Near-Term Prospects For 3G Wireless Get Dimmer.

A recent research report, in conjunction with announced service delays, seems to indicate that advanced wireless services based on 3G technology will take even longer to appear than previously expected.

In April, Japan's NTT DoCoMo, the company expected to lead the charge to third gen wireless, announced that such services will be delayed until October from their scheduled launch date in May. Instead, the telecom will offer "introductory services" beginning in May and continuing through September. In a statement, the company said that "[the] introductory service will be used to assess system performance and provide customer feedback for the full-scale launch in October. Users will be provided with free handsets and will be exempted from paying basic monthly fees, but not actual communication charges, in return for filling out questionnaires about the 3G services and offering comments and suggestions regarding possible improvements."

Throughput during the introductory period will be limited to a maximum 64Kbps per second, a far cry from the expected 128Kbps of 3G wireless. The service will also include a per packet fee--currently unspecified--as well as a monthly usage fee.

The delay is expected to further enhance the appeal of iMode, which is expected to hit the U.S. as an offering from AT&T later this year or early in 2002. A research report by Cahners In-Stat Group indicates that high spectrum costs, delays in handset introductions, and slow consumer uptake are combining to dampen prospects for 3G services. The firm says that although the market may take off in several years, the short-term prospects for the technology are bleak.

"The financial impact of mega-spending for spectrum followed by seemingly unreal financing arrangements has taken its toll," says Ray Jodoin, group manager and principal analyst for In-Stat's Wireless Technology & Infrastructure service. "3G is not for those with weak hearts or shallow pockets."

In a related report, In-Stat found that wireless carriers spent more than $8.5 billion in 2000 on W-CDMA 3G technology, second only to the amount spent on GSM, the 2G technology most common around the world. The total spent on worldwide wireless technology awards made public last year was more than $28.5 billion, the firm says.