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Who will benefit most from 3G?

mobile phones
Companies are betting billions that 3G will pay off  


By CNN's Tom Bogdanowicz

LONDON, England (CNN) -- Third-generation mobile phones are still several years away in Europe, but companies are positioning themselves to grab a piece of the pie.

Sweden's Ericsson has already taken the lion's share of European infrastructure contracts. Nokia wants to retain its leadership in handsets. And mobile operators want to recoup their multi-billion dollar investments in 3G licences.

"It is going to be very difficult for the service producers to win out in the present market," says John Moroney, principal consultant with London-based technology analyst Ovum.

"The actual business cases stretch for a long time, and we actually can see this is why they are trying to renegotiate the licences and extend the licence period and trying to get to the point of sharing some of the costs," Moroney says.

 VIDEO
CNN's Tom Bogdanowicz reports on European government profits from the sale of 3G licences.

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 IN-DEPTH
soldier Mobile phone revolution

  •  All eyes on Nokia, Ericsson
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  •  Asia's 3G digital divide
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  •  Interactive quiz
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  •  In-Depth: CeBIT special
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So far, hardware makers are spending millions on research and development. The installation of infrastructure will cost billions of dollars more.

The new technology will likely generate new competition. Asian mobile handset makers like Samsung, Sony and Matsushita will use 3G as an opportunity to attach Nokia's 35 percent share of the handset market. They'll be helped by the experience they gain in the Japanese market. Handheld computer makers like Palm, Compaq, Casio and Handspring are sure to enter the fray as well, welling devices that combine voice and data transmissions. And companies like Symbian and Microsoft will be battling for substantial software sales.

"We charge $5 and $10 depending on the type of phone that is being sold, and over time, given that the phone market is very large, we expect that to become a very large number of units," says Mark Edwards of Symbian.

On the content front, alliances of distributors and content provides may prove the answer.

"What we will see is Vodafone in collaboration, perhaps, with major media companies like Vivendi and other companies, Canal Plus for example, all these companies will act in concert together in the marketplace," says Chris Doyle of business consultant Charles River Associates.

Experts say the success formula may be to offer consumers a cheap package and then sell a range of extras.

The only certain 3G winners are European governments, the British and German in particular. Altogether, they've made more than $100 billion selling those 3G licences.







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