Siemens predicts gloomy year for 3G operators

Telecom operators across Europe have this year agreed to pay just short of 100bn Euros for high bandwidth licences that will allow them to stream video and develop ecommerce services. The subsequent cost of rolling out each network is also forecasted to run into billions.

Siemens' Volker Jung fired a warning shot at the mobile market that it should stem spending on 3G to prevent crippling the industry. He told Reuters in an interview: "Operators won't survive - they're going to be swallowed by others." He added: "Only the big ones will survive."

Philip Taylor, senior analyst at the Yankee group, commented: "This is a warning that operators are over-stretching themselves and the risk is now being passed onto the manufacturers - that the market has got out of control."

Taylor added: "Operators should slow the process down so it is more in balance with their cash flow."