-    BIZ-TECH   Upwardly mobile It promises the world in your hand, but will the next-generation mobile phone match the hype? Roulla Yiacoumi reports. If you believe the hype, the next generation of mobile devices will let you surf the Net, watch movies, video conference, download music, take photos, check the stockmarket, find the nearest restaurant and, of course, make phone calls - all with the one handheld device. On your colour-screen terminal, made by a consumer electronics company rather than a mobile manufacturer, you'll also be able to send email, pay your bills and be directed to your destination via a built-in global positioning system. Understandably, not everyone is buying into this utopian scenario just yet. After all, the second generation (2G) GSM digital mobile phones we use today limit us to making calls and sending 160-character SMS messages on a mono, text-only screen. But when 3G networks go live in Australia, probably no earlier than 2003 and more likely in 2004, there will be new handsets, new applications, and according to the device manufacturers, a new way of communicating altogether. "3G will bring a change in the way people live their lives," said John Butkiewicz, director of mobile systems, Ericsson Australia. "The technology is proven. I have no doubt it will deliver."

The device manufacturers argue that because 3G can theoretically transmit data at 144Kbps when moving at high speed, 384Kbps at low speed, and a whopping 2Mbps when stationary, information can be delivered quickly when you're on the move.

However, according to both local and international telecommunications analysts, transmission speeds will get nowhere near anticipated levels. A report by a US analyst, the Shosteck Group, concluded cost and operational reasons would limit the speed to between 30 and 40Kbps - slower than a 56Kbps dial-up modem. "For many people who had been told that 3G would support 384Kbps and beyond, this will prove to be a major disappointment," the study found.

Locally, the pundits are more optimistic, saying speeds will probably average between 100Kbps and 150Kbps, possibly even hitting 300Kbps.

Even so, do Australians want to surf the Net on a handheld device? "No, nobody wants to, it's totally stupid," said telco analyst Paul Budde. "The keypad and screen are not appropriate."

Budde said there would be some things that were either "useless" to conduct on a 3G terminal or that people simply would not be prepared to pay for. Among these, he cited checking the weather report, stocks, video conferencing and watching movies. "Who wants to pay $2 to get the weather? You can get that kind of information for nothing from the radio, television, newspapers and the Internet."

Arguing that there is no compelling reason for people to want to use such services, Budde accused phone manufacturers of simply hyping 3G as a way of offloading more of their product onto an already-saturated market. "Manufacturers desperately need new markets in which to sell their products," he said.

Indeed, Australia's love affair with technology is legendary. In 13 years, the country has amassed 10.2 million mobile service subscribers - more than half the population - up from 1 million in 1994. This figure will be boosted by the introduction of mobile-number portability on September 25, which will allow subscribers to switch networks without losing their number. Aside from chiefly using our mobile phones to make and receive telephone calls, as a nation we have developed an obsession with sending each other short messages. Both Telstra and Optus claim some 15 million SMS messages are sent around their respective networks each week, a trend expected to continue with 3G.

Accessing services such as calling a taxi, checking movie sessions and reading your horoscope via wireless application protocol (WAP) was set to be the next big thing after direct messaging.

By connecting to your provider's WAP service and scrolling through menus, your phone was to become part of a mini-Internet. You could chat online, read the hourly news and even find the latest lottery results.

Telstra charges 22 cents to connect to its WAP service and an additional 33 cents per minute - making it a pricey proposition for non-critical usage. Furthermore, users must upgrade to a new WAP handset to access the technology.

Not surprisingly, WAP services have not had much success in Australia. Services have not been strongly marketed, the cost is prohibitive and the terminals available do not accommodate the applications very well.

The Shosteck Group's CEO, Jane Zweig, went one step further: "End users are not finding WAP services interesting," she said.

Telcos are hoping WAP services will receive a boost following the current rollout of general packet radio service (GPRS). GPRS is a 2.5G technology, so-called because it is considered a stepping-stone between 2G and 3G. Like 3G, it uses packet switching rather than circuit switching to transmit data at a high speed, expect 4G about 2008.

Once again, users need to purchase a GPRS handset - there is one model on the market - to take advantage of the technology.

The carriers argue GPRS will make accessing WAP services more attractive as the information can be accessed more quickly and you only pay for the information you want - not the time taken to access it.

But Zweig warned that making existing WAP services easier to access will not suddenly make them more attractive to subscribers. "The content available over WAP today is immature," she said. "Incompatibility between sites and phones is commonplace, content services are flat and uninteresting, online games are childish, and services are generally difficult to navigate."

Locally, Budde Communications, Accenture and META Group have branded WAP services a failure. But Marc Phillips, managing director of local analyst group APT Strategies, isn't quite ready to write them off.

Phillips said the telcos had not marketed WAP services in the right way. He said promoting WAP services as "the Internet on your phone" led to unrealistic expectations.

"Most Australians have experienced the full richness of the Internet via a computer," he said. "You have to remember that there are people out there whose first experience of the Internet will be via a WAP phone. After you've had the main meal, you don't want to go back to the snippets."

(According to figures from the Australian Bureau of Statistics, 56 per cent of Australian households have a home computer; of these, 37 per cent have Internet access.)

But perhaps the greatest misconception is that GPRS, and later 3G, will offer an "always-on connection". This is not the case; callers will actually be charged a connection fee to access the service, plus a fee for the volume of data transmitted (as opposed to the time spent connected).

Like WAP, Telstra will charge a 22 cent connection fee to start a GPRS session. One session lasts as long as you remain connected. And like phone calls which can drop out when you go through a tunnel, so too a GPRS connection.

While ambiguously stating that "with GPRS, you can be always online", Telstra makes a point of not guaranteeing "the extent to which a GPRS compatible phone will have access to information on the Internet or anywhere else".

If you receive a phone call while in a GPRS session, the service will be suspended until you finish your call and return to continue. However, if you wish to make a call from your terminal, you will need to disconnect, make the call, and then reconnect (another 22 cents) to the GPRS service.

Telstra expects 3G services to follow a similar model and pricing structure.

Peter Walker, general manager of mobility at Siemens, said the early adopters would be those able to afford it, citing corporate types as the most likely candidates. "That's because the spend isn't coming from their own wallets," he joked.

While potentially expensive, the cost is anticipated to fall over time. Early on, telcos will need to focus on ways to recuperate some of the money invested in buying up 3G spectrum.

Locally, six telcos spent $1.2billion on licensing local 2GHz spectrum, the band which will be used for 3G communications. This is far from early estimates by advisory firm Merrill Lynch that up to $2.6billion could be raised.

European telcos will have a much harder time seeing a return on their investment. In Britain, five telcos forked out a combined £22.5 billion ($61billion). In Germany, that figure was a phenomenal $85billion. The United States won't be auctioning its spectrum until September 2002.

While the third generation of mobile communications may be a few years off in Australia, Japan is about to get a taste of what's to come.

Japanese telco NTT DoCoMo is about to begin the first trial of its 3G service called FOMA (freedom of mobile multimedia access). About 4,000 people in Tokyo will be selected by lottery to test the system which has been scheduled for commercial release in Japan from October 1.

ry@cinnamonsky.com

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