[kictanet] 3G lauch to spark battle in data services mart

[Wanjira, Alice Munyua]

3G lauch to spark battle in data services mart 
 	  
Written by Kui Kinyanjui: Buisness Daily

3G enabled services will help facilitate various modern e-applications such as remote medical diagnosis, remote education, as well as a variety of business-to-business and business-to-government applications.

November 5, 2007: Kenya’s telecoms scene is set for a major revolution following the recent launch by service provider Safaricom of a new technology.

The technology -- commonly known as 3G -- is expected to change the way consumers use their phones besides bringing home the long held consumer dream of accessing the Internet and television from their mobile phones.

The network differs from the current in its ability to deliver high quality media-rich content -- including audio and video to a mobile phone handset.

It comes at a time when consumers are beginning to enjoy Telkom Wireless’ price cuts on similar offers through its CDMA platform -- setting the stage for a battle for data shillings on the new breed of networks.

While Safaricom’s may be the first commercial 3G service in Kenya, Telkom maintains that its CDMA platform offers more of the same features and at a more competitive price.

This potential by Telkom, which is Safaricom’s parent company, poses a looming threat to the mobile firm’s aspirations to become the leader in the provision of value-added services in the telecoms market.

With 3G enabled phones, consumers will be able to use the telephone to access Internet services and transmit data. The mobile industry is counting on the arrival of 3G to boost the sale of data enabled handsets such as camera phones and to raise earnings through sale of high-end services such as mobile e-mail access.

“3G enabled services will help facilitate various modern e-applications such as remote medical diagnosis, remote education, as well as a variety of business-to-business and business-to-government applications,” said John Waweru, the director-general of the Communications Commission of Kenya (CCK).

Most Kenyan users will, however, be keen to use their phones to surf the internet. Third generation networks allow for faster download speeds for web pages, with prices dropping to less than Sh10 per megabyte downloaded.

Having paid $25 million, nearly half what it paid for the original mobile operator licence, Safaricom is banking on the new service to drive revenue growth from users accessing more data heavy applications.

Kenya’s mobile phone sector is slated to grow by 87 per cent in the next five years, exceeding the 72 per cent forecast for the African continent, according to the GSM Association.

Safaricom’s entry into this service platform came as a surprise to many given that its CEO Michael Joseph indicated that the company would only implement the service if the cost-benefits were commensurate with the projected number of users.

Rival mobile telephone service provider Celtel is said to be weighing the prospect of acquiring the pricey licence at this time. With the majority of new mobile subscribers expected to come from the countryside, it remains to be seen whether the projected levels of growth with translate into increased demand for valued added services.

The race for rural subscribers has seen Safaricom commission a Sh500 million switching centre targeting the rural folk in western Kenya. Industry observers however say that Safaricom may have to wait a while to reap the benefits of the latest network upgrade.

Japan’s NTT DoCoMo launched the world’s first official 3G system based on WCDMA in 2001 but only managed to fully migrate its users to the service by 2006.

Two years after its launch in the UK, a 2005 survey by Harris Interactive revealed that the uptake of the new service was sluggish. The poll indicated that only nine per cent of the entire mobile phone market had upgraded to a 3G enabled mobile phone two years after the services launch, with 41 per cent of 3G users using their powerful gadgets for just for talking and texting.

The silver lining in the Harris poll was however that 3G users were twice as likely to use their mobile phone for more than talking and texting.

“There is a danger in 3G being given away without effectively marketing 3G services to consumers. Service providers are seeding the market with the product and then relying on above and below the line marketing to generate momentum for key 3G services,” said Derek Eccleston, technology research director at Harris Interactive.

“If 3G consumers do not begin to utilize the full range of 3G services, the return on general operator investment in 3G may not be realized—and this can have a negative impact on their profitability.”

But as with any new service, Safaricom will roll out its latest network addition with tremendous spend on advertising to highlight its offering. The firm is said to be in talks to enter into data services partnerships with interested companies.

Besides, phone companies are maneuvering to strengthen their offerings in the high end gadget market, with some banking on the quick adoption rate of to drive sales of the relatively more expensive devices.

Phone company LG recently launched YouTube enabled handsets in the local market that will allow users to interface to access and upload video content.
 
“This new service will connect people like never before.  For the first time, LG customers will be able to film, upload and view videos on YouTube using their mobile phone just as they would from their home computers,” said K.W. Kim, LG Middle East and Africa President. 
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