3G WIRELESS: Where Is It Headed?

What
is 3G wireless/IMT 2000? Ask this to ten people who are
concerned with the developments–be it the vendors or operators–the
chance is that nine of them will talk about high-speed data
transmission capability. May be two or three about applications.

And what about the single
global standard that ITU was talking about till a year back? So
much so that the secretary general himself tried his best to
convince both the parties–the WCDMA camp led by Ericsson, and
the cdma2000 camp led by Qualcomm to reach a deal. Though he
could not achieve much, the developments a few days later did
inspire hope.

Vendors–the prime movers
in this revolution–have decided to put the single global
standard issue at the bottom–if at all–of the 3G agenda and
are talking of capability and applications.

Unfortunately, the ITU has
also stopped championing for this cause. It seems capability and
not convenience is what drives today’s technology world. The
IT-ization of the telecom is complete.

What Is the
Challenge?

Today,
one has to look at 3G keeping in view the ground realities. The
issues that were most important a year back are not even
relevant today, with the broader unwritten agreement among all
stakeholders–except the user, who does not have a voice–that
the world can live with multiple standards. It is imperative to
specify two explicit assumptions, before we go into a discussion
of the challenges in 3G.

One, with America still
not sure about its 3G market road map, UMTS and 3G are broadly
synonymous in a major part of the world.

Two, Internet has
dramatically changed the whole communication business. And it
will have a strong impact on how the 3G business takes off.

There are three broader
challenges, which are global in their character, though regions
like India will have their own challenges. These are: #1
Availability of spectrum globally

There are two battles
being fought here. One is Europe (plus Japan) versus America and
the other is satellite operators versus terrestrial operators.
It is the first, which is in limelight because while the
Europeans are certainly more influential in mobile and
organisations like ITU, the Americans, with their overall
economic dominance hate to take things lying down.
Interestingly, the European lobby has taken a more radical
approach, while the US is still conservative over spectrum
allocation.

The Europeans want
contiguous spectrum allocated in a uniform band globally by all
countries, while the US does not want to release some of the
bands that the government is using. Countries like India by
default become supporters of the US. The reason: both in the US
and developing countries in Asia, 3G will take some time,
whereas many European countries are already going for UMTS.
Prime examples include Sonera in Finland, and the UK licence
bid. They need the spectrum now unlike the US.

Similarly, some 3G band
that the terrestrial mobile operators want are now in the
satellite industry domain and the latter does not want to
release. However, with major projects like Iridium and ICO not
taking off, the voice of the satellite industry has weakened,
even as the terrestrial mobile operators have grown
impressively.

#2 Confusion
about new business and revenue models

Many acknowledge the fact
that Internet’s impact on communications is too much and too
fundamental. No one is even hoping that the revenue model that
works now–charging for voice communication–will work
anymore.

With 3G (read high-speed
data) capability access to the Web, e-mail, local information
service, mobile banking, mobile commerce, etc. will be offered
by the operators. Plain vanilla voice service will be taken for
granted. A cellular service provider essentially will become an
Internet access/content provider. It cannot look at the
traditional cellular business model neither can it borrow the
traditional Internet business model. It has to find some
innovative killer app to succeed. The WAP protocol–which has
seen one of the biggest supporting crowd around for any
technology in recent times–also makes things more challenging
by offering a common, open protocol lowering the entry barrier
for smaller players, and thus lowering the overall cost of the
solution.

While this is a very
simplistic presentation of the challenge, some of the specific
issues make the operator go round in circles to find out the
best services, partners, marketing models, and even the
customers. However, while it will be increasingly difficult to
make money, it will also create new capabilities. Smarter
companies will be driven more by ideas and market awareness
rather than by limitations of regulations.

But for the time being,
there are more questions than answers regarding this.  #3
Availability of handsets

This, on first look, seems
to be a non-issue. But experience shows that the availability of
handsets has delayed services by as long a period as six months.
That is too much time in today’s business.

Country

No
of Licences

Mode

Licence

Commercial

Japan

11

Beauty Parade

NA

NA

South Korea

NA

Auction

End 2000

NA

Hong Kong

NA

Auction

2001

NA

Thailand

2

NA

Awarded

On Hold

Austria

NA

Auction

Q1, 2001

Q1 2002

Belgium

 

Auction

2000

2002

Denmark

4

Beauty Parade

Q4, 2001

2002

Finland

4

Beauty Parade

Awarded

Jan-02

France

4

Beauty Parade

Mar-01

Q1, 2002

Germany

4 to 6

Auction

Q3, 2000

2002

Italy

5

Beauty Parade

Mid 2000

2002

Netherlands

5

Auction

Q3, 2000

Jan-02

Portugal

4

Beauty Parade

Q1, 2001

Jan-02

Spain

4

Beauty Parade

Awarded

Aug-01

Swden

4 to 5

Beauty Parade

Nov-00

2002

Switzerland

4

Auction

Nov-00

Jan-02

UK

5

Auction

Currently in progress

Jan-02

The problem here is that
most 3G handsets that come have to be multi-mode handsets
incorporating more than one 2G standards for sure, and ideally
more than one 3G standards. In all probability, the
combinations that will first hit the market will be the
historically compatible 2G-3G combinations like GSM/UMTS and
cdmaOne/cdma2000.

Many global technology
vendors operating in India admit that this challenge is bigger
than it seems.

So When Will
It Happen?

More
on 3G

http://www.uwcc.org 

Some
UMTS networks will start operating this year on an experimental
basis, with full commercial service starting not before
mid-2001. The telecom market research firm The Strategis Group
predicts that Asia and Western Europe are poised to deploy 3G
networks by 2002. In contrast, 3G services will not be rolled
out in the US until 2004.

While most believe that
Western Europe and some countries in Asia will lead the 3G
bandwagon, quite a few are optimistic that the US will also be
ready by 2003. Still others feel that some of the so called 2.5G
technology–the technologies built on 2G standards like GSM
and IS-95 and offering higher capabilities, like EDGE–will be
passed off by many as 3G. That will make it a transition rather
than a switch. So, it is difficult to mention a time frame for
the
migration.

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