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Tuesday, 27 March, 2001, 07:17 GMT 08:17 UK
3G phones under threat
A leading telecoms expert has told the BBC's Money Programme that third-generation mobile phones may never roll out. Over-investment in the purchase of 3G licences is blamed.
Professor Peter Cochrane, until recently the head of technology at British Telecom, has told the BBC that the new third-generation phones may never appear.
The professor is also concerned that some telecom companies may collapse under the financial strain of trying to develop and run the new networks.
"Make no mistake about it, this is a fairly serious game of poker. Some people are betting everything on this technology," he told the Money Programme, which is due to broadcast on Wednesday.
"If they can't find a solution, I think we will see companies collapse."
Internet and video links
Third-generation (3G) mobile phones offer broadband services, which include high-speed data transmission and internet and video links.
The phones are expected to revolutionise communications. Sophisticated handsets will be able to guide drivers through towns and cities, receive e-mail, or allow people to play computer games across the world.
European telecom companies have spent a collective £60bn on auctions to purchase 3G licences in countries across Europe.
The licences allow the winning companies to build 3G networks and provide services to their local populations.
A 'study in madness'
Professor Cochrane, who was responsible for BT's 3G research programme until November 2000, said the auction process was "a really good study in madness".
It was a bit like lemmings going over the edge of a cliff
Professor Peter Cochrane
"It was a bit like lemmings going over the edge of a cliff," he added.
In the UK, Orange, BT, Vodafone, and One2One and a consortium backed by Hutchison Whampoa paid out a combined total of £22bn to secure a UK licence.
Yet more money will be spent on building the networks and developing new phones to handle the upgraded technology.
In the UK alone, it is estimated that 3G networks will need up to 28,000 new masts and base stations.
"I think Europe has shot itself in the foot, and certainly the UK has, because I don't think we are going to see 3G," said the professor.
Confident
Despite such negative sentiment, the telecom companies remain confident in public.
Orange's Richard Brennan told the Money Programme: "If we were to paint a picture of 3G, it would be a world where you have this remote control for life."
BT is also upbeat about the future applications of 3G technology, as well as the financial rewards.
Kent Thexton from BT said in the programme: "Now, 60% of the UK population have found a way to put into their monthly expenditure their mobile phone bills... and what we're talking about is adding to that."
City analysts, however, are more sceptical and some predict it could be 10 years before the telecom companies get their money back, if at all.
The Money Programme's report "Mobile Madness" will be broadcast on Wednesday, 28 March, at 1930 UK time (1830 GMT) on BBC Two.
Related to this story:
Telecoms chiefs face debt crunch (26 Mar 01 | Business) Vodafone lifts pre-pay prices 40% (26 Mar 01 | Business) Australia's Optus sold for £6bn (26 Mar 01 | Business) Telekom profits take 20% hit (21 Feb 01 | Business) Orange float causes credit downgrade (15 Feb 01 | Business) KPN puts assets up for sale (26 Mar 01 | Business)
Internet links: Professor Peter Cochrane's website | BT | Orange | France Telecom | Deutsche Telekom |
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