Convergence fever grows as 3G finally comes of age

24 Feb 2004

CANNES – The collective angst of European telcos that spent millions on 3G licenses was lifted this year at the annual therapy session that is the 3GSM Congress in Cannes.

Not only are next generation networks a here and now reality; the prospect of convergence with fixed-line and wireless technologies has injected the industry with an unprecedented rush of excitement.

“The mobile business has been going through its biggest crisis ever. This year the market will cease to shrink; we think it will stabilise and start to grow;” said Siemens CEO Rudi Lamprecht, summing up the new optimism that pervaded the vast exhibition halls. “The most important trend and most visible development will be the 3G rollouts,” he continued.

Siemens has built 9 of the 15 next generation networks that are now live, reaping the rewards of an early commitment to the new standard. Another growing presence in the greenfield networks market is Nortel which has been winning over operator infrastructure across Europe, coming from virtually nowhere in the GSM business. “The networks realised they couldn’t launch mission critical networks and needed a partner that could deliver,” Nortel’s wireless president, Richard Piasentin told “We made a call 4 or 5 years ago about where we thought this industry would go from a convergence perspective. Now we can deliver a robust data network for fixed-line, wireless and mobile.”

Countering the negative analysis that has plagued the emergence of 3G, Siemens chief operations officer Lothar Pauly put it in perspective: “GSM licenses were awarded in the late 80s. Around 1992 the first networks were launched with bad coverage. It took almost two years until the first million subscribers had signed up. Let’s compare that to 3G: in 2003 the two million subscriber mark was passed in less than two years – twice as fast as the uptake in GSM.”

He went on to predict that there would be 40 million 3G subscribers in 2005 and that by 2010 every mobile phone would be 3G capable.

Though many of the issues that dogged the new standard are starting to be overcome, such as the notoriously difficult handover between 2G and 3G networks, Nokia admitted there was still some way to go for seamless roaming and the shortage of handsets is only starting to be addressed.

On the emergence of one-stop telco providers offering unified billing across fixed, mobile and wireless services there is a growing consensus that the technology is virtually ready and the big challenge remains the creation of a viable business model. To the relief of the exhibitors in Cannes, many of them mobile technology companies that have been battling to survive over the last few years, it wasn’t their problem for once.

By Ian Campbell