As mobile industry meets in Barcelona, 3G is now a success..

It was the biggest gamble in the economic history of mankind. Not my words, that was how The Economist considered the roll of the dice, that the 3G investment was to the mobile telecoms industry when they wrote about the giant 3G licence auctions and (then) pending 3G infrastructure investments, that were calculated to cost 300 billion dollars. In today's global economic crisis and President Obama's rescue package near 800 billion dollars, that may not seem like very much, but it was pointed out by economists, that the 300 billion dollar 3G investment was the largest infrastructure project of all time.

The Mobile World Congress meets this week in Barcelona, the biggest telecoms industry event of the year. I am not there this time, but I had the honour of delivering the strategy keynote to the event a couple of years ago, and the event is always one that gets massive media attention and creates a lot of buzz.

A few years ago it was popular for pundits to debate how badly the industry overspent on the 3G licenses, and whether the industry would ever recover from that investment. The most negative experts even suggested the industry was headed to a comprehensive bankruptcy, around the time of the previous economic downturn (the dot-com bubble bursting) around 2001-2003.

I was not. I was on record, in my speeches, my press interviews and in my books, confident that the fundamentals of the mobile economy were sound (gosh, did I just sound like John McCain, ha-ha) and that the business in 3G was built on a solid basis, and furthermore, that there was a lot of futher growth to come, that mobile was nowhere near "saturation" and that there was growth in everything from SMS to ringing tones to yes, the mobile internet, inspite of the refrain "Wap is crap".

Now we have numbers. And again, there is a lot of pessimism out there, the doubting Thomases, who seize upon some selected markets and also some unfortunate parallel statistics.

So, first - the usually reported statistic for 3G migration, is the proportion of all mobile subscribers who have migrated from 2G networks to 3G. That is all fine and good, but, but. It gives artificially modest numbers, in those cases where the national total mobile penetration rate is far above the total human population in that country. Take Italy. They launched 3G in 2003. Now, if we measure the migration of 3G as a percentage of all mobile subscribers, we get 32%. Less than one in three Italian mobile phone accounts is a 3G subscriptoin. Over a 5 year period, that is hardly a resounding success? But the number is actually disguised behind some incredible total mobile penetration rates. Italy is at 149% mobile penetration per capita! Yes, 1.5 mobile phone subscrptions for every live Italian, babies and great-grandparents and all included.

If we measure how high is the 3G penetration rate per capita, not the 3G migration per total subscrber base - then we get a very different view... Italy has already 48% 3G phones per capita. So there is a 3G phone for almost half of all Italians. Now 3G is clearly a success. Note this is higher as a penetration rate for Italy, than personal computer penetration, or fixed internet penetration (per capita, not per household).

So, I wanted to give our readers a look at how 3G is doing. Here are the world's leading countries, not by how many of their subscribers have upgraded to 3G, but rather, by national penetration rate of 3G per capita, ie per all human beings:

South Korea 67%
Japan 67%
Singapore 61%
Australia 53%
Italy 48%
Austria 47%
Sweden 43%
Taiwan 43%
Finland 42%
Portugal 41%
Israel 39%
Norway 38%
Spain 38%

Thats the baker's dozen leading countries. All around the world. 13 countries where there is a 3G phone subscription for over a third of the population and very smoothly up the curve up to two thirds of the population. Is there any doubt that 3G is happening? That 3G is a success? That 3G will happen everywhere? (for those looking for the USA, it is at 20% - remember this is per capita, and USA lags the Industrialized World still so much, that they have not even reached the 100% national mobile phone penetration rates yet. Germany is ahead at 23%, the UK is at 32%). The above stats from several sources including the Netsize Guide 2009, the ITU 2008 and Tomi Ahonen Almanac 2009.

But yes, its been a long time coming, but the world's biggest infrastrructure investment, - and the world's biggest economic gamble - have panned out. 3G is well on its way to being a major success. But of who will end up winners and losers? It is no longer a technology game. Like I've said for years already, the winners in 3G will be determined by services and marketing. Some of the past giants have been very slow to grasp that...

And for anyone who would like to read a 2 page summary of the major stats on this industry, remember I have my free Thought Piece on Mobile in 2009. I'll be happy to send it to you, if you send me an email to tomi (at) tomiahonen (dot) com.

Comments

[Per-Fredrik Hagermark]

Yes, it was a gamble, but we do have one of the fundamentals in place to actually start building really cool and useful services that people actually care to use. On top of 3G infrastructure, the sound business offering of flat fee mobile internet fees has followed. One worry might be the production cost for all the data traffic that finally has started to flow through the networks. But if there is demand for a service there is usually a solution for trimming the production line. We might be in the middle of a huge crisis by far overshadowing the tiny 300billion gamle the 3G build out was, but I think the future starts to look pretty bright for mobile media.

[Mariana Oliveira]

I think it's very impressive how Asia and Europe are years in advance when we talk about mobile! There it's already a reality, but I agree: "the winners in 3G will be determined by services and marketing".

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