3G technologies are not expected to overtake 2G in the next five years on the African continent, or any other emerging region in the world. So says Matia Grossi, mobile technologies market research analyst for global electronics market research and consultancy company IMS Research.
This statement comes after a recent report released by IMS Research, explaining that GSM-supported technologies are still dominating the market, especially emerging markets, over more developed 3G technologies like W-CDMA.
According to Grossi, the author of the report: "Until a low-cost 4G technology is commercially available and able to provide significantly superior performance, in an all-IP (next-generation) network, GSM/EDGE will not be seriously threatened by any existing technology."
In Africa, 2G in the form of GSM-supported technologies, like EDGE, are estimated to reach over 165 million users in 2006. It is forecast to grow to over 409 million users in 2011, explains Grossi.
The report further reveals the GSM (2G) installed base in emerging mobile markets (namely India, China and Africa) will grow from an overall approximated 677 million users in 2006 to over 1.3 billion users in 2011. The W-CDMA (3G) installed base is forecast to grow to a 100 million users in 2011.
Grossi says that, on a global level, the installed base for GSM/EDGE is forecast to be over 2.8 billion users in 2011. For the same year, the installed base for 3G-supported technologies, like W-CDMA/HSPA, is forecast to be just above 571 million users. Most of these users will be located in developed countries/regions such as Western Europe, North America, Japan and South Korea.
Affordable technology
The report highlights that, in emerging markets, 2G is the preferred choice because equipment is relatively cheap and the technology is proven. "Key factors for the success of the technology are the greater economy of scale and the availability of low- and ultra-low-cost handsets," he says.
The greater the economy of scale, the greater coverage and the availability of low-cost handsets, which GSM/EDGE can offer, are some of the key reasons for the success of the technology in emerging markets.
On the data side, the good rate offered by the Evolved EDGE standard will allow operators to handle the explosive growth in these regions with relatively little capex investment, explains the report.
Operators in emerging markets still feel that rolling out 3G networks is not cost-effective when considering the average revenue per user of subscribers in emerging markets.
EDGE represents a much more suitable option when operators have to deploy a new network and are looking to offer large geographical coverage for voice services, with limited data capabilities, says Grossi.
Balancing act
Operators usually carefully evaluate return on investment associated with every roll-out before establishing a new network, he explains.
"There are also political reasons for the deployment of a 3G network that could justify limited losses balanced out by the prestige of owning the network itself."
The majority of 3G deployments across Africa are predominantly in SA because of the higher GDP per capita in the country, which affords more expensive technologies like 3G, he says.
In a rural and semi-rural scenario, it is clear that the lower frequency at which EDGE is usually deployed also gives it an advantage in terms of coverage when compared to W-CDMA, he says.
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