UMTS licenses could be a ticking bomb under the governments who issued them
|Those governments around the world that have been busy making fortunes selling UMTS licenses to the mobile operators may have forgotten a minor detail in their rush to the bank.
|A minor detail that not only could mean that they have to pay the money earned on licenses back, but also could pose a serious threat to those countries that have state owned public service TV broadcasters.
Many people have been shaking their head and wondering why the mobile operators have been paying governments billions of dollars to acquire a UMTS license. Add to that the cost of building a 3G infrastructure – and then going out to find customers – and the prospects for a sound business case do seem daunting.
But at the end of the day, Public Service Broadcasters and the governments themselves could end up footing the bill! The bottom line is that none of the UMTS licenses issued contain any kind of “must carry” clauses. In other words, each UMTS operator can decide for themselves what content and from whom, to carry on their network. Most Public Service Broadcasters want to be available on all digital platforms, otherwise the whole idea of a state financed PSB falls to the ground and they stand to loose their state financing, but without a “must carry” clause in the UMTS licenses, 3G operators have no obligation to carry any content from PSB’s.
So when the PSB’s approach 3G operators and say “we need to be on your network” the operators can say, certainly and name any price they like, thereby getting a good return on investment on the price of the UMTS licenses. The PSB can either pay up or face the consequences of not being on a digital platform that will ultimately have a wider penetration than the Internet!
And it does not stop there. There is no reason why operators will not have the same approach to any state or government body, who would like citizens to be able to access their services through the 3G platforms. This can include tax services, local council services and information and much more at local government offices go digital and offer their services online. Strand Consult has knowledge of operators who have already stated that they expect substantial revenues from the Public Service and government sector, as soon as penetration of 3G terminals reaches critical mass.
Should there have been a “must carry” clause in the UMTS licenses? That depends on how you view what a UMTS license is. The governments that have issued them, have treated them as telephony licenses for wireless voice communication. But when the 3G infrastructure is complete, users will enjoy bandwidth speed much higher than the majority of Internet surfers have today on dial-up modems or ISDN! Operators have already announced that up to 50% of their revenue in the coming years will derive from other services than voice traffic. Add to this the new generation of terminals, sporting colour screens and you have a multimedia device that is “always on” and perfectly capable of handling rich content and video. In other words, maybe the governments should have treated the UMTS licenses as what they will be – Media licenses and thought a bit more about the consequences of issuing the licenses – other than charging exorbitant prices!
The latest reports from Strand Consult about the Korean mobile market “The Korean Mobile Market, a window to 3G”, where they already have java enabled colour terminals deployed and are running download speeds of up to 144 Kb/s, show a huge increase in average revenue pr user (ARPU), mainly derived from the many services available to the users. An sure indication that there will be a substantial market for mobile services on the 3G platforms and that the content providers and mobile operators need to reach an agreement on how the business and revenue models will work. Another new report from Strand Consult “How to make money on mobile services ” looks at how the mobile services will develop in Europe in the coming years and what factors will effect the roll out of new technologies and new services. Television ought to be one of the largest money making areas for mobile services in 2005, but even though mobile services revenue generated from television related traffic will reach Euro XXXX in 2005, that figure could be much higher if the broadcasters and mobile operators can form strong partnerships at an early stage and work together to create innovative television based mobile services.
Strand Consult believes that those Content Providers who have a strongly defined mobile strategy will be the most attractive partners for mobile operators and we have already helped one Public Service Broadcaster attain that position. But those Content Providers and Public Service Broadcasters who sit tight and still believe that “Content is King” could be in for rough times ahead, when the 3G rollout is further down the road.
|More information on the report
More information on the report