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By Jon Bernstein, 31 May 2001 15:10

NEWS Debt-laden European telcos can turn their fortunes around and start raking in the cash from third generation (3G) mobile services within five years. Referring to the likes of BT who has spent billions on UMTS (universal mobile telecommunications system) licences, Eli Reifman, CEO of Emblaze Systems, said: "It might take five years but they will get their money back." Reifman said there were many reasons to remain upbeat despite the doom and gloom that has characterised the market since the turn of the year. Specifically, he identified three ways in which European telcos could create money from 3G: Firstly, he said, users will flock to 3G over time. Conservative estimates put penetration rates at 30 per cent by the end of the decade. If, for example, just under a third of Vodafone's current subscriber base moved over to 3G that would represent 60 million users. If those subscribers used multimedia services at the level Japanese users currently consume i-mode services - paying between $2 and $3 a month - that would be equivalent to around $1.8bn a year in added revenue. Secondly, Reifman argued that 3G services were a crucial step in reducing churn rates, he added: "This is the only way to prevent someone abandoning you for superior services." Finally, he said that in a world where everything was going to be based on IP, the convergence of the internet, television and telephony offered a tremendous opportunity for telcos. No longer just carriers, telecom companies will become multimedia broadcasters therefore 3G is an essential part of the mix. Reifman added: "Local regulators will doubtless have a word to say about this final proposition."