While 2004 saw the widespread emergence of commercial 3G services in Europe, Forrester Research predicts that 3G will not become the dominant technology for mobile phones until 2010. GSM-only phones will fade out quickly within the next two years, and GPRS will dominate for the rest of the decade. Forrester believes, however, that despite 3G phone use becoming mainstream, adoption of mobile Internet services will remain sluggish across Europe.
Niek van Veen, Researcher, Telecoms, at Forrester comments: “By 2008, just 3% of European mobile users will still use a GSM-only phone, and this will shrink to a negligible 1% by the end of 2010. GPRS will start losing ground to 3G after 2007, and by the end of 2010 just 38% of mobile users will have a GPRS phone as their primary mobile device – compared with more than 70% today. By the end of 2006, as 3G phones become cheaper, less bulky, and superior in performance, 3G will reach double-digit penetration. And this growth will continue: By the end of 2010, three in five mobile users will have signed up to 3G.”
The combination of operators that aggressively promote 3G services, above-average consumer interest in advanced mobile phones and services, and fierce competition among operators and service providers will put the UK and Italy in the lead for 3G adoption. These countries will see 3G penetration rates of 68% and 72%, respectively, by the end of 2010 – far ahead of the European average of 61%.
Tepid consumer interest in Germany and France – and patchy UMTS coverage and little 3G promotional activity from operators in Ireland, Norway, and Spain – mean that 3G penetration rates in these countries will range from 55% to 65% at the end of 2010, in line with the European average. The laggards are Belgium, Finland, Greece, and Luxembourg. Forrester thinks that 3G penetration will only grow to 46% of mobile subscribers in Belgium and 51% in Finland by the end of the decade.
Regulation, in the form of phone subsidy bans and coverage requirement policies, will affect 3G uptake. For example, Belgium forbids operators to package phones with subscriptions. And the Swedish regulator obliges operators to cover almost 100% of the population – whereas the Finnish regulator sets the same requirement at just 35%. Lastly, regulators influence uptake via the number of 3G licenses that they make available.
Although 3G will reach critical mass toward the end of this decade and will help make mobile Internet service access capabilities ubiquitous, Forrester believes that this will only have a limited impact on actual regular mobile Internet usage. Mobile Internet functionality will remain the norm – but just half of mobile users will use it. This year, 90% of phones in use will be mobile Internet-capable. But 93% of Internet access runs on GSM or GPRS, not on the superior 3G alternative. 3G Internet-enabled phone penetration will grow rapidly, helped by replacement mobile phone sales, operators’ 3G pushes, and phone manufacturers’ volume shipments of 3G phones. By 2010, 200 million Europeans will have a 3G phone that’s also Internet-ready.
Van Veen states: “Today, 21% of European mobile subscribers use mobile Internet services – including MMS – at least once per month. Once 3G coverage improves and networks become more reliable, usage will grow. But this won’t be at the same pace as 3G handset take-up: Low consumer interest in paying for mobile Internet services and an inferior user experience compared with fixed Internet or interactive TV alternatives will have a dampening effect on uptake. As a result, no more than half of all mobile subscribers will regularly use mobile Internet services at the end of 2010.”