3G is the acid test for the mobile industry

3G is ready to enter the mass market next year. And that will be the crucial test for the mobile industry, which has banked its future on the technology.

Hutchinson-backed 3 took the first leap into the market earlier this year.

Vodafone is set to makes its 3G service available in the fourth quarter this year, followed by Orange, T-Mobile and O2 in 2004.

The rocky 3 launch offers big lessons for competitors, in both the speed of adoption by consumers and the need for aggressive pricing bundles.

'The advantage for 3 is that its network has a lot of capacity for handling voice,' said Gartner mobile infrastructure analyst Jason Chapman.

'But it's difficult being a first adopter in the video phone market, it's a bit like the first fax machines, people don't have anyone else to fax.'

The strong 3G rollout from the other network providers will be good news for mobile infrastructure vendors.

Nokia and Sony Ericsson issued relatively weak results last week, but both are key suppliers for the new network rollout.

'2003 is a tough year for infrastructure vendors, but they are on the road to recovery,' said Chapman.

In the mobile handset market competition is still strong.

'We're seeing ten per cent year on year growth,' said Gartner mobile terminals analyst Ben Wood.

Demand for high-end phones, with features like digital cameras and Java downloads, is low.

'People aren't trading up to the high-end, they're settling instead for mid-range features like colour screens,' said Wood.

'I think we're going to see a pricing bloodbath in the fourth quarter.'