Hip, Hype or Hope?

Third-generation (3G) issues have exploded into the wireless market, as vendors and analysts hash out proposals and opinions on 3G solutions. The main objective for these advanced systems is to provide a more robust range of data and multimedia services. The minimum objectives are to provide data rates of 144kb/s at vehicular speeds (100kph), 384kb/s at pedestrian speeds and 2Mb/s for stationary use such as in offices.

But is there really a market for these advanced capabilities, or will it be a waste of money? According to some analysts, there isn't yet enough market data to prove that the demand is really out there for wireless multimedia. In its recent report, The Fiscal Dangers of Third Generation RF Technology, Herschel Shosteck Associates even said third generation "as presently conceived, will prove an economic failure."

"The manufacturers are going to spend billions of dollars on research and development," said Jane Zweig, Herschel Shosteck senior vice president of marketing and client relations. "Unless they are careful and make sure there's a market and make sure the timing is right, then they're going to be at a real disadvantage and lose a whole lot of money."

Despite some skepticism, vendors are moving forward with their plans for 3G capabilities. Representatives of some of these vendors (Ericsson, Motorola, Nortel and Qualcomm) offer, in their own words, their visions of the future of wireless communications and the technology they say will take us there.

ENABLING THE VISION *By Arun Sobti, Motorola Cellular Infrastructure Group vice president & general manager, research and development and 3G systems

We are in the midst of a telecommunications revolution. The first generation of cellular systems brought mobile telephony to people around the world. Digital cellular, the second generation, reduced equipment costs while increasing system capacity, call quality and the availability of value-added services. Third-generation wireless communications will enable exciting new applications beyond the capabilities of existing analog and digital systems.

The 3G vision includes both fixed and mobile wireless services and the ability to move seamlessly through home, office and outdoor environments with a single device while maintaining access to a variety of multimedia services. Imagine conducting banking transactions, answering e-mail and participating in cross-continental video conferences all from a single, wireless device in the palm of the hand. Think of the opportunities when high-speed data transport, Internet access and multimedia are integrated in one wireless application, and new technologies such as voice recognition and location technology are widely available.

A decade ago, the International Telecommunications Union (ITU) envisioned a future where wireless communication would have new meaning. This vision includes advanced services such as global roaming, high-speed data transfer, low-cost pocket terminals and a single communications system for residential, office and mobile use. This vision is called International Mobile Telecommunications 2000 (IMT-2000).

Recognizing that there are several strong standard development activities ongoing, the ITU recently adopted the "Family of Systems Concept," which provides a model for integrating the emerging regional 3G wireless standards. The ITU is focusing on ensuring interoperability among the various standards to provide maximum opportunities for global roaming.

By the time the first IMT-2000 systems are in commercial operation, there will be an estimated half billion wireless phone users worldwide. They will be using hundreds of networks that required billions of dollars of investment. Motorola Cellular Infrastructure Group (CIG) has made a commitment to protect that investment in phones and infrastructure by working toward 3G system standards that embrace the IMT-2000 vision and are complementary to existing systems such as GSM and cdmaOne.

Support of second-generation subscribers and services, and integration of legacy network technology, including billing systems, customer databases and switches, are all objectives of third-system design. Furthermore, one of Motorola's primary 3G development goals is an affordable, dual-mode subscriber device to facilitate advanced services, intra-call handoffs between technologies and enhanced roaming between today's digital networks and 3G systems.

Motorola CIG also believes that IMT-2000 will be achieved only through strong, open standards providing the flexibility to adapt and grow systems in concert with ever-changing market conditions. To ensure that this happens, Motorola CIG is at the forefront of 3G standards activity throughout the world.

In Europe, Motorola CIG holds the chair of the Universal Mobile Telecommunications System (UMTS) Technology Aspects Working Group.

In the United States, Motorola CIG holds the chair of the Telecommunications Industry Association working group developing the advanced wideband CDMA air interface, which will be a critical part of the 3G standard for cdmaOne operators worldwide.

In Japan, Motorola is working with several vendors and operators to standardize wideband cdmaOne, the system that will complement the nationwide cdmaOne system customers that DDI and IDO are in the process of implementing.

There are strong movements within the industry to have 3G systems facilitate a change in the business model for delivering value-added services to end-users. In Europe, especially, service and transport separation has become an accepted part of the UMTS vision. Only basic services will be defined in UMTS. Value-added services will be defined as applications, with application programming interfaces to be created to interface with the basic services.

Motorola CIG supports the client-server concept as a means of delivering services in a network-independent way. The client-server architecture relies on well-defined network interfaces so that a software application running on the terminal can interact with a remote server to deliver the required service. The network acts as a transparent bit pipe, transporting the information between the terminal and the server. A variety of companies then would be able to offer wireless services on physical networks that are owned and operated by others. This new approach will foster rapid innovation and accelerate the development of the 3G market. Ultimately, services can be implemented independently of the transport technology.

Motorola CIG's network architecture for 3G is designed to add advanced, data-oriented services gracefully to today's voice-oriented systems. The architecture will support fast development and flexible deployment of new features, allowing you to address specific customer needs, leading to improved differentiation of product offerings.

With extensive RF, microcellular and 6-sector expertise, Motorola CIG has deployed cellular systems to meet wireless communication needs in the world's most challenging market conditions. With consistent success in large-scale system implementation, including cellular, PCS and fixed wireless, as well as land mobile, data networks, and now satellite communications, Motorola has integrated complex and innovative wireless systems. In addition, the company is offering semiconductors, data communications, smart cards and other key technologies in order to develop advanced subscriber devices and pursue new approaches to networks on the ground and in the sky.

Today, resources from throughout the corporation are developing advanced hardware and software for trials of 3G system technology later in 1998. Once standards are finalized, Motorola expects to move rapidly toward commercial status, making the 3G vision a reality.

For information, visit Motorola's web site at www.motorola.com/cig.

THE QUEST *By Matt Desch, Nortel Wireless Networks president. This column also appears in Nortel's corporate newsletter.

After some hasty thinking, someone up the management chain at Western Union issued an internal memo stating, "This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us."

That was 1876; 100 years later, it is still difficult to predict technology. Twenty years ago, who would've thought the wireless industry would be where it is today? Forecasting the twists and turns the industry will make tomorrow remains a challenge.

In the case of 3G wireless services, Nortel believes this vision of the future will evolve from two significant service trends already under way -- namely, the rapidly expanding growth and use of the Internet and wireless services.

Nearly 80% of wireless subscribers today also are on the Internet. One forecast predicts nearly 1 billion Internet users worldwide by the year 2000. And wireless subscription growth will certainly continue to mushroom for the next few years. The upcoming generation of wireless users will grow up "net friendly," and will demand anytime, anywhere access to the Internet and all it has to offer.

Only wireless can meet this demand. Technologies such as "push" can make wireless access to the Internet even more valuable for consumers. With push technology, simply firing up a wireless web phone or personal digital assistant (PDA) will offer access to e-mail, weather alerts, news headlines, corporate databases -- and advertising.

To make this vision a reality, some companies advocate a leap of faith: start building 3G networks today, and consumers will line up to subscribe. If you build it, they will come.

Nortel takes a more pragmatic view. Before the industry throws a great deal of money at this enticing opportunity, there are issues surrounding 3G that need to be resolved. Pricing, standards, applications and a business case for wireless service operators should be addressed before someone writes the first big check. New technologies required to deliver 3G will require the purchase of base stations and overlays on existing networks. Add spectrum, marketing, distribution, training and other costs associated with bringing new services on-line, and the investment could reach billions of dollars.

Compounding the cost issue is the fact that consumers will have to pay for heavy use of new spectrum and new radio channels. But will they want to pay? Will new 3G services be sufficiently compelling and valuable to command a premium price?

There is a rush to reach consensus on 3G standards in the next year or two. This might be possible if the participants in the debate are willing to recognize that the multiple standards proposals on the table are not that far apart. Unfortunately, the competitive environment among manufacturers is something of a roadblock.

It is important that the industry turn at least as much focus, if not more, on identifying the 3G services that will create superior value in the consumer's eyes. At Nortel, the term "multimedia PCS" is often used in lieu of 3G to illustrate the necessity of a consumer-oriented view. Multimedia PCS is a more descriptive, more consumer-friendly way to express the mobile or nomadic delivery of wideband services to a laptop computer, web phone or PDA. As a vision of the evolution of new, high-value services for the consumer, elements of multimedia PCS may, in fact, be available prior to the advent of 3G wireless infrastructure.

Wireless e-mail will be one of the first multimeda services to provide conspicuous value to the consumer. By having e-mail genuinely simple to use and friendly on advanced, screen-based wireless terminals, the consumer will become more comfortable with the idea of receiving primary services and Internet access through wireless technology. Nortel is endeavoring to understand how to tailor this and other services to the consumer through initiatives such as the Orbitor project, which involves a screen-based, Java-powered wireless handset.

The final issue surrounding 3G is the operator business case. Operators need networks and services optimized to ensure reasonable and timely return on investment. Only when this is attainable can we be assured that 3G is on its way to becoming a reality.

Nortel is addressing issues to define and develop 3G activities on a number of fronts:

*Collaboration with Motorola, Lucent, Qualcomm and Samsung on the evolution of cdmaOne (IS-95 CDMA) to 3G, and with Alcatel, Motorola, Siemens, Sony and others on a proposed TMDA/CDMA air interface for evolution of GSM to 3G

*Investment in 3G prototypes in Nortel's advanced technology program

*Establishment of a wireless multimedia PCS lab to define 3G markets and services through a collaborative effort with lead users and industry partners

Multimedia PCS represents a significant turning point in the evolution of wireless communications. With the prospect of connecting scores of subscribers globally to the Internet via multimedia PCS, the wireless industry has the potential to provide a new level of service access ubiquity and to establish wireless technology as the world's preferred method of communication.

For information, visit Nortel's web site at www.nortel.com.

ERICSSON TOUTS WCDMA *Adapted from Ericsson company literature

Mobile subscriber penetration rates now exceed 15% in countries such as Australia, Japan and the United States. Meanwhile, Internet and e-mail services also are proliferating. These developments lead to greater demand for mobility and data access, which creates what Ericsson called the "next major trend in the information age: true mobile multimedia." Potential applications include interactive news delivery (voice, video, e-mail and graphics) voice/high quality audio, still photography, video, data transmission services, Interent gaming, interactive audio, file transfer from Intranet, voice/CD-quality music, video conferencing and web browser for on-line services, time schedules, and GPS information systems.

Since 1989, Ericsson has been dedicated to researching wide-band multimedia capabilities, focusing on wideband CDMA (WCDMA). Ericsson developed a 5MHz WCDMA test bed and began multimedia tests in 1996. The company's new WCDMA solution will handle 384kb/s packet data services. The system also will provide flexibility in user data rates. Variable data rates that range from 8kb/s to 384kb/s can be assigned to different users on each 5MHz carrier.

Ericsson's proposed technology is based on a modern network-protocol structure similar to what is used in GSM networks. The system will incorporate ATM Adaption Layer 2, allowing more data packets to be transmitted quickly.

The Ericsson solution optimizes code division for capacity. "By using coherent demodulation in the uplink and downlink, systems can deliver eight times as many users per RF carrier than current narrowband systems." This provides capacity for 100 simultaneous voice calls per RF carrier and 50 simultaneous Internet-type data users per RF carrier.

WCDMA allows inter-frequency handoff, which uses low-power microcells. It also allows you to stack microcells in hierarchial cell structure. Using these capabilities together creates a more robust network than current narrowband systems.

WCDMA's enhanced total interference cancellation method cancels interference from other users and improves capacity. This allows the system to work with high-capacity microcells, where interference is likely to occur.

Overall, WCDMA lowers deployment costs and substantially improves coverage.

The system is being put to the test in Japan, where the number of wireless subscribers is expected to reach 45 million by the year 2000. With these expectations, the country's largest carrier, NTT DoCoMo, plans to introduce a new enhanced system by 2000. The system will use WCDMA.

Ericsson installed the system near Tokyo in Dec. 1997. Initial indoor testing is expected to begin in April with final outdoor testing scheduled for October.

For information, visit Ericsson's web site at www.ericsson.com.

NEXT-GENERATION CDMA TECHNOLOGY *By Irwin Jacobs, Qualcomm CEO

For years to come, voice calls will be the key use for mobile communications, but mobile data applications will become increasingly important to users, operators and Internet services. For mobile phones and infrastructure, Qualcomm initially will support low- and medium-data-rate packet access to the Internet, with burst rates approaching 100kb/s. By late 1999, it plans to support data rates of about 1mb/s on a normal bandwidth (1.25MHz) for fixed wireless, campus and mobile applications. With fixed-access Internet, e-mail is a key application for mobile users.

As the higher data rates become available and efficient enough for operators to provide reasonably priced airtime, and as phones with large displays become available, multimedia applications will increase. Both digital photographs and video can be attached to e-mail, and higher data rates will support cost-effective mobile transmission.

To lower transmission costs, Qualcomm is working on an evolution of IS-95 that will double the capacity of each antenna sector for voice and for low- and medium-rate data. It also is working on an evolution to support high-burst-rate Internet data efficiently. These developments are referred to as 95C and 95HDR, respectively.

Within the next two years, Qualcomm expects 95HDR to support data rates in the 1Mb/s region on the forward link, with lower data rates on the reverse link. This is useful for most Internet applications, particularly browsing or downloading large files, where there is a lot of traffic going out to the user and less traffic coming back from the user. Mobile users often will need more data than they are generating, and fixed-location, wireless- local-loop users will enjoy better capabilities than they now receive from a wired connection. And they won't be tethered to a wall.

Qualcomm plans to bring 95C and 95HDR to market quickly. By the turn of the century or soon thereafter, there will be 1 billion wireless users. These users need an evolutionary path to higher capacity and higher data rates to support the advanced applications.

Beyond the year 2000, additional spectrum will become available. Companies across the world are working on a 3G system to meet high-data-rate requirements of IMT-2000. Although several designs are proceeding in parallel, the hope is to have a single standard for additional high-data-rate applications.

The demand for wireless, both mobile and fixed, is worldwide. Although medium- and high-data-rate services first may be taken up in the more developed world, some less developed areas also will have early users, and upgrades will take place quickly across most installed systems. Economic and convenient access to the Internet is becoming a universal requirement. It is important to provide these upgraded services with minimal cost impact and changes to existing infrastructure, and with phones that are available in a timely fashion.

CDMA currently operates only with IS-41 networks. Worldwide, many operators have deployed GSM systems, using the existing GSM TDMA air interface over the GSM/MAP network. To address their needs, Qualcomm is developing and demonstrating a CDMA air interface into the GSM/MAP network, interfacing to the switch through the standard A switch interface. As a result, the switch doesn't care that the air interface is CDMA rather than TDMA. This will give existing GSM operators the option of choosing a CDMA air interface, with access to the 95C and 95HDR enhancements.

95HDR supports many of the contemplated 3G applications, but not all. Voice and low- and medium-rate data will be a major part of the traffic into the future. Many popular applications are handled by low and medium data rates. In fact, as Qualcomm improves its compression of voice, video and other multimedia applications, it will transmit at lower data rates.

But some applications might require higher burst rates to and from the mobile systems. Third-generation systems are being designed to provide that access. Although 3G systems are intended to carry voice, in terms of spectrum efficiency and time and cost, both voice and low- and medium-rate data can be carried at least as effeciently as 95C. To provide higher burst rates, carriers would introduce a 3G-type system.

The most flexible and efficient option is for carriers to have the ability to use IS-95 as a 1.25MHz system and then to introduce 5MHz systems as they are needed for very high data rates. The result will be a flexible, spectrally efficient, cost-effective and timely system.

Qualcomm is working with several companies to design a system with backward compatibility, allowing efficient spectrum sharing of IS-95 and 3G, and compatible signaling and network functions. Most proposed 3G systems are based at least in part on direct-sequence, spread-spectrum CDMA. For the physical layer of 3G, Qualcomm recommends using a spread-spectrum chip rate, which is a multiple of IS-95. The company hopes that all parties will reach some compromise -- not only in chip rate, but in various aspects of the systems -- to end up with a single worldwide standard. That's still difficult to achieve, but worth pursuing.

For information, visit Qualcomm's web site at www.qualcomm.com.

Although these vendors and others are moving full speed ahead with their promises for third-generation (3G) technology, analysts aren't as optimistic about the timing or even the need for these services.

"From a technology standpoint and for a crazy amount of money, I'm sure they can do anything," said Jane Zweig, Herschel Shosteck Associates senior vice president of marketing and client relations.

But in addition to technology discussions, Zweig would like to hear more about specific applications.

Currently, most vendors are just throwing around the term multimedia, she said. And, in general, multimedia hasn't even really taken off in the wireline environment yet, so why assume that it will take off in the wireless world? she asked.

According to Albert Lin, SoundView Financial Group vice president of research, Internet and e-mail access is one wireline feature that holds promise for future wireless applications.

"The fact that e-mail and the use of Internet and intranet are getting popular, and more people are integrating that into a daily part of their life, it starts to increase the demand to have those same features and services available anytime, anywhere," he said. "The only way to do that is wireless. I think that's why everyone is so excited about these next-generation systems because eventually the long-term goal is that people would like to have access to vast amounts of information anywhere they are."

The problem, he added, is that wireless technology is much more complex than wireline, and there are many more variables that are harder to control.

But many vendors are offering their technology solutions, claiming that with 3G technology these capabilities will indeed be a reality. Some companies even are predicting first commercial availability as early as 2000. Analysts are skeptical. According to Lin, there still are too many issues that need to be addressed. Standards decisions must be made to define how the system will work. Carriers need adequate capital to buy new equipment and deploy it in the field. And vendors still need to build and design new communications devices to support these services.

"I don't think we really will start to see these 3G systems get into the commercial marketplace until 2005," Lin said. "All of that takes time because at each junction you're faced with that question, 'Who should invest first to stimulate the market?' Carriers don't want to build networks unless there's going to be a phone. Likewise, phone manufacturers won't design phones until carriers can show some trials that the network actually works. This tug of war between different parties will take years to resolve."

But even when carriers and vendors finally are ready to offer commercial 3G services, will subscribers be ready? According to Zweig, it's not yet clear. Right now technology and politics rather than market demand are spurring 3G developments. Governments, carriers and vendors all have their own underlying political agendas. For example, standards issues are firing political discussions right now.

"It's unrealistic to think that we're going to have a single unified 3G system," Lin said. "I know that's what Ericsson, Nokia and some of the others have been pushing, but in reality there's so many interested parties, and there is so much money at stake. It isn't likely we'll have one unified standard."

All of these issues surely will flood the industry for years to come. Only time will tell who is right. Will market demand prove the investment a profitable one, or will time prove technology and politics as misleading ventures?

-- By Karissa Boney