Can 3G do the business?
Mobile operators have been making lots of noise about the types of services they can sell to consumers using the much higher bandwidth capacity of 3G, the next generation wireless technology being rolled out by operators around the globe.
From live video calling to locating your nearest restaurant to watching sports and music videos on your handset, the range of services being offered to consumers on 3G phones appears almost endless.
By comparison, even where operators are selling business users services running on 3G networks, their offerings are often limited just to 3G datacards which plug into laptops. This is certainly a major technological advance. 3G cards provide a far superior experience compared to their predecessors which ran on 2.5G, the interim wireless technology: a 3G datacard should enable users to download data several times faster than a 2.5G version.
But this is hardly the major data revolution that many operators were promising when they invested tens of billions of dollars buying 3G licences at the height of the telecoms boom. Indeed business users would be forgiven for thinking there is a dearth of services available to them on 3G.
Dag Jansson, global head of consulting services for telecoms, media and entertainment at Capgemini, the technology consulting firm, argues this is because the consumer market is far more of a natural driver of new services than the enterprise sector.
“The business market is about rational communication whereas the consumer market is about emotional communication,” he says. “That is important, as emotion tends to be a bigger driver of new services.”
This is somewhat ironic, as when it comes to the impact 3G could have Mr Jansson argues it is likely to be far more significant in the business sector, potentially feeding through to significant productivity gains.
There are already tentative signs of some of these emerging productivity gains. From parts of Asia, through Europe to the US, operators that have launched 3G datacards claim to be getting very positive initial responses from users. Business users are enjoying the much faster download speeds on 3G data-cards and they appear to be changing their working patterns as a result.
Vodafone began selling its own 3G data service across nine of its global operations in February. By the end of June it had counted 50,000 users, representing more than 15 per cent of its total data-cards in use.
Stephen Noakes, director of business propositions at Vodafone, says users of its 3G datacards are clocking up higher levels of data usage, indicating that the faster download speeds are encouraging them to do more work when they are on the move.
This experience is echoed by T-Mobile, Deutsche Telekom’s mobile arm, which is selling a 3G datacard that provides even faster access when users enter one of a growing number of Wi-Fi hotspots at locations in places such as airports, hotels or train stations. Wi-Fi technology provides high speed access to the internet without the need for wires or cables, typically several times faster than 3G.
“We’re seeing different behaviours in different markets,” says James Hart, head of business marketing at T-Mobile. “There are similarities between the US and the UK where we are seeing a lot of usage at Starbucks [coffee shops] for example.”
Elsewhere he says airports are proving very popular locations for mobile working with Heathrow one of its busiest hubs. And he says there are strong signs that many business users are tending to wait until they enter a Wi-Fi hotspot before they send or download data rich applications such as e-mails with lengthy attachments.
These experiences indicate that demand for the faster download speeds available on 3G are likely to prove significant for business users who are increasingly accessing e-mails and their work calendars while on the move. But some operators are now seeking to pioneer more creative 3G services targeted at the business market.
“During several pre-launch marketing surveys, indications were that the video calls would not be a great service [in the business market],” explains Edoardo Verduci, head of marketing at 3 Italy, the 3G-only mobile operator. “But what we have found is that the video call is a highly penetrated and useful service in the business market.”
In addition to enabling business users to access their company’s local area network while on the move, 3 Italy is developing other innovations targeted at business users. An example is a live video-calling service used by a dermatological centre so that skin disorders can be diagnosed remotely.
By rolling out a range of 3G services to its business customer base, 3 Italy has been able to buck the trend with higher data usage among its business customer base. Mr Verduci says data usage among its business users is “significantly more than double” its consumer base.
Other operators are likely to follow suit with specialist 3G services tailored to business customers as they bed down their 3G datacards offerings. Mobile operators such as Vodafone are in discussions with handset makers over how they can bring 3G functionality to more devices such as personal digital assistants targeted at the business market.
Coming to a handset near you
Services launched or with launch dates
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Despite these promising early signs, however, there are still factors that could stunt 3G adoption among the business community. One of the most significant of these is cost.
“Cost is an issue for companies,” says Michelle de Lussanet, an analyst at Forrester, the technology research house. “Companies don’t want their employees running around with top-of-the-range camera phones that can download games. Typically the employee’s handset is not a data-friendly device.”
Jon Hindle, strategic technology manager of worldwide mobility at Cisco, agrees. “Cost is a very significant issue. This is one of the issues the operators faced in the early days of GSM [the mobile technology dominant in Europe].”
But he says companies are finding ways to control their costs either by giving employees access to their company site at preferential rates or by charging employees separately if they view other content over laptops or other mobile devices. Some companies are also looking at pre-pay models which will impose a ceiling on costs.
There is a lot of talk about return on investment within companies on investment in new technologies such as 3G, Mr Hindle says. “But, as long as the costs do not spiral out of control, the longer you can keep employees connected the more productive they should be.”
The other potential barrier is security. ”We do see security issues,” says Forrester’s Ms de Lussanet. “Most handset makers are using either Microsoft or Symbian [operating systems in phones]. As penetration of these operating systems grows the incentives for hackers to do damage will also grow. And as these devices open up to more of an IP [Internet Protocol] environment, the threats will become more real.”
“In five to 10 years time I’m sure there will be enterprise services that run on 3G such as picture or video sharing,” she adds. “But it is not realistic if operators believe take-up on these services will be significant next year. If you are a fireman you are not going to risk critical services on a technology that has limited coverage or could be unstable.”
Yet despite the huge potential for new services on 3G, some argue that the biggest impact 3G will have will be on humble voice services. 3G spectrum auctions have given mobile operators bigger bandwidth, making it easy to transmit data-hungry applications.
But 3G has also radically increased operators’ capacity to handle voice calls and it will significantly improve the quality of those calls, bringing the mobile voice experience much closer to the fixed-line phone. Some believe this will lead to a resurgence in the shift of voice calls from fixed to mobile. With only around 20 per cent of global voice traffic currently carried over mobile networks, the potential for further growth is huge.
“It may be traditional voice that is most useful on 3G,” argues Capgemini’s Mr Jansson. “The quality of voice and the coverage of voice is not really respectable from a business users’ point of view [on 2G],” he says. “3G could make voice so abundant and so cheap that you get a further switch from fixed to mobile.”
In the second part of this series on September 22
