3G adoption has apparently defied the past experience of first and second generation (1G and 2G) service adoption, which went from briefcase and brick sized phones affordable to few, to stylish, petite handsets affordable to almost all. Analysing these different experiences and trends, telecommunications consultant Dr. Jeffrey Bannister is still hopeful for 3G and suggests how operators can get their formula right.

Dr. Jeffrey Bannister

Malaysia has now issued all of its four available 3G licences. The early two players are Maxis & Celcom, with the government issuing an additional two to MiTV and Time DotCom last year. The big surprise of course being that DiGi wasn’t awarded one.
Figures thus far show that the general public here in Malaysia have been less than enthusiastic about adopting 3G technologies. Why is this the case?
The first major reason is the answer to a fundamental question regarding 3G: Who wants or needs it?

Casting our minds back to the early days of GSM, we can recollect that it was seen as a niche technology which only business users needed or could afford.

I can recall that in 1995 while I was still living in my native Ireland, I could count on one hand the number of friends I had who owned a mobile phone and this was two years after the networks had been deployed, I didn’t know a single person who was seen as an early adopter.
The service was extremely expensive, with even fixed-line users reluctant to call anyone on a mobile device because of the cost. However the early adopters, in part, paid for the development of the system, and in a relatively short space of time the industry has managed to shift to become an essential commodity item with very high penetration levels – in other words, now everybody wants a mobile phone. And what are we principally using this for? Making phone calls and sending SMS messages.

By now of course, the market for voice is heavily saturated, so where do these companies go to keep their revenue increasing?

The answer is to get their customers to buy more, but this is not going to come from an increase in the number of phone calls due to the high market saturation. Therefore we need to be using our mobile for other services that will generate network traffic, and hence revenue, for the operator. And therein lies the problem. Since this is being pushed by industry, do we actually want or need the services on offer, or more importantly are we willing to pay for them?
Thus far, it is fair to say, the services being offered by 3G providers throughout the world are not generating the levels of interest that were expected. Most analysts now agree that there is no killer application lurking out there that is going to spark everyone’s interest, so the operators have been lurching from one potential winner service to another.

The GSM industry was very fortunate with the huge success of voice and SMS. Both were generating a new service which had very little competition.

However for the “Internet” type services on offer through 3G, there are many avenues where we can access similar content, and generally get it at higher speed and with a much larger display. There are few applications that cannot be accessed elsewhere, and those that do exist, such as video telephony, have failed to generate significant interest.

Quite a proportion of the take up of 3G has been in the area of provision of data cards with the all you can eat packages. This is positioned for post paid subscribers but as I pointed out towards the end of last year; the vast majority of subscribers in Malaysia are prepaid – so how can the telcos market this service to them, when the pay as you go costs are still so high?
The cost models for 3G services need to be harmonized so that the prepaid market can have access at the same low costs like those available to postpaid users.

I see a need for the billing model to move to being more content or subscription based rather than on download time or volume. If I wish to download the latest Beyoncé hit, I should be paying for the song rather than the bandwidth it took to receive.

Also, to be successful in a Malaysian context, applications & content need to be “Malaysianised”.
One of the key opportunities that 3G presents is the simplification of the process by which third parties can develop and deploy applications on the mobile network with relative ease and most importantly without a requirement of in-depth understanding of the telecoms environment. This allows the operator to focus on customer management & network quality, while the content developer can focus on their strengths in assembling stimulating applications.

Opportunities lie in having a wide portfolio of content available to customers where customers can pick and choose but the operators have to ensure that we are not overwhelmed with choice and therefore chose nothing.

Perhaps Henry Ford had it right when he said about the model T ‘you can have any colour you like as long as it’s black’. In reality of course we do perhaps need slightly more choice, but not to the extent where we go snow blind. Content should also be made applicable to all, and not just focus on either the early adopters or the Internet savvy. Remember that mobile penetration is far higher than Internet penetration.

Of course, one of the issues with both adoption and content development lies in the current coverage of 3G which is still very much limited to highly populated areas. This means that users are reluctant to migrate to a service with limited perceived value-add, and in turn content providers cannot yet see the large market for their applications and services. The coverage also means that for now, key service enablers such as location-based systems will have little impact or applicability.

The operators in Malaysia also have some unique hurdles to contend with. In both the Internet arena and now the mobile Internet, the services that are globally at the forefront of adoption have tended to be those “vices” such as gambling etc. which are strictly limited in Malaysia. These have tended to be the services that not only have the largest number of subscribers, but also the subscribers are willing to pay for.

If we examine the push for 3G, it is a forked approach coming from both governments and industry. Here, the Government is pushing it to show that Malaysia has a state of the art telecommunications infrastructure, a capable workforce as well as good roads and stable finance and governance etc. All these pieces together are incentives for inward investment.
On a more global scale, both manufacturers and cellular operators are pushing this technology. It is not a grass-roots movement of public demand for mobile services which the industry is attempting to address. But then again neither was GSM – in fact, thinking about it, we subscribers are pretty fickle since we tend to say something will never work or we don’t want it and then eventually we love it.

A couple of examples, ‘I’ll never change my record collection to CD – its too clear and just doesn’t sound as authentic’, ‘who is going to sit in front of a console playing video games rather than playing football – it’ll never happen’

It seems we subscribers don’t really know what we want. Even now some older folk say ‘what do I need a mobile phone for?’ when we can’t imagine life without it. So perhaps even though we say we don’t need or want 3G, in a couple of year’s time we won’t be able to imagine life without some of the applications and services that we simply got used to.

In conclusion, my thoughts are that there are huge opportunities for 3G and we subscribers will come to gradually accept it, start to appreciate it and finally adopt it as part of the family.
Even though it has been around for a number of years it still can be seen as an infant and there are lots of things it has to be able to do before it can be classed as an adult, even going through those unruly teenage years. For it to have a significant impact on our lives a whole list of things need to be addressed such as pricing, coverage, quality and not least of all compelling services, packaged in an easy and accessible manner.

Dr. Jeffrey Bannister is a senior consultant with Kuala Lumpur-based regional telecommunications consultancy, Orbitage Sdn Bhd (www.orbitage.com)