Europe Picks Up 3G, Investors Rejoice?

The "Heard on the Street" column at The Wall Sttret Journal writes that 3G has finally arrived in Europe, which might be good news for investors. The Journal reports that Vodafone "added one million 3G customers globally in the second quarter and Hutchison's "3 Group added 1.7 million 3G subscribers globally in the first quarter."

According to Ovum, "European operators will have registered 63 million 3G subscribers -- one in six European cellphone users -- by the end of next year, as the sophisticated networks needed to carry the technology finish being rolled out and prices for 3G handsets come down."

Philippe Kiewiet de Jonge at ABN Amro Asset Management in Amsterdam said, "Slowly, what operators were saying one, two or three years ago is coming true."

In Europe, with the networks mostly in place and the infrastructure investments written down, "3G services could be a boon for European telecom companies desperate for fresh revenue." The article provides some good carrier data for the potential of 3G:

Subscribers of 3 Group in the U.K. spend £40 ($72) a month to get video downloads of the "Big Brother" TV show and soccer-game highlights in addition to regular voice service. By comparison, the average British cellphone subscriber spends just £25 a month. Vodafone says its German 3G subscribers spend more than three times as much as its regular subscribers, though that is partly because these so-called early adopters are usually technophiles who use their cellphones more.

Ralph Brook-Fox at Brittanic Asset Management in London remarked, "the bottom line is we should finally start to see higher service revenues from European telecom companies."

The article concludes by citing the Japanese market as a source of potential as well as caution. NTT DoCoMo claims "its 13.7 million 3G subscribers use their phones twice as much as regular customers and spend about 50% more each month. The company expects to nearly double its 3G subscribers to 24 million by next spring." The downside is due to competitive pressures, ARPU is expected to drop 6 percent this year as "enticing flat-rate plans to grab market share" push down spending...