3G in its original guise may be in trouble but the mobile data service it was designed to provide has a future - one that needs definition, writes Ultan Ryan

What is happening to 3G? Problems in the telecom industry are never far from the news these days and Vodafone's decision last week to delay possible acceptance of the 3G licence offered to it by the regulator has re-ignited the debate.

This follows recent announcements by Telefónica to virtually write off the value of its German 3G licence and similar announcements from KPN.

3G, in its original guise, may be in trouble, but the mobile data service it was designed to provide has a future. It is the size, shape and pace of this future that needs definition.

3G was born out of the need of the mobile industry to develop its service offering.

The current GSM networks are not optimised for data. The add-on technologies of GPRS and EDGE were designed to enable simultaneous access by multiple users. While satisfying the initial requirement for mobile data services, neither technology was seen as a long-term option.

This thinking is now being challenged. 3G was seen as the only technology capable of serving applications requiring high speeds. The growing popularity of public access Wireless LANs is part of the challenge to the 3G business case.

The enormous success of GSM was seen by many analysts as an indication of the universal success of mobile telecommunications. However, had they conducted some basic research they would have quickly discovered their initial assumptions were grossly unfounded.

When GSM networks were introduced in Europe there was considerable pent-up demand for affordable mobile telephony.

At the time, Europe was served by many different analogue mobile telephony systems. Besides the many quality and security issues, the diversity of standards meant the quantity of scale to enable cheap handset production was not possible.

Mobile user population penetration in the early 1980s was very low. Most countries, UK excepted, did not have competing networks. GSM changed all this, resulting in the situation that prevails today with cheap handsets, many competing networks, high population penetration, extensive international coverage, etc. The factors that led to the success of GSM do not exist today for 3G.

Mobile data networks have been around for a long time. The first was probably the ARDIS network in the US. Built by Motorola as an in-house network for IBM, it was offered as a service to other companies in the early 1980s. Other mobile data networks began in the late 1980s and early 1990s, many based on Ericsson's open standard, Mobitex. The take-up of services on these networks was slow due in part to a difficult sales process. Besides selling the service, one had to sell an application and the terminals to run that application. While there were some off-the-shelf applications, like fleet management, many had to be developed, or modified, for the customer.

GSM users did not need to be sold an application or be educated on how to use the service, all they had to do was talk. With mobile data the users had to be educated - what they needed mobile data for; how to use the application; how to modify the application for their own particular use. Does this sound familiar?

The slow take-up of the GPRS service is a repeat of the difficulties encountered by the dedicated mobile data networks in the early 1990s.

Incidentally, the "killer application" spoken of back then was e-mail, similar to GPRS today although the advent of the internet and intranets provides an additional ready known application.

At the time of the great 3G licence sale, many mobile data applications were built into the business plans, some fanciful, some real. Anyone who has seen the demonstration of mobile data services in O2's Isle of Man 3G demonstration network will have been impressed by what is possible. The real issue is when will large numbers of consumers embrace these services, what networks will they use, and, of course, at what price?

If Vodafone's indecision whether to accept a 3G licence now is a result of internal debate on these issues, then it is to be welcomed. It would be beneficial to have this debate in a wider industry forum.

Do we need the incumbent operators to roll out 3G networks or should they take the cautious approach, concentrating on GPRS, evolving to EDGE if demand increases, eventually deploying 3G networks if demand dictates?

Would this approach seriously disadvantage the incumbents against a new operator building a 3G network? Would public access Wireless LANs bridge a competitive gap?

If Ireland wants to take a lead in the telecoms market, it has an opportunity to do so by taking a pragmatic approach to the mobile data issue rather than following the model of other countries, which is clearly buckling under pressure of new-found market reality.

Ultan Ryan is a principal consultant with Mason Communications with over 19 years' experience of the telecoms industry