Vodafone’s Spanish subsidiary Airtel has substantially increased its investment in GPRS services.
Spanish mobile operator Airtel, majority-owned by Vodafone, announced at the weekend that it will spend E720 million this year on network infrastructure. While all mobile operators are investing heavily in infrastructure due to the transition to higher-bandwidth GPRS and EDGE services and then to broadband 3G networks, one aspect of Airtel’s announcement is more worrying.
The company has substantially increased the amount it intends to spend on GPRS. While the standard was only supposed to be mobile operators’ flagship product for a short time, it now looks likely to last rather longer. Despite operators’ huge investment in 3G licenses and networks, the development of handsets for 3G services is getting pushed further and further back. Projections of three quarters of a million 3G subscribers in Europe by the end of 2001 now look improbable – Airtel doesn’t expect even to offer the services until Q3 2002.
This is bad news for mobile operators They need to start making money from mobile Internet services as soon as possible – but no matter how quickly they build out their 3G networks, nobody will be able to use them. So GPRS is the only viable interim solution.
But even GPRS has its problems. At least at present, it is slower than dial-up domestic Internet – and as fixed broadband services take off in Europe, the speed gap will become still more noticeable. The industry just can’t afford disappointing consumers as it did with WAP if it is to maintain consumer confidence. Worse, GPRS handsets are also way behind schedule. Motorola is the only firm marketing one at present – Nokia’s has been put back until the end of this year.
Airtel’s probably making the best move it can. GPRS is getting there and handsets will be available well before 3G devices, while many of the services expected to bring in 3G revenues will also work on GPRS devices. Still, given the implementation problems, it’s no wonder revenue predictions for mobile operators are being continually downgraded.
