Introduction

Even after 4-5 years after UMTS licences being issued, UMTS still didn’t spread all over the world and is yet to become the heart of people.There are continuing delays in network installation/launching from licence holders. The mobile network operators can not leave their optimisms about the success of UMTS in providing insane data speeds for full movie downloads and other stuff in the form of 3G mobiles (the third generation mobiles) but there are other things the end user should look at. Lets discuss some factors.

UMTS Security Architecture

Firstly, there is a huge cost for delivering UMTS, once license fees, build-out and marketing are taken into account, some analysts fears operators will be unable to make enough, or possibly any, profits. For example, in UK, more than EU38 billion have been committed in 3G license fees. Now one can see that you cannot have a successful telecom system that has a tax of about $800 per head before it is even deployed.

Most operators have optimistic plans of beginning to get a return from their investments after between three to eight years which is quite a task but it can be still longer for some mobile operators. The operators plan to cut short these payback periods by having a large no. of subscribers and then persuading them to use their phones a lot. The key metric is ARPU - average revenue per user. But consumers will only spend more if there is something worth buying - and that means many more applications and services will have to be developed that run better on 3G than elsewhere.

Secondly, when UMTS was launched it claimed that it would give users a 2Mbp/sec channel for data transfer which is enough for streaming videos and other real time application. But the truth is that it actually provides 1.1Mb/sec channels which are to be shared among the users so in fact the users receive data at about 80kbp/sec.So why should the users pay enormous prices for UMTS while they are already receiving data at 50-60mbp/sec through existing GPRS setups. Other technological glitches which are hampering the smooth conversion of existing GPRS networks into UMTS are further increasing the price tag for the 3G mobile phones.

Third, a theory has been developed saying that 802.11 'wi-fi' or WLAN systems could provide a telecommunication solution that can compete with UMTS. Or, a discussion is going on to integrate WLAN with GPRS to provide a high speed but cheap solution to compete with UMTS. Still there are not practical implications of it.

Conclusion

Considering all these factors it can be concluded that, these are the difficult times for all the stakeholders and investors in Europe's 3G projects. It is a dilemma and no one has any answers. The companies holding licenses are obliged to develop services - yet in most cases these will be unprofitable for at least a decade and maybe much longer. In Germany for instance two leading companies Sonera and Telefonica simply wrote off their EU8 billion investments. The UK giant Vodafone is also reviewing its plans for UK. Others, especially those with large debts, are sure to follow.
Meanwhile, embarrassed governments may concede that, in charging insanely for licenses, they have not helped the consumer or the economy. Somehow, they must now make it easier for 3G operators, while at the same time encouraging the development of competing technologies that may, ultimately, prove more important. From an optimistic point of view; it was stated a couple of years back that a UMTS network will be profitable after a decade, so, one has to wait and see. Regarding bandwidth, it has the flexibility to improve and as far as wifi is concerned, there are no practical implications of it.