Third-generation (3G) is on death row and operators would be better off giving away their licences, according to a new report by technology analysts Datamonitor.
"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. "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".
European 3G developments look increasingly uncertain after Vodafone defaulted on its first downpayment of €44m to the Irish Government for its 3G licence, according to a report in the Irish Times.
The network operator asked the government for a one-month extension while it considers whether to go ahead with plans to roll out the next-generation network.
Vodafone pointed out that the extension was allowed under the original tender rules and not indicative of a change of heart.
Other European operators have also put 3G plans on hold. Telefonica of Spain and Sonera of Finland have pulled the plug on their German joint venture Quam, writing off €8bn (£6bn) in the process. And Orange is lobbying the Swedish Government to ease off on its 3G licence requirements.
But some analysts still see hope in 3G. "There is no real substantial evidence to say that it will fail and it will never make any money back," said Dion Price, senior industry analyst at Mobile Streams.
"I would say in the medium- to long-term it will make money. Obviously not as prolifically as people were originally expecting."
Price added that there could be a suite of services released next year that "will blow everybody away and make an absolute fortune, just like iMode has made in Japan; it is by no means impossible."
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