In the past few weeks $Bns have been wiped off company valuations as share prices have fallen more than 50%. IT and telecom's are really on a back foot with numerous fixed and mobile operators in serious trouble. After paying over $100Bn in licence fees for G3 mobile licences across the EU, the markets have suddenly realised that a further $100Bn of infrastructure investment is needed, and $100Bn in technology and service developments plus marketing and sales to get Europe into this leading edge mobile mode. Not surprising then the financial minds have done the quick mental arithmetic resulting in a need for at least $1000 spend (on average) by every handset owner in Europe. This of course assumes that all users abandon their GSM handset and convert to G3 overnight. And whilst I m a committed mobile worker and avid user of mobile services, there is no way I am paying $1000/year for web access on the move. The operators have obviously done their sums too and can't see a payback within 10 years. So they are bringing 3G launch dates forward to just 18 months out when chip producers, base station manufacturers and infrastructure installers are looking at being ready sometime beyond 24 months.

Personally I am finding it very difficult to come up with a business model that makes G3 pay in on any basis. In the UK operators paid $34Bn for licences in a market of around 30M mobile users. Some 30,000 new base stations will be needed at a time when the public is generally objecting to these eyesores on the landscape, not to mention all the erroneous radiation scares. And many of the new services being voiced by the operators seem about as exciting as a chair leg - and nothing much in advance of 2/2.5G. For example; all voice announcement, alerting, advertising, broadcasting and positional data services are more or less adequate and doable on 2/2.5G at a much lower cost. Even ID tag location, banking, tracking, payment services, electronic point of sale, traffic, market, and other services can be adequately serviced. What 2/2.5G cannot do however is provide high bandwidth access, and this is a key limitation. G3 also has serious and growing competition from a variety of wireless LANs, Ad-Hoc, Parasitic and Peer to Peer networking. It is also up against customer apathy as they have seen the fall of WAP and become increasingly comfortable with SMS messaging. It seems to me that 3G may well enjoy the same fate as the ISDN, LEOs and WAP for very similar reasons - over hyped, over complex, overpriced, with poor/unwanted services, and no sound business plan.

So what can be done? I see a very few options to save the current situation, but here is my wish list;

1) The mobile operators could move to subsidise 3G by increasing the price of 2G handsets, call charges, whilst simultaneously reducing their Quality of Service, and the number of services- ie we all get to pay much more for much less. But I don't think governments or customers will let them get away 100% with this.

2) Governments could suddenly see the error of their ways and spontaneously repay the 3G licence monies they raped from the industry - this I see as highly improbable! However, they may consider a restructuring of the payment period to ease the industry burden.

3) Mobile companies could merge across the EU to share the infrastructure build and operational burdens. The UK needs 30,000 base stations and not 30,000 x N operators worth! My guess is that Europe can only afford 4 or 5 operators in total!

4) The most lucrative option would be to attack and eradicate the local loop. The last mile problem is the biggest millstone around the neck of telcos. At a rough estimate an average telco could displace 50% of operating costs and 60% of employees if replaced all its wire-line plant by 3G handsets. 3G offers wire-line voice quality, and higher data rates than the data modems, DSL or ADSL over a far greater geographic area. A partnership between fixed and mobile operators plus manufacturers could be incredibly beneficial in this area. Over 50% of all telco faults are in the local loop, with about half inflicted by the telco craft people, and the rest are more or less evenly split between water ingress into the cables and damage by other utilities. Going 3G would get rid of a huge raft of problems and place the onus for local loop operations on the customer. Moreover, the majority of the existing line plant is optical fibre out to locations ideal for 3G mini-base stations. This is the only scenario where everybody wins!

5) As there is no new money available and customers are highly unlikely to throw more at the 3G for nothing, an increased cash flow can only come from displacing some existing market. So to a vital question; who has all the money and how can they be displaced? Well how about the music, movie and computer game industries? Looking around most homes there is ample evidence that families spend substantial amounts in these sectors. They are a natural for the non-physical distribution of bits - which can be written direct to disc of any form or location - home, office, car, handbag, pocket or belt.

It is somewhat ironic to see the American music industry hell bent on the destruction of Napster and all its variants at a time when CD sails increased by 15% in one year - the Napster effect? This type of service, and derivatives, is probably the only one big enough to support a community of 3G users. With all the digital TV network news and programmes dying on their feet, plus our apparent dislike of the small screen, there are not a lot of options open to service providers for advertising supported services.

On the upside I don't think anyone or any industry will be able to stop the Napster variants and the public downloading of music, it may even become commercialised in due course, with a natural progression to high quality pics, and movies. But all of this is fundamentally dependent on freely available bandwidth anytime, anywhere - a natural fit for 3G. The other essential feature is that music is now essentially a mobile phenomenon - people wear it, ride it, have it everywhere.

Who knows, perhaps 3G might meet some of this demand and be the start of a paradigm change we are all looking for