Mobile market faces turmoil over 3G delays

The future of the UK mobile market is not good, according to a report from analyst Forrester Research, which predicts that fierce competition among European operators will drive all but five to the wall by 2008.

The future of the UK mobile market is not good, according to a report from analyst Forrester Research, which predicts that fierce competition among European operators will drive all but five to the wall by 2008.

The driving force behind this wireless massacre will be the gap between investment levels in third-generation (3G) services and the profit generated from them, particularly in the mobile internet market.

The study suggests that average annual turnover per user in the overall mobile sector will tumble by 15 per cent to just £200 by 2005 as users sniff out the best deals. The report's author, Forrester telecoms analyst Lars Godell, also predicts that the total value of the market will shrink by 36 per cent.

While operators insist that turnover from 3G services will compensate in roughly equal measure for a turnover plunge in traditional markets, Godell is sceptical.

He said that profit from network access, content subscriptions and location-based marketing contracts will be lower than expected, leaving a shortfall of about £44 per user per year.

Mark Blowers, a senior researcher at analyst Butler Group, agreed that consolidation would hit mobile markets, but he expected astute operators to exploit opportunities as the market shifts.

"It's pessimistic to say that mobile internet services won't take over from traditional revenue streams. Network operators are in a prime position to leverage additional revenue from various areas, such as wireless portals. Partnerships with content providers will allow them to grow their turnover," he said.

First published in Computer Reseller News