Will EDGE Ever Happen? [UMTS Congress]
Oct 13, 2000
Anders Byttner, AnywhereYouGo.com
[Editor's Note: Anders Byttner is in Barcelona for the UMTS Congress]
The final session of the 'Enabling the Datapipe' track in Barcelona attempted to cover some of the
issues with the evolution towards UMTS. The session finished off with a discussion panel
consisting of representatives from Ericsson, Alcatel, Lucent, Motorola, Nokia, Nortel, Siemens,
and Cisco. This discussion turned out to be quite interesting.
The first question asked was, "how many of the eighty operators awarded a 3G license in
Europe will manage to launch a commercial 3G network before January 2002?" Most of the panel
members answered that between five and ten operators will have launched some sort of
commercial network before 2002, and that most of them will have networks up and running by
2003. Ilkka Pukkila, Marketing Director at Nokia, added that more important than actually launching
3G as soon as possible, is to establish a customer base already with today's technologies, such
as WAP and GPRS.
Current GSM networks were built at the rate of 10 networks per year. Now, operators plan to
launch 80-90 networks between 2002-2004, or over 40 networks per year. Will the
manufacturers be able to cope with this deployment rate?
The panel seemed to think so. Siemens Communications on Air President Dr Chapero-Rueda said
that the industry has never been better prepared. Although operators are concerned about
shortages of qualified engineers, the networks will be delivered in time. However, most of the
panel members did admit that there might be a shortage of competence but Alcatel Mobile
Communications Division President Michael Rahier said, "We do have two to three years to
organize ourselves to meet the demand." Pukkila added that there are a lot of experienced people
in the industry and that UMTS deployment will first happen in hotspots, such as urban and
suburban areas.
Financing
Recently many concerns with the financing of this rapid deployment have been raised. This was
also discussed during the session. Nortel Portfolio Manager Doug McGregor said that his
concern was not the lack of competence, but that the industry may simply run out of money. He
added that the banks have really not entered the market yet. Though they probably will lend
money to Vodafone, for example, they will probably find it harder to lend money to some of the
consortiums that don't have much experience in telecommunications.
Pukkila did not think that this was such a big problem. He saw some difficulty in the short run, but
said that in the long run money will come back. "There will be enough healthy margin to cover up
front costs," Pukkila said.
Rainer's view was that financing was part of the game and that industry watchers shouldn't be
so pessimistic. "There is a lot of psychology involved and as soon as we get some success
stories, financing problems will no longer exist."
As to the question, "Would any of the vendors would share the risk with the operators, such as
owning some of the networks that they install," only Cisco VP Massimo Migliuolo answered with
a straight 'yes.'
Evolution of the customer
The discussion then moved towards educating the customers, and it's not only a technical
evolution that is involved. The panel agreed that the customers have to be educated and
introduced to the concept of 3G services before they actually are available. So, it's very
important to create a customer base early. The panel did agree on that the player that does not
have a firm customer base already when launching their 3G networks will find it very difficult to
succeed.
Commitment to EDGE
Everyone in the panel said that their company is committed to EDGE. Nokia said that they are
committed to provide EDGE upgrades by 2001, and that these upgrades should give an
experience as close to 3G as possible. However, though the vendors are committed, they all
agreed that their customers, the operators, are not. According to the panel, only one or two
operators in Europe say that they are committed to EDGE. There is a large uncertainty among
operators when it comes to EDGE, but as Dr Chapero-Rueda put it, "The market will decide. We
just have to be receptive and prepared for any which way the operators may take."
anywhereyougo.com
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Comments -
The projected cost of upgrading from GPRS to EDGE is on the order of 10 times the expense of upgrading from GSM to GPRS.
Aside from the Operators'"uncertainty", what of their Bankers', and their Bankers' Regulators? Will Operators willingly pay for this interim step whose primary purpose is the delay of 3G and welfare for GSM vendors? Will financing (other than vendor financing) even be an option?
A recent news release suggests that some Operators are requiring vendor financing even for GPRS upgrades. (Gonna cut into those famous Nokia margins.)
ben |
