Crawling toward the next generation: Uncertainty slows down move to 3G

Although the demand for bandwidth and high-speed data is expected to surge, the wireless industry has not yet matched the speed of the Internet. Third generation technology could help put wireless on par with wireline. But at the recent 3G Mobile Broadband conference in Chicago, several operators and analysts remained skeptical about when the industry would take on the technology.

Confusion among operators and some miscommunication between vendors and service providers may be contributing to the slow pace of 3G development. Some operators aren't sure which 3G-affiliated services customers will want. They also are reluctant to make network investments before they know which services will pay off. "We cannot be too excited until we know where we are in terms of revenue." said H. Donald Nelson, CEO of U.S. Cellular Corp., during a roundtable discussion at the conference.

The lack of immediate 3G-enabled handsets is another reason for hesitation, said David Tade, senior telecommunications analyst with Dataquest.

The uncertainty over what types of services will require 3G may be rooted in confusion over where the concept of 3G began.

In its study called, "Third Generation Wireless: Strategies for Global Markets," The Strategis Group pegs manufacturers as the key players behind the deployment of 3G technology. While manufacturers may be setting the pace for 3G deployment, operators are reluctant to invest in the rollout of networks that may or may not generate demand. The report also says that the interests of these groups must converge before 3G can be deployed.

But not all operators believe that manufacturers are driving the development of 3G. "Users are driving the trend toward next generation technology," said Roger Nolan, vice president of strategic alliances with Metricom. "That is really who is at the wheel of the bus; we should listen to the customers to see what they expect of us."

Despite these debates, 3G ultimately will be deployed - but not without competition. The progression of landline technologies threatens potential market demand for 3G services.

"3G already has a lot of competition in the United States in terms of fixed applications," said Arthur Feather, cellular architecture czar with Cisco Systems, as printed on his business card.

"Wireline will be faster than wireless," Nolan said. "You can never be too thin, rich or have enough bandwidth." For reasons of convenience, though, many consumers will turn to wireless - or in many cases fixed wireless offerings - because it hooks up those who do not have access to DSL or cable. The number of users without such access is expected to be approximately 6 million in 2002.

In addition to accessing data services now available via landline technologies, users will need 3G to access new developments, such as location services, emergency services and shopping.

"The wireless [industry] will need to evolve to provide these services faster, [meaning] bandwidth must improve as does the operators' role in delivering the services," Tade said.

While the trend will slowly make its way to the professional audience first, it eventually will grab typical consumers' attention. "In terms of standards, what matters is that they look and feel like IP. They should also look and feel like wireline today," Nolan said.