The Telecommunications Regulator fulfilled her mbition to foster competition in the Irish telecoms market by awarding Hutchison Whampoa the nationwide 'A' licence in the 3G competition. Irish consumers will be the ultimate winners from this decision as the two incumbent giants will be finally faced with a significant, well resourced rival.

John Whelan at Alatto, an Irish consultancy that has worked for 3G operators throughout Europe and Asia, offers the following perspectives on the Irish situation

Above is shown a typical 3G application of the type which will be available to 3G phone users.

The first 3G licences were awarded in Finland in March 1999. Since then over 100 3G licences have been awarded in 26 countries earning governments over US$112 billion in revenues. Nevertheless the 3G market is very much in its infancy. Foma, the world's first commercial 3G network which launched in Japan in October 2001, has only just passed the 100,000 user benchmark. A number of key technical issues remain to be resolved. In particular, 3G's initial patchy deployment means that smooth switching from UMTS to GSM networks will be vital. However, this "hard handover" remains poorly tested. In addition, dual-mode handsets will not be available in mass market quantities until the middle of 2003. Indeed, the lack of handsets has resulted in a spate of launch postponements in the past 2 weeks alone by leading operators including Hutchison 3G (UK), SingTel (Singapore) and Sonera (Finland).

Prospects for 3G operators in Ireland

That only 3 bidders competed for 4 licences demonstrates the challenges that a small country such as Ireland with a low population and very low population density poses for mobile operators. 3G services will not appear in Ireland until 2005 at the earliest. By that stage, all 3 operators will have at least a year's experience of marketing and delivering services in other countries and 3G handsets will be more widely available. Ironically, the delay in awarding the licences has worked to operators' advantage in a number of ways - not only are licence fees more realistic than other markets but all 3 operators can observe and learn from the mistakes made elsewhere.

Network rollout

Protests by environmentalists pose a significant threat to network rollout. As 3G operates at higher frequencies which do not travel as far as GSM, a higher density of transmitters are required. However, we believe that 3G antennae may be exempted from the Planning and Development Regulations Bill 2001 which came into force in 11 January 2002. If this proves to be the case, planning permission will not be required which would greatly facilitate network rollout.

Whither Meteor?

I would not be surprised if Meteor were acquired by Hutchison to give it an immediate foothold in the market. Meteor currently has 80% population coverage but has struggled to acquire customers. In March Meteor declined to participate in the UMTS tender process. Moreover, Meteor's US based parent company Western Wireless, has experienced a difficult year with its share price falling by some 93%. It is questionable whether it has the resources or patience to build a profitable business in Ireland and a trade sale could be a very attractive option.

The revenue potential

The failure of WAP and GPRS have demonstrated operators' inability to launch new data services to the mass market. It is to be hoped that 3G marketing and branding strategies will focus on customer benefits rather than the technology. Few if any customers will acquire an expensive 3G handset for its own sake. Instead they will pay for the enhanced communication, entertainment, empowerment and time savings it promises.

A debate has centered on the identity of the "killer app" for 3G. I believe that there isn't a single "killer app" for 3G. Instead, customer insight and segmentation are necessary to identify applications that will appeal to different customer segments and sub-segments.

Voice communication will continue to be the biggest driver of revenue. As the quality of UMTS voice communication is on par with landlines many users will opt for 3g phones in preference to landlines.

Some of the data applications that I believe are most likely to succeed include:

Entertainment services and multimedia messaging for the youth market
Lucrative niche applications like gambling, adult content
M commerce (using mobile device as payment mechanism)
Access to corporate e-mail, enterprise applications and databases for business users.
Licence holders should not fall into the trap of simply replicating the same content in Ireland as in the UK. The World cup is a timely reminder that content does not necessarily transfer across the Irish Sea.

Operators in Ireland have been slow to encourage and reward content providers with the result that there is little quality content available to WAP or GPRS users. It is a short sighted approach as without compelling content there is no reason why end-users should pay for these services.

A lot can be learned from Japan where equitable revenue-sharing arrangements have fostered a vibrant content development industry. Everyone wins with this approach. Customers have access to numerous services, the application provider receives revenue if the service is attractive to end-users and the operator receives revenue both from airtime and a portion of the service charge.