Plug & Play

The most hyped acronym in wireless these days -- 3G -- promises lightning-quick data throughput speeds, video and multimedia applications. Problem is, years yet measure the arrival of 3G technologies. Most will not be ready in time to help service providers receive the approaching wireless data storm, triggered by the rampant convergence with the Internet and e-commerce.

As a result, many of the world's largest service providers are adopting an incremental approach to 3G. The strategy is to harness as much revenue as possible from the as-yet fledgling wireless data market by using speedy 2.5G systems such as EDGE , HSCSD, HDR and GPRS. Proponents of the 2.5G solutions promise each offers a smooth evolution into 3G, while allowing you to jump into the wireless data markets on your existing spectrum with a modest investment in network upgrades.

Although many service providers say they can ill-afford to ignore 3G, many are remaining tight-lipped about their next-generation strategy, silenced, perhaps, by incomplete 3G testing and the inability of the world's standards bodies to agree on one universal standard. Not to mention the fact that launching a national 3G network could be as expensive as the cumulative investment in all the existing voice networks. In fact, the costs of deploying 3G are so staggering, they could significantly reduce the ROI, analysts say. Thus, asking shareholders for money to bid on spectrum for 3G could prove a tough sale, especially considering many shelled out millions for 2G a few years ago.

Still, the increasing popularity of e-commerce and the wireless+Internet convergence suggest that few doubt a massive latent demand for 3G, despite unproven demand for key features.

"There's a window of opportunity that we see closing here," said Cliff Ranskind, Strategic Analytics senior industry analyst and an advocate of the incremental approach to 3G. "Yet, from a mass-market perspective, 3G services essentially equate to video telephony and related services -- a novel application that has yet to be proved on the wireline side."

A recent Strategic Analytics report projects wireless data penetration as high as 75% in the United States and Western Europe -- 750 million users by 2010, with most having their data needs met by 2.5G applications. According to the study, ARPU 10 years out will be highest for 3G networks at approximately $24, compared to $14 for 2.5G, and $6 for 2G. Of those networks, 36% will be 2.5G and 30% will be 3G, with the remainder choosing an IP-based voice and data network-integration platform that lacks video and multimedia services.

Andrew Cole, Renaissance Worldwide wireless practice head, agrees with the incremental approach to 3G for wireless service providers. In fact, he is skeptical 3G would be needed at all were it not for its ability to enhance network capacity. But, that added capacity will be more critical in a market driven by short-message services and other messages. Not to mention increased competitionfor customer loyalty from mobile virtual network operators bent on joining the e-commerce gold-rush as virtual service providers by offering consumers free airtime to shop at their Web sites.

And as is often the case, wireless service providers in Asia and Europe are taking a pro-active approach to 3G, while many U.S. service providers appear content to offer data as warranted by consumer demand and show little concern about virtual service providers de-aligning customer loyalty.

"In the U.S. market, the penetration rates for voice are much lower, so there is this sentiment among the incumbents that, 'Hey, we have a lot of revenue and margin to make up to pay back all of the debt that we have incurred. So, thanks very much, but we'll offer data as needed,'" Cole said. "Whereas the view in Europe is very much, 'Wireless data is going to change everything! Wireless e-commerce is going to be huge! We've just got to get more capacity, and 3G makes that possible. There's no getting around that.'"

ELUSIVE HARMONY There's also no getting around the fact that the world hasn't agreed on a universal standard for 3G.

Despite the common goal of a universal 3G standard on the part of the European Telecommunications Standards Institute (ETSI), Association of Radio Business, and TIA, along with the ITU efforts to bring 3G standards under the IMT-2000 umbrella, there are still key implementation differences. Hence, another reason to enter the market with 2.5G technologies with an eye cast down the road to 3G.

On the CDMA side, Asia is taking the first steps toward 3G with IS-95B, which offers 64kb/s of both voice and data. For instance, the recently merged DDI-IDO in Japan went commercial nationwide with IS-95B earlier this year. The same technology already has been rolled out in Korea as well.

The Japanese ARIB made an early decision to go with W-CDMA and is working to develop the next-generation standards with ETSI using an evolved GSM core network. Many industry players believe that this wide acceptance of UMTS, the 3G standard envisioned by the Europeans, makes it the likely candidate for global acceptance.

It's the first time Asia has taken the lead in marketing next-generation technologies, said Maureen Grzelakowski, Motorola Network Solutions Sector senior vice president & general manager.

"(Asia) is going to be the real test-bed for multimedia over wireless, so we're watching that real carefully," she said. "It will be interesting to see how they market these services."

Most U.S. CDMA service providers, meanwhile, are waiting not only to see how the 64kb/s, IS-95 pans out, but also for the arrival of IS-95C and 1XRTT multicarrier technology. Both technologies offer speeds of 144kb/s, a smooth evolution to W-CDMA and should be commercially available.

Meanwhile, TDMA and GSM service providers appear intent on increasing throughput speeds with GPRS and EDGE. An evolution of GPRS, EDGE will allow up to three times higher throughput with promised speeds of up to 384kb/s. AT&T, once rumored to be considering dumping its TDMA networks in favor of CDMA, now says it is committed to deploy EDGE throughout its nationwide footprint, starting in 2001. One undeniable sign is a recent alliance with Sierra Wireless, which AT&T intends to pay $30 million to supply it with high-speed EDGE modems over a 12-month period beginning in 3Q01.

The EDGE air interface standard also is a first step in the convergence of GSM and TDMA networks enabling global roaming.

"The biggest issue right now is that we as carriers all have customers that want to travel around the world and take their phone and features with them," said Greg Williams, UWCC chairman slipping on his vice-president-of-wireless-systems hat from SBC. "We all have a number of solutions to resolve it -- we try to call forward, we give a customer another handset, we try to give them a different number, we try to refer calls, all kinds of things. This (agreement) allows us to offer global roaming in an elegant way."

Meanwhile the U.S.-based CDMA crowd continues to push for cdma2000, a universal 3G standard, based on cdmaOne. The 64kb/s cdmaOne was rolled out worldwide three years ago and already boasts more than 16 million subscribers and is commercially available or being tested in 35 countries. The next phase of the cdmaOne standard, 1XRTT, offers packet data throughput at 144kb/s, and at the same time increases voice capacity and unit standby time by nearly 200%.

Ultimately, most of the initial incremental 2.5G steps toward 3G will likely hold true, Grzelakowski said.

But CDMA proponents will likely take the world lead with help from 3GPP, a European standards body that has successfully pushed for worldwide adoption of a harmonized standard called CDMA Direct Spread. A derivative of W-CDMA, the CDMA Direct Spread technology includes both MAP and IS-41 versions.

"The GSM guys will go to GPRS and maybe a little bit of EDGE," Grzelakowski said. "The TDMA guys will go to GPRS and EDGE. And the CDMA guys will go to 1XRTT. But then they should all start converging on CDMA Direct Spread. And it's a slam-dunk for the W-CDMA guys, because they have basically modified the W-CDMA to accommodate IS-41 to create CDMA Direct Spread."

GPRS: THE 3G STEPPING STONE Meanwhile in Europe, GPRS is about to explode on the scene as service providers race to be first to market -- a marathon that, by most accounts, has BT Cellnet in the lead. The GSM service provider intends to roll out a full commercial GPRS network this side of summer in select markets and cover all of the United Kingdom by the end of this year.

"We have very much taken the view that to get in really early into GPRS is a big step forward, and then UMTS is the evolution from that -- a souped-up or turbocharged version of GPRS," said Stuart Newstead, BT Cellnet head of commercial development for data services. "So instead of UMTS in about three years' time being the great leap forward, it's actually GPRS that is the great leap forward."

The GPRS technology, when fully rolled out, will offer initial speeds of about 53MHz, or about five times faster than current 2G-data throughput speeds. That also means it will deliver multiple Internet applications and a vast array of portal content approaching the common PC 56K dial-up speed. BT Cellnet also recently reached a strategic agreement with Freeserve, considered the United Kingdom AOL. The strategic agreement contains many exclusive elements and gives BT Cellnet access to Freeserve's millions of subscribers, and vice versa, not to mention giving Freeserve the ability to offer the most advanced data services in the United Kingdom. BT Cellnet's own Internet service, dubbed Genie, services approximately 400,000 subscribers.

"They have had an incredible year as far as taking on the market and turning maybe a share-loss situation into a share-gain situation," Grzelakowski said. "They're clearly going to be the first to go commercial with GPRS in the world."

BT Cellnet this past November conducted the world's first GPRS data-transfer call over a live GSM network. The GSM service provider currently is trialing the GPRS system with approximately 500 customers scattered about the United Kingdom for one of the last times before full deployment. The initial data transfer was made on a Motorola-Cisco-supplied infrastructure and Motorola GPRS phones. The call was completed via a remote web server with Web pages downloaded to a laptop computer.

The GPRS system also will allow subscribers to remain constantly connected to the Internet in an economical manner, Newstead said. "Today, the way networks work is that once you log on to the Internet, if you're on there for an hour and just type the word hello, you still pay for the whole hour because you are using up the network's capacity that whole time," he said.

Service providers that are fearful of being left out of the wireless data bonanza are searching for alternatives to the staggering costs of implementing next-generation technologies and are turning to IP-based platforms that integrate voice and data and use WAP-enabled phones.

Enter, Motorola's Mobile Internet Exchange (MIX), an end-to-end solution for CDMA, GSM, iDEN and TDMA that includes servers, gateways, software applications and content. A deal with Yahoo! adds e-mail, an address book and calendar. Motorola has equipped its CDMA StarTac mobile phone with a microbrowser that has the ability to send and receive limited Internet data using QuickNet Connection technology.

MIX does not offer the laser data throughput speed, video and multimedia services 3G promises to deliver. But it does accommodate both WAP and non-WAP devices and supports HTML, WML and VoxML. Although vendors such as General Magic, Wildfire Communications and Planetary Motion already offer voice-operated solutions, it's the integration of voice and data that distinguishes MIX, said Julie Roth, Motorola ISCD group director of marketing.

"On the voice side, we give the end user things such as automatic voice recognition for dialing and text-to-speech that allows users to listen to content (and) their e-mail," Roth said.

One service provider testing MIX is BellSouth Cellular. Carlton Hill, BellSouth Cellular director of product development, said although BellSouth was intrigued by the voice-data integration, it's testing several WAP solutions.

"We're trying to work with as many different file-form content providers as we can get our hands on so that we can test the different levels of popularity," she said. "One of the key questions surrounding WAP is, what does the end user really want to be able to access from their phone?"

Carriers can buy and integrate the MIX platform into their networks or use Motorola as a service bureau. Even so, it's unclear whether MIX can win over WAP skeptics.

"We've always said that there are limitations with WAP," said Jane Zweig, Herschel Shosteck Associates executive vice president. "It's too slow. The display screens are too small. The airtime is too expensive," she said. "There are certain things that make sense in a mobile environment and certain things that don't."