European mobile users resist 3G prospects

LONDON -- The results of a survey of mobile phone users in six European countries are coming as a shock to the industry, which has been investing heavily in new technologies and is just a few months away from the widespread launch of 3G across Europe. The message is clear that most users are saying "don't forget voice" and "I don't really need anything more than what I have now"

Clearly, the industry's research and development is running faster than sales and marketing. Unless there is a big and successful consumer marketing and education effort made, European mobile user will be dealing a blow to the prospects of early mass 3G adoption.

Yet there are signs that by following a few simple lessons, the 3G industry can put itself back on track for success.

These are the findings from the latest HI Europe Poll of attitudes towards 3G, conducted online in six key European markets (Great Britain, France, Germany, Spain, Italy, Belgium) among almost 10,000 mobile users. HI Europe is a subsidiary of the US firm Harris Interactive.

Clearly, the industry's research and development is running faster than sales and marketing. Unless there is a big and successful consumer marketing and education effort made, European mobile user will be dealing a blow to the prospects of early mass 3G adoption.

The survey results among mobile users showed an apparent lack of interest in 3G:

▪ 49% agree that 3G is of no interest and that current mobile phone technology completely satisfies their needs (20% disagree)

One of the reasons for this could be that many mobile users want no more than a good voice service while 3G’s key advances relate to mobile data:

▪ 44% agree that, looking ahead, they can't see themselves using mobile phones for much more than making voice calls (35% disagree)

Recently, though, some operators have started to manage the early hype over 3G by acknowledging the continued importance of mobile voice to future growth.

Another reason for the low interest could be a lack of clarity over 3G’s benefits:

▪ 52% agree that the mobile industry has completely failed to explain what 3G is all about and why it is worth having (11% disagree)
▪ 49% agree that mobile phone retailer staff are poor at explaining new technology (14% disagree)

While retailers are unlikely to be responsible for this perceived lack of clarity in communications, given their involvement later on in the lifecycle (i.e., once products come to market), these findings suggest that retailers represent a potential bottleneck in the process.

On the issue of pricing, there is widespread cynicism, deserved or not, that the industry will overcharge for 3G:

▪ 55% agree that 3G operators will overprice 3G to help recoup the huge investment costs on licenses and infrastructure (10% disagree)

All of this evidence underlines the uphill struggle the industry faces in making 3G a success. With billions of Euros invested, mobile operators are under severe pressure to deliver the goods.

Particularly in the light of previous industry failures, such as the WAP launch that resulted in disillusioned consumers, the HI Europe survey gauged consumer reactions related to premature launches:

▪ 51% agree that operators who promote 3G services while the service is unreliable will severely damage their reputation (10% disagree)
▪ 51% agree that operators who promote 3G services without being able to meet handset demand will severely damage their reputation (9% disagree)

Lessons for the industry

Surinder Siama, associate director within HI Europe’s technology practice and author of the study, believes that the findings lead to four important lessons for the 3G industry, particularly for mobile operators but also relevant to handset manufacturers, retailers and content/applications providers:

A targeted approach, such as offering 3G data cards to road warriors, is more likely to bear fruit than the scattergun approach of operator 3 which has, ironically, had to rely on traditional mobile drivers such as price rather than 3G features such as video telephony, to attract many of its punters.

Don’t forget voice: The industry has bought into the self-fulfilling prophecy that mobile data is the future and mobile voice passé. But data still represents a small part of mobile spend and the emerging success of Wi-Fi limits the appeal of 3G mobile data. Continued investment in innovative voice solutions, such as Nextel’s highly successful Push to Talk product, which will soon launch in Europe through Orange, makes sense.

Communicate benefits, not just features: Steer clear of communicating 3G as a technology revolution (the mistake made with WAP), and instead focus on services and applications that offer genuine quality, productivity or lifestyle improvements.

Get it right: There is nothing worse than buying into a heavily promoted service only to find it unreliable. Yet anecdotal evidence suggests that 3G coverage is patchy and, as our study shows, the market is unlikely to be sympathetic to premature launches.

Market Differences

There are some notable attitudinal differences among mobile users by country:

▪ Great Britain is the most anti-3G, somewhat surprising given it is home to arguably the world’s greatest 3G proponent (Vodafone).

▪ The French (57%) are more likely than others to criticise mobile retailer staff for poorly explaining new technology.

▪ At the other extreme is Belgium, notably less critical of 3G. Despite this, Belgians are no more interested in 3G than average -- a full 52% say "3G is of no interest to me, current mobile phone technology provides everything I want."

▪ The Germans are the most open to mobile data since fewer (32%) agree that "looking ahead, I can't see myself using mobile phones for much more than making voice calls."

▪ Spaniards (71%) are much more likely to believe that the industry has failed to clearly explain 3G.

About 3G

3G is the popular term for the next generation of mobile phones which allow much faster data transfer rates and hence enable viable data-rich applications such as video telephony and messaging. Currently, only pan-European network 3 offers a fully launched 3G service, but most incumbents with 3G licenses plan to launch 3G services during 2004/early 2005. 3G investment far exceeds any other investment programme in the history of the mobile phone industry.