Get ready to wait for 3G, analysts say

HONG KONG - Both buildout and widespread adoption of 3G wireless data services are likely to take longer than was anticipated in countries that have not yet embraced mobile data, industry analysts said Wednesday.

Except in a few cutting-edge markets, customers won't adopt the technology, while service and content providers won't collect much revenue from it until some basic conditions are met, said Chipper Boulas, a Hong Kong partner at consulting company McKinsey & Co., at a breakfast briefing sponsored by Internet.com.

"Wireless is something that will come and will have universal appeal, but it's not going to be easy," Boulas said.

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Hong Kong, a vibrant mobile-phone market that industry observers once had expected to have fully operating 3G services in 2002 or 2003, probably won't have full-fledged services with a strong customer base until 2005 or 2006, Boulas said. General Packet Radio Service is a possible interim service but far different from 3G - for example, it uses radio spectrum less efficiently, he said.

Japan, South Korea and Finland all have thriving, wireless data markets today, he said, and they offer some lessons about what elements need to be in place before such services will take off in any location.

These include:

• Rich applications that are easy to navigate and use.

• Plenty of data-capable, mobile phone models for sale.

• Broad, geographic network coverage to link users to each other.

• Strong middleware that can secure transactions and convert HTML data.

• Enthusiastic customers with realistic expectations.

Once those factors come to fruition, however, wireless data will take off on a "hockey stick" curve, he said.

In Asia, Japan and South Korea's booming mobile data markets will probably be followed by a second wave of adopters that will include Hong Kong, Singapore, Australia, Taiwan and possibly, text-messaging powerhouse the Philippines, Boulas said. China and other developing nations are likely to pick up the technology only after those countries.

The additional capacity of 3G will be needed for rich applications, and 3G ultimately will dominate mobile data, Boulas said. But the first "killer app" of mobile data will be e-mail and messaging, he added. The technology that delivers that most-frequently today on mobile phones - Short Messaging Service - will evolve into a richer service as bandwidth grows with image and sound attachments, he added.

Those views were echoed by Brett King, regional director for Asia at e-commerce system developer Modem Media, who also spoke at the briefing.

"3G is a technology we're going to need if we're going to have true [mobile commerce]," King said. Along with business transactions, 3G will probably help to deliver a form of short messaging that uses voice recognition as an easier input method than today's keypad-entry techniques, he added.

King also agreed that potential customers will need to be patient for mobile data applications - as long as five or six years in the case of Hong Kong.

"This is probably going to take a little bit longer than was expected," King said.

The IDG News Service is a Network World affiliate.