The bank is wrong to say 3G will be a "neat technology with no customers." While wLANs will certainly take off, and some enterprises may well find wLANs alone meet their needs, many firms - and particularly consumers - will find the combination of wLAN solutions and 3G much more useful. Merrill has neglected 3G's sizeable consumer potential.
A new Merrill Lynch report casts doubt on the case for 3G mobile, claiming that 2.5G technologies and especially wireless local area networks (wLANs) will mean it is not worth companies' while to subscribe to 3G services. The bank believes that firms will stick to accessing the Internet via laptops and PDAs using the 802.11b, 802.11a and Bluetooth wLAN standards, and via smartphones using 2.5G and Bluetooth. As a result, the bank says, 3G is unlikely to take off.
Merril is certainly right to say that wLANs will take off. Within companies' offices, they allow people to move their laptops around whilst remaining connected to the corporate network. More exciting are the opportunities in public places, such as airports and hotels. ISP Get2Net has already implemented 802.11b in New York's JFK and Newark airports, giving waiting travelers broadband Internet access.
With such wLAN solutions offering high bandwidth in key areas, the modest bandwidth of 2.5G solutions such as GPRS may indeed suffice for some companies. In particular, firms that don't have to operate in real-time but are comfortable sinking information in end-of-day processes will be able to follow this model.
However, some enterprises will still need 3G. If employees need to access and send information in real-time, GPRS won't be enough, particularly as web and email get more multimedia-heavy. There are also huge consumer applications for 3G, such as videophones and MP3 downloads. Already in Europe, the majority of mobile devices are consumer- rather than enterprise-focused; consumers are most unlikely to start using laptops en masse.
Merrill is right that some enterprises won't need 3G. But it is wrong to conclude this means the death of the technology. As long as operators can produce 'killer apps' to drive consumer uptake, 3G networks will be viable. And once 3G networks are actually available, even firms that would have been content to stick with GPRS are still likely to upgrade - just in case it gives them a competitive advantage over their rivals.