Sunday, July 03, 2005

Everyone’s talking about 3G except in RP

By melvin g. calimag MB

At this year’s CommunicAsia, the mammoth ICT exhibit held recently in Singapore, the buzz was all about 3G and post-3G technologies. Major phone manufacturers and operators showcased their products and solutions which were all aimed at giving 3G the needed shot in the arm.

Multinational companies such as Motorola, Samsung, LG, and Panasonic unveiled their high-powered 3G phones, while high-profile regional operators like SingTel (Singapore Telecoms) made sure people were aware 3G is already a reality in the city-state and not just a remote vision.

In the case of US-based Motorola, it has turned its sprawling manufacturing plant in Singapore into a worldwide hub for 3G phones. The factory, which serves as Motorola’s international headquarters for the Asia Pacific region, accounts 60 percent of the company’s global output of 3G phones.

The plant has a workforce of about 2,250 employees, over 500 of which are software engineers working mostly on 3G technology. Its design center is one of the few Motorola global R&D centers with a 3G team that is dedicated to the development of 3G handsets for regional and global markets, and is the only one in Asia outside of Japan.

"3G is now a reality and it is not something that is far-off in the future," Jeffery Tan, president of Motorola Singapore, told journalists from the Asia Pacific rim during a recent factory tour.

"We’ve seen a number of 3G phones that have been rolled out and countries have launched their respective 3G networks. This is a trend that will definitely keep up."

Tan was referring to recent roll-out of 3G networks by Asia Pacific countries — mostly developed — in the last four years. Japan was the first to take the plunge in 2001, followed in quick succession by Australia, Hong Kong, and Korea in 2003. Singapore joined the club this year, while Malaysia is scheduled to inaugurate its own 3G network in 2006.

A year ago, there were only 10.2 million 3G subscribers in Asia Pacific. This figure now stands to about 15.5 million, excluding Japan and Korea which have a total of 56 million 3G users. In 2009, when 3G reaches maturity, there would be an expected 142.6 million subscribers with a compounded annual growth rate of 68.5 percent.

By Motorola’s reckoning, it shipped 2.6 million 3G handsets in 2004 alone. With Motorola clearly seeing its future in this arena, it has slated the release of a number of 3G phones later this year and is expecting to double the number in 2006.

Tan said a major factor for the increasing adoption of 3G is the falling prices of 3G handsets. From as high as $400 (about R21,000) per unit in 2003, it has gone down to less than $200 (about R10,000), he noted.

"But we say that size, weight, battery life, compelling applications, and design are just as important as the price."

But even if vendors are busy ramping up their production of 3G phones and other countries are in a frenzy to bring their mobile subscribers to the next level, 3G is still an almost alien concept in the Philippines — which, ironically, has one of the most vibrant mobile markets in the world.

Smart Communications, the country’s largest mobile phone operator with more than 19 million subscribers, said apart from the costly price tag of 3G phones, a host of factors must be taken into account to determine whether the Philippines is ready to embrace 3G.

"Issues such as handset availability and affordability as well as the regulatory framework must be addressed first before we enter into 3G," said Ramon Isberto, public affairs head of Smart Communications. The company was recently picked by Asian Mobile News as mobile operator of the year for the Philippines in ceremonies held in Tower Club Singapore.

Isberto considers the current price of the 3G handsets as "expensive" and their availability still a question. Furthermore, he said the National Telecommunications Commission (NTC) has yet to issue the final guidelines in the allocation of 3G licenses. "As to who will be allowed to bid for the 3G licenses is a matter that has to be resolved."

The Smart official said as of now, introducing 3G in the country doesn’t make a good business case for the company. "3G is basically for the high-end market. Our high-growth prospect is still in the low-end segment of the market so there’s no need for us to rush into 3G."

Smart’s rival, Ayala-owned Globe Telecom, has taken the same stand in a separate position paper it submitted to the NTC and does not have plans of launching 3G at least in the near future.

The decision to move to 3G, admitted David Taylor, Motorola’s director for strategy and operations for mobile devices in high growth market, depends entirely on local mobile operators since the Philippine market is basically driven by them.

Asked how long can local mobile operators afford not to offer 3G, Taylor said, "The Philippines has to inevitably move on to 3G, I just don’t know when. That’s for operators to determine. But with 3G they could earn more; just think of the revenues from various multimedia services that the current platform does not allow."

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