Third-generation (3G) operators have 'scarily' unrealistic expectations about service launch dates and have overestimated their customer base for 3G services in the next five years by a factor of four.

The findings, by analyst group Forrester Research, form part of a new report due out next month dubbed 3G - the Reality Check.

According to report author Michelle de Lussanet, a number of European operators expect to launch commercially available services next spring.

"Even today it is scary how unrealistic their launch dates are," said de Lussanet, who studied 25 mobile operators across Europe.

The 3G launches of the UK's five mobile operators range from the end of this year for Hutchison, to early 2004 for Orange, and dates have already slipped.

Vodafone will be trialling its 3G service later this year before a full launch in 2003, a year later than originally envisaged.

O2 is also looking at a mid-2003 kick-off when it believes that dual-mode handsets, capable of roaming between 2G and 3G networks, will become available in quantity.

T-Mobile is the only company not to give a definite launch date. A spokesman explained this by saying that any missed targets could reduce market confidence.

According to Dion Price, a senior industry analyst at Mobile Streams, operators have realised that making money out of new services now is more important than rolling out 3G network infrastructures.

Price said that the reason Hutchison is launching its services before the rest of the field is because it is the only company without a money-making 2G network in the UK.

"A lot of the operators are finding that the services they can roll out on a General Packet Radio Service network, like Multimedia Messaging Service, are potentially a lot more important in this time frame than the rollout of 3G," he explained.

De Lussanet also rejected operators' assertions that about 40 per cent of their customer base will use 3G services by 2008. "We expect 10 per cent penetration by 2007," she said.

The analyst added that major problems still surround 3G services, including interoperability issues between vendors, a dearth of handsets and switching between 2G and 3G coverage.

"I have seen some forecasts which suggest that handsets will ship as early as the end of this year, but they are likely to be single band handsets on 3G only," said de Lussanet. "They are not likely to ship in volume until the end of 2003."

Another analyst suggested that some operators would be better off giving away their licences.

"Investing billions of euros in 3G licences and infrastructure isn't a decision that anyone would like to make in today's market," said Nick Greenway, mobile telecoms analyst at Datamonitor.

"But rolling out a service on top of such giant sunk costs makes less sense than abandoning the market altogether."

He added that it would be cheaper for the operators to abort 3G plans "rather than trying to foster a market by subsidising the handsets and services required".

But junking licences is short sighted and delay costs are a red herring, according to John Fletcher, senior consultant at Analysys Consulting.

"No operator is actually losing revenue by delaying in the short term because the cost of deploying the network outweighs the revenue to be gained from customers in the next 12 months," he said.