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Business

Nokia On the Line With New 3G Telephone

As telecom firms remain reluctant to invest further in new phone services, world market leader Nokia presented its first Third Generation mobile phone in Helsinki.

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Nokia is the world's leading mobile phone maker

In an attempt to dispel some of the gloom around the obscure 3G telephone market, Nokia unveiled Europe’s first 3G handset this week in Helsinki.

The new 6650 phone may look like its 6000 series counterparts, but incorporates a range of new services, including a colour-screen, built-in camera, and dual-mode capabilities. A phone, which according to Jt Bergvist of Nokia, marks the “start of a new age”.

Small revolution

Nokia’s launch of a new third generation handset is regarded as a small revolution in the current communications market.

Struggling under financial pressure, telecom firms are reluctant to spend on future phone services, including the third generation Universal Mobile Telecommunication System, UMTS.

A recent example is German mobile operator MobilCom, which was set to go bankrupt on September 30, but was given a lifeline worth 400 million euros from the German government earlier this month. This government help is not enough to prevent layoffs -- in fact, MobilCom announced on Friday that it would likely have to cut 1,900 jobs in order to save the company itself.

These cost-saving measures are forcing MobilCom to kill off its preparations for third generation mobile services.

Images, graphics and video

It is a far cry from the year 2000, when telecommunication firms fought a harsh battle over licences for 3G systems and spent some $46.11 billion on UMTS access.

With a population of some 82 million and a mobile phone penetration of 35 percent, German telecom companies hoped to make big business with these new services that will enable phone holders to communicate fast, with pictures, graphics and video.

Slow implementation

But in Europe, the implementation of UMTS has been increasingly slow.

Some fear the slow pace of change, driven by either customer wariness or firms’ spending squeeze, could hold Europe back in telecommunications: In other parts of the world, the basic technology that underpins the future high-speed data services is already in use. Korea Telecom, for example, has been running a third-generation network since August 2000.

In Finnland, despite the new 3G handset, it will take another two years before owners of these phones can actually use the country’s UMTS services.

The main problem lies in the so-called “handover” from the current GSM network to the new third generation network. At present, GSM, or Global System for Mobile communications is used in 69 percent of the world's mobile phone networks. UMTS phones must be able to switch from GSM to UMTS, which in the first years will only be available in densely populated areas, and large cities. Today, however, this switchover still does not work satisfactorily.

Experts say it is a software problem that can be solved shortly. But Nokia is still wary: “We have to be sure that mobile phones and networks belonging to different companies are compatible”, Anssi Vanjoki, head of Nokia’s mobile phone department told Handelsblatt.

However, Vanjoki is still optimistic: “We don’t have to wait for UMTS. The future services already exist today in current mobile telephony systems”, he said, referring to the wide range of existing GSM mobile phones which already offer examples of future UMTS technology, including colour screens, cameras and longer standby times.

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