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Issue #2003 - 18 (June 2003)
(Updated June 4, 2003)


Two Surveys Disagree About 3G in Europe - European Survey Optimistic, In-Stat/MDR Survey Cool 

Source: http://www.3g.co.uk

TNS Telecoms Survey  
Forty two per cent of European mobile phone users are interested in 3G services, according to the TNS Telecoms 3G 2003 report, carried out in 10 countries. But the good news for telecoms operators and manufacturers is that the majority of those users interested in 3G were prepared to pay extra for 3G handsets and services.

Half of these respondents who stated that they were interested in 3G services (21 per cent of all mobile users), said they would pay an additional 6 to 10 euros per month for some 3G services such as MMS, high speed internet and emails. With the report showing that the average monthly invoice for a mobile phone user in Europe is currently at 26 euros (20 euros for prepaid and 37 euros for contract) operators have the potential to substantially increase their average revenue per user (ARPU).

Similarly, those interested in 3G services would also be happy to pay more for a 3G handset than they paid for their existing one. Across all countries surveyed, the majority of respondents would be willing to pay up to 330 Euros for a 3G handset. However this figure changes considerably by country, depending, among other reasons, on whether handsets are subsidised by the operators, as in France or the UK.
Alan Imbert, Senior Research Director, TNS Telecoms explains: "The fact that operators in many countries have subsidised mobile phone handsets could prove a major stumbling block for the uptake of 3G in some European countries. If operators chose not to subsidise 3G handsets then users may be shocked to find that they will have to pay many times more for the new 3G models than they do for existing handsets."

Other Interesting Findings From Europe:

Which services are users most interested in?
Of those users across Europe that did express an interest in using 3G applications, most are interested in sending and receiving emails on their mobile phones (77 per cent) or using videophones handsets (77 per cent). They are least interested in downloading music files and viewing video clips (47 per cent and 40 per cent respectively were interested).

Who is interested in 3G?
On average, 42 per cent of all mobile phone users are interested in 3G. Interestingly, mobile phone users in Eastern Europe show more interest in using 3G applications than their counterparts in Western Europe. Fifty nine per cent of users in Turkey and 51 per cent in Poland said they are ' interested' compared to only 34 per cent in the UK or in The Netherlands. Forty eight per cent of men are interested in 3G compared to only thirty six per cent of women.

Which companies are in the best position to capitalise on 3G?
Unsurprisingly, it is the leading national mobile operators that European mobile phone users most trust to provide reliable 3G services within the near future. On a scale of 1 to 10 (where 10 represents a " high ability" to provide reliable 3G services), European mobile users give a rating of at least seven to the national mobile operators. It is the smaller providers, those with less than 20 per cent market share, that will struggle to convince users that they can offer reliable 3G services.

Alain Imbert adds: "Our report suggests that attitudes to 3G may be changing in Europe, but that mobile providers, especially the smallest ones, will need to put much time and effort into communicating both the benefits of 3G services and their ability to provide consumers with reliable services".

Source: http://www.3g.co.uk

In-Stat/MDR Forecasts Slow Growth for MMS and IM Wireless Data Applications in Europe Until 2007

With the exception of Short Messaging Services (SMS), wireless data in Europe, as in the Americas, has arrived with a whimper rather than a bang, reports In-Stat/MDR. The high-tech market research firm finds that, the prospects for 3G services, which are being launched during a seemingly unending telecom slump, look grim and newly launched messaging services such as Multimedia Message Service (MMS) and Instant Messaging (IM) will not reach double-digit (10 percent) penetration before 2007. 

"Wireless IM, which provides a person's presence availability for correspondence, has a real potential for SMS cannibalization in Europe," said Ken Hyers, a senior analyst with In-Stat/MDR. "However, while the demand for wireless e-mail, SMS, and, potentially, IM is clear, interest in new and future messaging services, such as Enhanced Messaging Service (EMS), is not." Network upgrades and improvements, and messaging friendly devices will be the most crucial developments for success in the messaging industry, and, to a large degree, operators' data success rests in handset manufacturers hands. 

In-Stat/MDR has also found that: 

  • SMS Mobile Originate (MO) message volume and revenue will peak in 2003, before declining to approximately $3 billion in 2007, a 2003-2007 CAGR decline of -24 percent. However, SMS will not be overtaken by another messaging format before 2006, when Wireless Instant Messaging (IM) and Multimedia Message Service (MMS) will take the lead. 
  • SMS Centre (SMSC) spending will decline steadily through 2007, with a -10 percent CAGR through 2007. At the same time, MMS Centre (MMSC) spending will decline by -35 percent CAGR through 2007. 
  • Initial demand for MMS has the most potential among business people, who, typically, possess the monthly disposable income for the higher priced messaging service. The average tariff per message, in 2003, is approximately $0.40, and is expected to decline to approximately $0.17 in 2007, implying a 2003- 2007 CAGR of -16 percent. 

The report, "The Best Has Yet to Come: Wireless Messaging Models for Europe" (#IN030931MD), provides a total overview of the potential and revenue opportunity for wireless messaging services in Europe. Messaging formats covered in this report are Short Message Service (SMS), Enhanced Message Service (EMS), Multimedia Message Service (MMS), Wireless Instant Messaging (IM) and e-mail. This report provides an explanation of how wireless data and messaging will continue to evolve in Europe. In Europe, messaging in general, and SMS in particular, is in a strong growth phase. Person-to-person (P2P) messaging is showing signs of plateauing in some countries (the UK, Germany, and Sweden, for example). The launch of MMS and IM highlight this ever-shifting market that will help drive revenues to the next level when the industry needs it most.

MobileInfo Comments and Advisory: We do not understand how technology surveys are done and forecasts are made. Do these surveys follow rigorous methodology that aims at getting at the truth with some statistical accuracy? The readers may get different views of future from two different surveys. Are analysts at In-Stat/MDR just skeptics and analysts at TNS gullible?

To be accurate, the two surveys are focusing on two different questions about wireless data's future. It would be quite reasonable to interpret TNS survey to indicate that 3G does offer a potential to increased  revenue from handset sales and increased ARPU on ongoing basis. Then comes the clincher - the desirable suite of wireless data application services that deliver added value to consumers and enterprise professionals delivered at affordable prices. What these services are and at what price point will they take off  are the questions that need answers. In-Stat/MDR attempts to address the potential from Instant messaging application suite. Here, In-Stat/MDR appears to be pessimistic. If carriers are listening, it might indicate that too much emphasis on messaging as a source of increased ARPU might be misplaced. Beyond all, overall economic climate, disposable and discretionary income for those who are most likely consumers of these services (we mean the upward-mobile young adults) must be considered. May we suggest that prospects of 3G and wireless data are directly linked to the economic environment around us? 

Note: This news release may contain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of Securities Exchange act of 1934 in USA. Similar provisions exist in other countries. There is no assurance that the stipulated plans of vendors will be implemented. MobileInfo does not warrant the authenticity of the information. Readers should take appropriate caution in developing plans utilizing these products, services and technology architectures.  All trademarks used in this summary are the property of their respective owners.

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