3G operators scrabble for killer apps

By Rhee So-eui and Sophie Taylor

SEOUL (Reuters) - Mobile operators around the globe are busy rolling out 3G services and upgrades, dreaming of a day when users casually make video calls and download movies, allowing companies to reap several times more revenue per phone.

But that rosy future remains elusive. Despite the billions of dollars spent on new networks and marketing, operators are still struggling to find the new features customers cannot live without that will finally make 3G pay.

"I've got a 3G phone but I don't use '3G features'," said Kang Hatan, a research fellow in a lab in Seoul. "Video calls are too expensive and it's hard to find time to watch mobile TV."

Analysts say many operators have neglected the development of content and services that their customers want in their headlong pursuit of new technology. Meanwhile users are still mostly just using their phones to make voice calls and send text messages.

"As of now, it's difficult to pinpoint the killer service for 3G networks," said Lee Bang-hyung, Chief Operating Officer at SK Telecom Co Ltd. (017670.KS: Quote, Profile, Research, Stock Buzz).

Peter Erskine, the chief executive and chairman of Telefonica (TEF.MC: Quote, Profile, Research, Stock Buzz) O2 Europe, agreed: "Text is the big standout."

As well as the video and music downloads they hope will attract younger users, operators are looking at new features such as video conferencing and localised mobile search services that work with the GPS navigators now fitted in many high-end phones.

"I think that's going to change things, location services," said Barry Diller, chief executive and chairman of IAC/InteractiveCorp (IACI.O: Quote, Profile, Research, Stock Buzz).  Continued...