3G Wireless: Mobility Scales New Heights
telecommagazine.com
Cover Story
Sean Buckley, Staff Editor
How the 3G wireless network will take shape is almost
as unpredictable as the 19th century Western land rush:
Carriers know the opportunities are there but first have to
deal with issues such as spectrum allocation, regional
regulatory differences and future marketplace adoption.
And, oh yes, how are they going to pay for required
upgrades of their still-nascent systems and keep the
bottom line looking strong?
3G as a sound business model all comes down to an
age-old competitive business strategy: If the other guy
has it, I also need it to stay competitive. Although there
are significant challenges ahead, Jane Zweig, executive
vice president of Herschel Shosteck Associates, points
out that there's too much at stake for carriers to not
evolve to 3G.
"3G technology is going to happen whether there's a
business case behind it or not. The politics are behind it
and manufacturers are putting a lot of money into it,"
Zweig says. "It's going to be a very tough situation for
network operators to figure out how they are going to
make money from this, but it will happen."
Robin Potter, director of UMTS (universal mobile
telecom systems) business development for Marconi,
agrees. "It's similar to this situation: If you were an
AMPS-only business in Europe, you would have
probably been dead five years ago if you did not migrate
to a GSM-based network," Potter says. "If you have a 2G
network now and don't have a 3G network in five to 10
years, you are going to be dead."
The European market will likely feel the largest effects
from systems upgrades. With CDMA and TDMA, some
migration paths to 3G may only require a simple
software upgrade to the base stations and a new card for
handsets, while the GSM path will likely be more
expensive. European GSM-based carriers migrating their
networks from 850 MHz or 1800 MHz to 2300 MHz
may be required to replace most of their base stations.
Also, the cell size becomes smaller by moving up the
frequency band, so more 3G-enabled base stations will
be necessary. Some GSM carriers predict that an upgrade
could be as much as 30 percent higher than for CDMA or
TDMA carriers. However, until mass-market
deployments take place, no one can predict the full
impact of upgrade costs.
During the 3G wireless evolution, it's possible that
consumers might begin accessing 3G services through a
plethora of other consumer devices, including PDAs,
Walkmans, in-car systems and laptops, which potentially
decrease a carrier's customer acquisition cost. Larry
Swasey, executive vice president for Allied Business
Intelligence, envisions that the 3G network could create
new opportunities for consumer electronics players such
as 3Com and Casio to develop new wireless access
devices.
"You will need to have data-centric devices that will
allow fewer keystrokes for data entry and voice
recognition software capabilities," Swasey says. "We are
at the cusp of what will become a radical development of
applications and usage patterns."
Scott Erickson, vice president of wireless networking for
Lucent Technologies, points out that while application
developers are ready to debut these services, a lack of
bandwidth has prevented them from widespread
adoption. "Over the next two years you are going to see
more and more dot.com companies developing
applications that require higher bandwidth than what
today's 2G and 2.5G networks are capable of handling,"
Erickson says (see Figure 1). "We are seeing applications
that can be commercially deployed, running successfully
at the higher band speeds of 100 kbps to 384 kbps."
According to the Strategis Group, the number of
worldwide subscribers will continue to explode, growing
from 530 million users in Q1 2000 to more than 1.37
billion by Q4 2007. However, this incredible growth rate
will slow as the market becomes saturated (see Figure 2).
Initially, Europe and Asia-Pacific will have the strongest
deployments for 3G wireless. Strategis expects that 14
markets in Western Europe and seven in Asia-Pacific
will launch 3G service by 2003. By 2007, Western
Europe will be the largest market with 56 percent of the
total 3G subscriber base; Asia-Pacific will have about 34
percent. The United States is expected to be a bit slower
adopting 3G services.
While analysts may paint a positive picture, one 3G
evolution challenge is each government's approach to
spectrum allocation. A government can auction spectrum
in two ways: a financial auction where the carrier with
the most money gets the spectrum or a beauty contest in
which the government chooses the company it thinks has
the best business plan. "The amount of available
spectrum is a big issue. If 3G data services take off the
way we hope they do, additional or incremental spectrum
will be required," says William Stone, executive director
of network strategies for Verizon Wireless.
Despite these concerns, carriers and investors are
shelling out big dollars for licenses, especially in Europe.
The recent European 3G wireless spectrum auctions in
Germany, the Netherlands and the United Kingdom have
raised billions of dollars. In April, five British 3G
licenses sold for a total of (U.S.)$35.5 billion.
Germany's 3G auction alone gained more than (U.S.)$46
billion in total bids. Some of the competing carriers
included Deutsche Telekom's T-Mobil; Vodafone
Group's Mannessmann Mobilfunk; E-Plus-Hutchinson;
BT's Viag Interkom; MobilCom; Swisscom-backed
Debitel and Group 3G, a consortium consisting of
Finland's Sonera and Spain's Telefonica.
"Many fear that the amount of money paid for licenses in
the UK and Germany is going to make it hard for an
operator to build a profitable network in the short term
that will allow them to grow and provide the right QoS,"
Erickson says. "Given the amount of money spent on
licenses, their cash flows might remain negative for
many years."
In the United States, the spectrum allocation issues
become even more complicated because the UHF
television broadcasters that reside in channels 60-69
currently occupy a major portion of 700 MHz spectrum
needed for high-speed 3G wireless applications. Paxson
Communications, USA Networks and Sinclair Broadcast
Group want billions of dollars for their spectrum portions
and this situation has caused the FCC to postpone the
auction until March 2001--the third delay.
This spectrum, which was given to the broadcasters by
Congress four years ago for free and is now valued at
$70 billion, was intended for the mass-market adoption
of HDTV (high-definition television). With HDTV's
slow adoption and the fact that the stations don't have to
give up spectrum until 85 percent of television viewers
switch to digital TV, 3G wireless hopefuls such as
AT&T, BellSouth, SBC, Sprint and Verizon refuse to
create business plans until they know exactly when and
for what price they can obtain this spectrum.
Plotting the Course
The three dominant 3G evolution paths are based on the
three main air interfaces: CDMA, GSM and TDMA (see
Figure 3). CDMA's first migration step is to 1XRTT, a
joint development between Lucent Technologies and
Qualcomm. 1XRTT provides a theoretical data rate of
144 kbps and voice capacity twice that of cdmaOne (the
current standard). 1XRTT operates in the same frequency
band as the original cdmaOne network--800 MHz in the
United States and 1900 MHz internationally--and allows
the simultaneous transmission of voice and packet data.
Data rates will average between 60 kbps to 100 kbps
with the peak rate of 144 kbps. According to Verizon's
Stone, another release for 1XRTT called "release A"
could increase the peak data rate to more than 300 kbps,
but he says it's unlikely to be implemented.
From 1XRTT, the CDMA path continues along a series
of incremental steps that include 1XEV (1xevolution),
leading finally to 3XRTT, also called cdma2000. This
technology, which will provide a maximum data rate of 2
Mbps, is compatible with UMTS networks in Europe.
1XEV is an evolved version of HDR (high data rate) that
was developed jointly by Qualcomm and Lucent (((?))). IXEV
has been submitted to the ITU and is in the early stages
of development.
As its name suggests, 3XRTT is the third step in the
CDMA evolutionary path. It has a theoretical maximum
data rate of 2 Mbps and represents an increase in
capacity over 1XRTT, improved voice quality and the
QoS necessary to deliver multimedia mobile data
services.
HDR operates in the same frequency band as CDMA and
is a packet-based, always-on solution designed to offer
data rates up to 2.4 Mbps. HDR technology supports
services such as e-mail, Web browsing and mobile
e-commerce. Similarly, the GPRS path will enable
European carriers to offer these services as they make
their final 3G migration step with UMTS.
Barry Robbins, president of Nomadix's wireless division,
says that HDR may be the best migration path to 3G
wireless. "I see HDR as a pioneering effort by a major
radio provider at a true all-IP, broadband
packet-switched solution that does not require any of the
existing 2G network legacy equipment," Robbins says.
"One could potentially turn HDR into a full, pure-IP,
fourth-gen data and VoIP solution."
With the standards complete for 1XRTT, initial rollouts
will begin in the first half of 2001. Sprint is currently
conducting a field trial of 1XRTT in the Midwest and
Verizon recently completed a trial with Lucent in
Trenton, N.J., that showed a peak data rate of 153 kbps
through Lucent's Flexent base station.
Brian O'Connor, a wireless consultant for PA
Consulting, argues that CDMA is a compelling path
because of its simplicity and cost. "If you look at the
upgrade to 3G from CDMA, it's really going to be a lot
of software upgrades in the existing base stations,"
O'Connor says. "Just from the perspective of being able
to preserve capital investment, the CDMA path is the
most compelling."
GSM: The International Choice
Two of the advantages of GSM are its global reach and
its ability to interoperate with the TDMA-to-EDGE
(enhanced data rates for global evolution) migration path.
European governments have mandated that carriers
follow the GSM migration path even though it may mean
substantial upgrades. "With GSM you actually have to
start swapping out a fair bit of equipment and then go to
the final UMTS 3G stage," says O'Connor.
GSM's path to a 3G network can take two directions: A
carrier can migrate from HSCSD (high speed circuit
switched data) to GPRS (general packet radio service)
then to EDGE and UMTS or can bypass HSCSD and go
directly to GPRS, EDGE and then UMTS.
Many predict HSCSD's bandwidth inefficiencies will
prevent it from gaining a significant share of the
worldwide market. Carriers could theoretically reach
115.2 kbps, however in practice data rates of 28.8 kbps
will be available to users. To reach the higher data rates
with HSCSD, carriers must remove part of the bandwidth
reserved for voice calls. Nokia, which was scheduled to
release its HSCSD 6210 handset this quarter, is one of
the few manufacturers using the technology. In Europe,
the only operators rolling out a HSCSD-based network
are UK-based Orange and Finland's Sonera. Worldwide,
only 18 carriers will deploy this technology. Due to its
limited penetration, other manufacturers are unwilling to
invest in HSCSD.
"Given HSCSD's limited footprint it is highly likely that
the vast majority of HSCSD networks will be upgraded
at some point to GPRS," O'Connor says. "One or two
network operators may opt to leave their 2G network at
HSCSD, then invest in UMTS rollout, but they would be
at a disadvantage, because they would not have a
nationwide packet network to work hand-in-hand with
UMTS."
GPRS is viewed as the major development step for GSM
networks in Europe. Although GPRS operates in the
same frequency band as GSM, it has two main
advantages. Because GPRS represents the birth of packet
data or always-on services for mobile networks, it can
deliver higher data speeds and greater spectral efficiency
than 2G GSM systems. GPRS will deliver a theoretical
maximum speed of 171.2 kbps, but actual achievable
data speeds are likely to approach 56 kbps. The
technology's always-on nature will enable users to
receive real-time news headlines, for example. "GSM
has a graceful evolution to GPRS," Stone says. "The
evolution to GPRS from GSM is very similar to the
migration from IS-95 or cdmaOne to 1XRTT to 1XEV."
While the next step in the GSM path is EDGE, a
majority of European wireless carriers are going right
from GPRS to UMTS. UMTS operates in a new
frequency band of 2 GHz, transmits data in packets and
will deliver a maximum theoretical data rate of 2 Mbps.
UMTS standards, which were hammered out last
December, will implement a single, globally accepted
standard allowing users access to high data r |
