Studio Press

Now that the dust has finally settled after the race amongmobile operators to offer third-generation (3G) services, the two that have entered the fray are facing the stark reality - dismal take-up rates. Of the 110,000 3G subscribers at end-March, 60,000 were signed up with Celcom (M) Bhd and the balance 50,000 with Maxis Communications Bhd. Considering all the excitement over 3G just last year, interest seems to have fizzled out and industry experts believe it is time Celcom and Maxis take more drastic action - such as dishing out free handsets - to accelerate the migration from 2G/2.5G to their 3G platforms for which they have invested millions of ringgit. Celcom was first to introduce 3G to Malaysia on May 17 last year. Maxis followed suit on July 1 with its creative pricing that forced Celcom toreview its pricing plans. Celcom is targeting 150,000 3G users by year-end and expanding coverage nationwide by July 2007. Maxis has its own projections and coverage expansion strategy. Both hope their subscribers will take the migration path, but some users want to know what “pull factor” is there for them to migrate to 3G. Several mobile users interviewed were of the view that handset cost was the biggest cost component for a user to migrate to 3G. Cost of services was another factor but if handsets could be subsidised heavily, that cost element was removed or minimised. However, a review of the pricing packages was also necessary and content should be upgraded for people to stay on the network, they said. Globally, 3G take-up rate has not been too fantastic but the numbers are trickling in as more handsets are available in the world. A recent study on the Australian market revealed that “intelligent pricing and user education” could help accelerate migration to 3G from 2G/2.5G. The report cited the “Apple iPod as a classic example of how a technology has changed the way we consume music within a relatively short time and carriers can learn from that example.” 3G handset cost in Malaysia has dropped by more than 50% from a year ago when handsets were priced at RM1,900 to RM3,000. Now 3G handsets are priced from about RM900 to RM2,900. The number of models has also doubled and more models are expected to be launched in the second half year. Nokia Malaysia customer and market operations marketing manager Geraldine Wong said Nokia offered 11 3G models in Malaysia and planned to launch more in the second half year. Nokia 3G phones are retailed from RM999 to RM2,800. Motorola's six 3G models were priced from over RM900 to RM2,900, said Motorola Malaysia mobile devices business marketing manager Zulkifli Mat Jusoh, adding that “more exciting” models were in the offing. Several other 3G models available in the market include three from Samsung and a number from Sony Ericsson. As technology matured and production capacity increased, Nokia forecast demand would shift to 3G phones from 2.5G phones. “With better efficiency in economics of scale production and demand, mobile handsets will begin to capture lower price tier segments,” Wong said. There is a huge gap in pricing between 2G and 3G handsets and observers are saying this should be removed so that the “customer would be indifferent to which generation of handset he is buying.” Worried that handset cost affecting the 3G take-up rate, the GSM Association approved an initiative to create a “3G for all” this week. There will be a core set of common requirements for 3G handsets to create economies of scale. Such a move would help drive cost of manufacturing of this high-tech device down. The GSM Association represents 690 GSM mobile phone operators across 213 countries. It said this weekend would be a historic milestone as the second billionth GSM mobile phone user got connected. theStar