UMTS allows broadband, high-speed access to the Internet from mobile phones and, during the height of the high-tech and telecoms boom a couple of years ago, operators held high hopes for the technology which they claimed would revolutionise communication.
German operator MobilCom has become the latest telecommunications group to rethink its plans for next-generation mobile phone services in Germany, saying it would probably set back the launch date as it slid ever deeper into the red.
"I don't think we'll go ahead with the launch this year," as orginally planned, a MobilCom spokesman said after the company announced its net loss widened substantially in the second quarter.
But MobilCom insisted it would stick to the conditions of its Universal Mobile Telecommunications System licence which requires that it provide UMTS services to 25 percent of the population by the end of next year.
The announcement came only weeks after the Spanish and Finnish telecom groups Telefonica and Sonera decided to pull the plug on Quam, the joint vehicle for their own UMTS services in Germany.
Clamouring to cash in on the perceived potential of UMTS, telecom groups across Europe bid agressively when the licences to operate the networks were put up for auction. And in Germany alone, the cost of a licence topped more than €8 billion euros .
But the telecoms bubble burst soon afterwards and the mobile telecoms industry slid into crisis as heavily indebted operators realised they may have bitten off more than they could chew.
Explaining its decision on Thursday, MobilCom complained that while it had worked flat out to establish the infrastructure needed to provide the services, there was a lack of "really convincing, efficient, low-cost hand sets" for end-users and the demand for mobile data services was still lagging well behind expectations.
"It is becoming increasingly evident that the conditions for a commercially successful start will be difficult to fulfil," MobilCom said.
"We are currently reviewing our UMTS business plans in the light of this and we'll take concrete action in the third quarter on the basis of the conclusions reached." It was the astronomic costs of UMTS which soured MobilCom's relationship with its partner France Telecom, owner of a 28.5-percent stake in the German operator.
While MobilCom insisted on the need to invest agressively to secure a leading position in one of the markets of the future, the heavily indebted semi-public French giant balked at the huge costs involved in a technology which had yet to prove itself.
In the increasingly bitter battle, MobilCom's founder and chairman Gerhard Schmid was booted out.
MobilCom is not the first company for whom the UMTS dream has turned sour.
Only last month, Spanish group Telefonica announced it was freezing its UMTS projects in four
European countries, including Germany, and its Finnish partner Sonera said it likewise intended to scale back its UMTS exposure abroad, effectively pulling the plug on their German joint venture Quam, which had secured a UMTS licence for German. - AFP
