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Goldman Sachs: No Thrill In 3G

Although fast third-generation (3G) service is starting to roll out in markets around the world, short-term prospects are bleak because operators are stunting compelling content and applications, research firm Goldman Sachs said Monday.

As a result, little excitement is being generated about the new technology, the research firm said in a report. Goldman Sachs made its comments on the same day that the first commercially available 3G service in the world was rolled out by NTT DoCoMo in Japan. In the U.S., Sprint and Verizon have pledged to begin rolling out 3G service by the end of the year.

The comments were an outgrowth of Goldman Sachs' "3G: Time to Get Real" conference in Rome last month. According to the Goldman Sachs report, attendees were particularly downbeat about the short-term prospects for 3G, which provides wireless data speeds as high as 384 Kbps.

The research firm attributed much of the pessimism to how wireless operators are managing content.

"We believe that the desire of the (wireless) operators to control as much content as possible is a key reason for the current slow rollout of exciting content," the research report stated. "As a result, applications that eventually will stimulate demand aren't available yet."

In addition, Goldman Sachs noted that the technology is proving to be more complicated than many anticipated and the infrastructure still needs refinement, particularly CDMA-based wireless technology.

"The industry still seems to be underestimating how difficult it is to implement CDMA-based technologies given the problems of power management and the lack of experience in Europe of commercial CDMA rollouts," the report notes.

Overall, both Goldman Sachs and the industry remain gloomy about the prospects of 3G.

"There was little presented that excited us about the sector," the report concluded. "It seems clear to us that investors are unlikely to become excited about 3G until they see whether GPRS is rolled out successfully over the next 12 months."

David Haskin is managing editor of allnetDevices.com, an INT Media property.