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To 3G or not to 3G is Eircom's question
Richard Delevan



EIRCOM'S board of directors faces a fateful choice as it sits down to meet this week - whether or not to accept the offer to purchase the fourth 3G license. The Euro114m license had initially been awarded to Smart Telecom - a company name now inseparable from its prefix "troubled".

It is by no means certain that Eircom will opt to purchase the license, which would require the company to spend millions to build out a national 3G network years after Vodafone, O2 and 3 have had an opportunity to build out network and develop a customer base.

Besides its late start in the 3G game and the costs of entry, other factors will weigh on Eircom's decision. One is the success of Meteor, the mobile phone company Eircom acquired for Euro420m in 2005 and which now has a 13% market share. But the more intriguing factor may be something that industry observers noted was missing amid all the hype around the launch of Apple's iPhone earlier this month.

Under its current specifications, the iPhone will work on most 2G networks around the world as well as have the ability to connect to the internet via WiFi. But several observers noted that missing from the blizzard of acronyms was 3G - a signal that Apple at least at present doesn't have the confidence that 3G will, in the long term, be a commercially viable service.

Indeed, there is scant evidence that any operator has yet made good on what the Economist magazine in 2001, amid the frenzied bidding for 3G licenses, called "the largest bet in business history". Vodafone and 3 have made marketing pushes to sign up data customers for their 3G services, O2 has been more circumspect and has only lately come around to heavily marketing 3G services. Last week O2 released a survey showing that more than half of small businesses were unaware of 3G data cards for laptops.

Industry observers speculate that later and European versions of the iPhone could ship with yet another technology that allows phones and computers to connect wirelessly to the internet, called WiMax. US mobile operator Sprint Nextel is launching a national WiMax network in the US later this year.

As it happens, Ireland is one of the only places in the world that has a commercial WiMax network up and running - its first phase is up and running, rolled out by NTR's Irish Broadband.

The radical alternative for Eircom would be to forgo the 3G license altogether. Meteor could still offer 3G services via an MVNO agreement with an existing 3G license holder.

And it could even opt to bid for Irish Broadband, now that Clearwire has failed to agree a purchase with NTR, which is still looking to sell off the broadband company.

Whatever the Eircom board decides, it is mindful that this is the biggest decision it has had to make since the company was taken private last year -and will determine the company's future for years to come.




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