The Next Generation of Mobile Phones: 3G Services Revolutionize Communication

Strategic Insights -

As the Australian Government announced the switch to digital mobile phone services in 2000, an estimated 2.6 million people were forced to migrate to second-generation (2G) digital services. The new 2G technology brought clearer phone lines and SMS capabilities, but the introduction of third-generation (3G) mobile phone networks and services has taken the industry to the next level. With speeds allowing for two megabits per second, 3G services support intensive bandwidth applications such as video calls, streaming news clips, downloading songs, sending email, and accessing the internet via mobile phones.

Key Takeaways:

  • The 3G service is expected to outgrow the rate of the voice call market by a factor of 10 over the next five years, with non-voice services such as ringtones, music, SMS, and MMS reaching $1.53 billion by 2005 and projected to increase to $209 million by 2009 for music alone.
  • By 2008, Australia is expected to reach 100% mobile phone penetration, surpassing mature markets like the United Kingdom and Italy, and rivaling the United States' 65% mobile phone penetration rate. However, IDC believes that by 2009, one in three mobile phone users will be connected to a 3G network.
  • To access 3G services, consumers need to purchase a new 3G mobile phone and sign up for a new 3G mobile phone plan, which may be more expensive than their current voice-only plan. A 3G phone must be within a 3G area to access 3G services, and even then, there may be blackspots within supposedly 3G-enabled areas.
  • The key selling points of 3G services include high-speed data transfer, the ability to download and stream media content to mobile phones, and enhanced multimedia capabilities such as video calls and mobile internet access.
  • Hutchison 3 mobile, Telstra, Vodafone, and Optus have announced their 3G services, with competing plans and pricing structures. For example, Telstra is offering Commonwealth Games content on its 3G network at no extra cost, while Vodafone has introduced Mobile TV services, including "mobisodes" of 24: Conspiracy.
  • Consumers must be aware that 3G handsets are battery hogs and require frequent recharging. Additionally, phones with limited internal memory may not be able to store large amounts of downloaded content.

Statistics:

  • By the end of 2005, an estimated 19.2 million people in Australia used a mobile phone, representing 100% mobile phone penetration in the country.
  • According to IDC, by 2009, one in three mobile phone users will be connected to a 3G network.
  • Music accounted for only $5 million of the $1.53 billion spent on non-voice services in 2005 but is expected to increase to $209 million by 2009.
  • Video calls will cost 70 cents per 30 seconds plus 35-cent flagfall on the $49 cap, or 55 cents per 30 seconds plus 35-cent flagfall on the $79 cap after June 30, 2006.
  • Hutchinson 3 mobile's 3G pricing starts at $29 for a voice cap plan, while Telstra's pricing ranges from $49 to $79 for 3G Mobile Phone Cap plans.

Sources:

  • Government announcement (year not specified)
  • IDC (emphasis not specified)
  • IDC survey (September last year)
  • CTIA Wireless Association
  • Various telco press releases