabits per second (mbps) to start with, rising to as much as 14 mbps soon, bringing broadband speeds to mobile devices.
This, operators hope, will provide a boost for lucrative but data-intensive services such as music downloads and video sharing, which the mobile industry is keen to tap into.
Music downloads using mobiles is fast catching on, and operators want to ride this trend. Orange Chief Executive Sanjiv Ahuja told Reuters that growth in music and video business at his group was approaching triple digits year on year.
"We're one of the largest retailers (of music) in the UK ... We sell more single track music (downloads) than Virgin, HMV and Tesco combined in the UK," he said.
Vodafone Chief Executive Arun Sarin said music downloads were becoming second nature for many people, and increased speeds on wireless devices on the back of HSDPA could tap into this rising trend.
FEND OFF WIMAX
It could also help counter an emerging threat from rival wireless technologies such as WiMAX, which, although some time away, could offer broadband wireless over large distances and put business models of mobile operators at risk.
"Once we have HSDPA, we'll have wide area ubiquitous coverage of high bandwidth services ... WiMAX will be far less important," said Sarin of Vodafone, the world's largest mobile operator by revenues.
Betting on HSDPA is also a risk operators can afford to take. It is just a software upgrade on existing 3G networks, which analysts and industry officials say, will cost tens of millions of dollars compared with the billions spent earlier.
Faster migration by consumers to 3G services could help operators cut costs involved in running two separate networks.
Besides, HSDPA, to be followed by in a few years by HSUPA or high speed uplink packet access, will also enable operators to use bandwidth more efficiently, helping them to lower costs further.
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