The Birth of 3G

Service providers are trialing next-generation systems with promising results. Now comes the fun stuff like billing challenges and handset shortages.

Call it the care and feeding of the next generation. Incubating for a few years now, little 3G is in its third trimester of gestation. All that's needed is good trials, a healthy birth and enough handsets to carry 3G through its formative first year in commercial deployment.

Sometime between 2001 and 2003, most major wireless-service providers in North America will deploy their 3G networks. Smaller service providers will follow. And subscribers will enjoy increased efficiency in voice and data-transmission rates that will enable a host of new applications such as video, packet data, e-mail and other functions that currently operate at sluggish speeds, if at all.

Although most service providers will use 3G primarily to double voice capacity, statistics certainly support the case for a growing market of wireless-data consumers aching to transmit e-mail at 144kb/s-plus rather than current speeds of 14.4kb/s.

Out of 16 million subscribers with wireless-data access, 1.3 million will use the service in the United States by the end of this year, according to the Yankee Group's May 2000 Mobile Data Forecast.

By 2004, well into 3G, it is predicted that 147 million will have access to mobile data, and 35 million will be using the service.

On the voice side, the Yankee Group predicts 105 million U.S. subscribers by the end of this year; by 2004, that number could rise to 166 million.

Network trials are being watched carefully. Being first to market means more than bragging rights; it means a leg up on the competition.

Things are moving along quickly. To hear most service providers talk, the next generation is almost here today. But analysts caution that before you pass out the cigars, back-office considerations such as billing and operational support must be addressed. And once 3G 1X starts carrying more data, spectrum could become clogged, thus dampening the 3G celebration.

Additionally, at least one wireless executive thinks full 3G deployment might be delayed by slow delivery of new handsets.

"Everybody is talking about the air interface, but there's going to be a whole bunch of stuff in the background — billing and operational support systems — that's going to pose potential problems," said David Berndt, Yankee Group director of wireless mobile technologies. "Carriers need to realize they're not just changing their air interface and swapping out a few cards at the base station."

Berndt admitted it's tough to predict which service provider will be first to market — Sprint PCS and Verizon Wireless likely will launch 2.5G technology, or 1XRTT, within the next year, with 3G following by 2001. AT&T Wireless should launch its 3G solution using EDGE technology by 2002.

Verizon Wireless
Verizon, which operates on CDMA, recently began a 3G field trial in Philadelphia, said spokesperson Andrea Linskey. Other trials will follow in Columbus, OH, with Nortel.

"We are going to demonstrate data-access speeds 10 times greater than currently available," Linskey said. "And we are also going to demonstrate an increased capacity gain on the voice side."

Lucent and Qualcomm experienced a 153kb/s data rate in a lab environment, and Verizon will see if it can "shoot over" 144kb/s, she said.

Commercial deployment of 3G at Verizon, which it views as 1XRTT, could come in mid-2001, Linskey said. Its handsets will be backward and forward compatible. Initial deployment won't include faster data speeds, but will allow customers to hold onto their handsets until they decide to upgrade.

Verizon has not yet identified new services for 3G, but Linskey did say it would include current services such as wireless e-mail, turbo-charged to 10 times today's 14.4kb/s rate.

Sprint PCS
Sprint PCS has been working on 3G 1X for two years, said Oliver Valente, vice president of technology and advanced systems development. Commercial deployment is slated for the second half of 2001.

"We see it up to doubling our voice capacity, increasing our data-rate capability by tenfold — from 14.4 (kb/s) circuit-switched to 144 (kb/s) packet — and also leading to some improvements for battery standby times," Valente said. This will be accomplished with some more efficient power-control algorithms within CDMA.

Sprint PCS announced a trial with Samsung in March and was the first North American service provider to get off some 3G 1X voice calls, he said.

The provider is working on 3G trials with Lucent, Nortel and Motorola. This summer, it is focusing its trials on data, making its Wireless Web product line faster and more robust.

Sprint's Wireless Web currently offers the "always on" function. But Valente said it would be looking at other applications over that data pipe as well as doubling speed through "some things we're doing in our back-office networks in terms of compression."

The sweet spot in speed for today's mobile-office applications is a range between 56.6kb/s and 144kb/s, Valente said. Future applications will crave even higher data speeds.

AT&T Wireless
Data rates of 384kb/s in its EDGE network trials and 2Mb/s in UMTS trials are being touted by AT&T Wireless Services. The provider is using GPRS on an experimental basis only during its 3G trials and will transition to EDGE for commercial deployment, said Ken Woo, AT&T Wireless director of communications.

AT&T is opening up the test network to application software developers to help the provider develop products and services that will exist on that network when it is ready to go commercial. Because 3G will require new handsets, AT&T is going straight to EDGE in the commercial marketplace to avoid a transitory layover with GPRS, Woo said.

"We will do the cut-over all at once so you don't have to keep buying new stuff," he said.

AT&T is part of a worldwide consortia of service providers, part of the AT&T-BT Advance Alliance, that will eventually convert their networks to EDGE or UMTS technology. It will swap information with British Telecom, Smart Tone in Hong Kong and Far East Tone in Taiwan. There will be dual-mode EDGE/UMTS handsets entering the marketplace with AT&T deploying EDGE in the United States and UMTS elsewhere.

Full commercial deployment of 3G-EDGE technology is expected by the end of 2002 and will satiate a "huge pent-up demand for high-speed data services," Woo said. He predicts subscribers will prefer a wireless high-speed data connection to waiting for a DSL line or sticking with dial-up at 56.6kb/s.

Woo cited a recent USA Today study polling people about advanced services on wireless phones. E-mail was the top one. Second was ubiquity of coverage.

"Under EDGE and UMTS, you will have global coverage in almost every major population center on this planet," Woo said.

But choosing EDGE over CDMA could put AT&T behind its North American rivals in the raceto launch 3G, the Yankee Group's Berndt said.

"The fact that AT&T is not going to get out as quickly as the CDMA carriers is potentially going to be a problem," he said. "First-to-market is an important thing here, and if a Sprint, Verizon or VoiceStream get off the block first because they're using something available more readily and quickly, then they're going to be able to grab a big share of the market just like AT&T did when it launched its Digital One Rate."

BellSouth Cellular
Although BellSouth Cellular is participating in private and industry 3G trials, it's premature to estimate when the company will launch the service, said Stephen Blust, director of technology, strategy and standards.

"Changing hats, and looking at it as a participant in the industry ... as a chair of working party 8F and ITU dealing with IMT-2000, and sort of doing a global-perspective assessment, I might say there's a (3G) window here in the U.S. of 2003," Blust said.

BellSouth operates on a multiple-technology base in 2G, employing TDMA, GSM and CDMA IS-95 in systems throughout the world, he said.

Working with the ITU, Blust has realized the complexity and importance of trying to identify wireless-technology standards.

"We're just getting the technologies in here with the recent approval of the IMT-2000 3G standards in the ITU," he said. "What we're seeing is that the real global marketplace says there are several solutions — hopefully not too many — and those several solutions have different capabilities in different marketplaces."

Great Expectations
Like a parent dreaming of a child's future triumphs, service providers view 3G as an extension of their current networks — doubling voice capacity and enabling much higher data rates. But baby steps may be the key phrase, according to Berndt, who said U.S. service providers seem more ready for increased voice capacity than the wireless-data applications enabled by 3G's increased speeds.

"(Carriers) are not putting in 2.5G for data; they're putting it in for capacity," Berndt said. "Both GPRS and 1XRTT effectively double the capacity of the network because it uses it more efficiently."

Service providers are struggling with capacity problems and see 2.5G as the answer. Following the deployment of 3G, spectrum constraints may enter the picture. But Berndt said service providers always want more spectrum.

"It's like money — the more you get, the more you need," he said.

The bigger issue is addressing how to use the spectrum they have more efficiently.

"Everybody's eager for the 700MHz auction, with good reason," he said. "That will free up spectrum."

But that new spectrum could bring new competition.

"More importantly, that spectrum's going to bring new players into the market," Berndt said. "Companies like an AOL would be great. We will need more spectrum if some of the technologies shake out."

Berndt believes newcomers to the data market may understand opportunities better than today's wireless-service providers.

"Wireless carriers have not been very good in North America as a whole ... at selling anything beyond voice," Berndt said.

Sprint has done fairly well with its Internet service, he said. But other service providers have "had a lot of shortcomings, and a big part of this new infrastructure is going to depend on whether service providers see success or not."

Berndt said it's a good thing this infrastructure is going to give them voice capacity, because they understand that.

Those that understand the data market — AOL, banks and airtime resellers, for example — have the potential to bypass the wireless-service providers, he said.

As if new competition weren't enough to think about, wireless-network technology is evolving even farther. AT&T recently announced it is experimenting with 4G technology that should be interoperable with developing 3G networks. It expects to deploy 4G in about four years.

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Fast Followers

The wireless industry has its leading edge and its followers. By nature, the larger service providers have the money and the technological expertise to lead the 3G charge. So small- to mid-size service providers are watching the big dogs to see if it works.

Canada's Clearnet Communications and US West are two such service providers. Although it's not conducting trials, Clearnet already is implementing 3G-capable equipment, said Stephen Howe, vice president of technology. In late May, Clearnet announced it was installing 3G-capable wireless base-station equipment from Lucent allowing it to expand voice services and enhance upcoming wireless-Internet services with high-data-rate transmission speeds. Clearnet, founded in 1984, operates two digital wireless networks serving more than 600,000 customers.

"To step way back, we chose CDMA initially in 1996, because we felt it was the most extendible into the future with data and everything else," Howe said. "Fortunately, that's proven true. Lucent's first step into that fold is the Flexent Modular Cell, which we are implementing into our network as we speak."

That cell site is 1XRTT-capable, or 2.5G, but with just a card swap, it is full 3G-compatible as well, Howe said.

"Toward the end of the year, we'll be doing some 3G trials," Howe said. "We're basically following in the footsteps of Verizon and Sprint PCS, the big carriers who are pushing this."

But Clearnet should reach full deployment next year, he predicted.

In the coming months, Clearnet customers will have access to services via their phones including Internet information, e-mail, news, sports, banking and other financial information. And by next year, these services will be delivered at faster speeds, identical to those being experienced in trials by CDMA-service providers Verizon and Sprint.

"We expect to achieve a full 144kb/s by next year," Howe said. Clearnet also will double its voice capacity, "so data is almost a bonus. Will there be a demand for the full 144? Will people be happy with 56.6? That's always the question we get. If the bandwidth is there, they'll use it."

US West is in the process of reviewing vendor equipment for its 3G network with trials planned late this year or early next, said Wayne Leuck, vice president of wireless engineering and technologies.

Lucent, Nortel and Ericsson are US West's main vendors. It will trial Lucent's 3G 1X-capable equipment first, with Ericsson or Nortel coming a little bit later, Leuck said. US West operates with Lucent in its major core markets, with Ericsson in its secondary markets and Nortel as switch provider.

It hopes to deploy 3G next year.

"What time next year is a good question," Leuck said. "We're still trying to get through the vendor commitments at this point."

Leuck does have a concern about the availability of new handsets.

"Now I know there have been a lot of press releases saying that Sprint and others are going to have it the first half of next year," he said. "The problem with that is that the terminal (handset) manufacturers are not saying the same thing."

He noted that it usually takes a year to 18 months for handset providers to produce a high-volume commercial-grade product, and most have just received the chip sets from Qualcomm.

"So we'll probably have the infrastructure ready before we'll have the handsets ready," Leuck said.

Observing larger service providers' 3G trials, Leuck is less than bullish.

"Most of the trials we're seeing now are really not something I would hang my hat on," he said.

But he was encouraged by recent beta-tests of Lucent's 3G 1X products, which he observed in Hong Kong.

"They are at least fulfilling the promise of having backward compatibility," he said. "From a (service provider's) standpoint, I can put in 3G 1X carriers and still let my other phones use that carrier, so it's not a dedicated carrier. From a network side, I can still get revenue from the infrastructure."

Though Leuck still has questions about 3G capacity gains, he's increasingly confident the new networks will double current voice capacity.

"And we still do see the high probability of getting 144kb/s of maximum throughput on data per subscriber," he said.

Leuck echoes the prediction of David Berndt, Yankee Group analyst, that voice will trump data in the early stages of 3G.

"From a business-case standpoint, I stand to see more value from the infrastructure by the voice capacity," Leuck said. "That's paying the bills. Primarily voice is my driver — even if data doesn't work or pay off."

US West currently is installing new platforms that are 3G-capable. Upgrades will require only card swaps. But full network conversion will be expensive.

"I can't believe that any carrier can (afford full conversion)," Leuck said. "Most carriers are putting in equipment at this point in time that is easily upgradable."