UMTS: The Next Big Thing is Back

UMTS -- the four letters that stand for Universal Mobile Telecommunications System once sent excited chills through the mobile phone industry, promising fantastic technological leaps and big profits. Nowadays, it's more likely to be the source of exasperated sighs, as one of the worst investments in the industry's history.

The once hyped UMTS standard (also called G3) is still waiting for its big break. An estimated 25 million mobile phones are equipped with the technology, but that number makes up only 1 percent of all phones worldwide.

German experts say there are an estimated 500,000 UMTS clients in Germany, including a few hundred thousand clients who surf the Internet with their laptop using mobile cards. But only 10 percent of the UMTS network's capacity in Germany is being used, proof that five years after the country's biggest telecoms companies handed the government 50 billion euros ($61.1 billion) for the right to use the network, the big break has been slow in coming.

The next big thing tanks

Five years ago, the industry couldn't get enough UMTS, widely tipping it to be the "next big thing." The massive amounts of data that could travel from mobile to mobile at high speeds promised the advent of television shows watched in the palm of a hand, and Internet surfing anywhere on earth.

But things have progressed a lot more slowly. The stock market crash meant telecom companies soon ran out of the cash necessary to build UMTS networks. Mobile phone manufacturers took longer than expected in working out the technology's bugs. The first phones were heavy and clunky and didn't work properly.

Then came the arrival of a competitor nobody had counted on. Wireless LAN networks also promised wireless surfing, for far less money. At industry events like 2003's technology trade fair CeBit in Hanover, Germany, some wondered whether UMTS was on its way out.

Early-adaptors good for everyone

Telecom companies soon learned to welcome the competition. Thanks to W-LAN technology more and more people are getting used to the concept of wireless surfing, made possible by surfing "hot spots" spread across cities all across the world. Whether it's DW-WORLD.DE, BBC or CNN, all major web portals are now offering the possibility to surf their content with a mobile phone while on the road.

The news out of Japan that young people are getting more and more used to watching short video clips on their mobiles is as encouraging. Though the price may still be prohibitive, the rates are sinking and it will only be a matter of time for mobile surfing is included in a flat rate offered phone clients when they sign their contracts.

Vodafone, the world market leader, is certainly optimistic, hoping for close to 10 million UMTS clients by early 2006. Whether that will be enough to compensate for the millions spent five years ago is still up in the air. But, in the end, Vodafone, T-Mobile and others will probably care less what sort of technology will be used: Mobile surfing will make them lot's of money in the coming years.