Jim Seymour on GPRS:
>> Just Asking: Any Chance the '3G Revolution' Won't Happen?
By Jim Seymour
TheStreet.com
12/1/00 4:06 PM ET
You're a contentious, skeptical bunch, aren't you?
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You've heard and read a lot, including columns here, about the "3G," or third-generation revolution coming in wireless. It's an article of faith among most wireless people that 3G is coming, coming soon, and it's going to be very, very big.
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Sure, 3G phones and systems are supposed to put all sorts of magic in your pocket. But there are real questions (alluded to in my column on the delays) about what we want, vs. what the mobile carriers may offer. Are you eager to see grainy little movies on your cell phone's screen? Maybe even in murky color?
The fly in the 3G ointment is what's generally known as "2 1/2 G" or "2G+" technology, or technologies. It looks increasingly like these simpler but still very useful steps forward may meet most or all of users' needs.
There's also a capital issue: Reinventing the mobile-phone system in most countries to use 3G means not only new phones for thee and me, but also a ton of new equipment for the carriers. The very same carriers that have lately spent tens of billions on the licenses to run 3G systems in their service areas.
Can the carriers, many of them already stumbling under terrifying debt loads, afford to buy and bring up 3G technology? Despite spending all that money on those licenses? Despite questions about whether customers want full 3G capability?
I'm being a devil's advocate to some degree here, because I like the idea of full 3G service. I like what 3G phones can -- could, maybe will -- do. But I also don't want to see the major worldwide wireless carriers brought to their knees by an impossible debt load.
The contrarian stance I think you may want to consider is simple: That 3G never happens. Or at least, happens later, in a smaller way, in fewer areas and with less impact than presently predicted.
That would, let me say first and clearly, go against the grain of most forecasters' calls. It would mean vast problems for many wireless carriers' management teams, which have (in that event) squandered billions of their investors' money on 3G licenses. (Think Deutsche Telekom and British Telecom). And it would sure as heck shake up the handset business. (Think Nokia, Ericsson and Motorola).
The big question here is how fast a 2G+ technology known as GPRS, or General Packet Radio Service grows, and is accepted.
GPRS gives you more speed, right out of the box. Instead of dawdling your mobile data transmissions along at today's pokey speeds, GPRS delivers about 64Kbps service -- not impressive in terms of present Net access speeds from computers connected to DSL and cable systems, which often run 10 times faster ... but very fast for a text-only system.
And it's a persistent connection -- in other words, one allowing constant connections -- like our DSL/cable/T1 Net connections for our PCs. That's important.
GPRS isn't cheap to implement, but it is being implemented right now -- mainly, of course, in Europe. (I say "of course" because the U.S. remains so far behind in wireless rollouts and standards that judging almost anything about the future of this market from domestic activity is highly deceptive.)
And GPRS can give you what most of us say we really want from 3G phones.
>> Playing the GPRS-3G Contest
Jim Seymour
TheStreet.com
12/4/00
On Friday, I spoke a loud -- and maybe a dangerous -- heresy here: that the much-ballyhooed "3G Revolution" in mobile telecom may well come much later than the hypemeisters have claimed. And maybe, that it will never come at all.
The fly in the third-generation ointment is GPRS, or general packet radio services technology, a much-cheaper-to-implement service which allows handset makers and carriers to deliver much of the pixie dust which will supposedly come with 3G phones but in a "2 1/2 G," or "2G+" environment.
GPRS isn't new, but it is enjoying a flush of interest among mobile carriers and handset makers. Because as sexy as those little color video images on the displays of 3G phones may be someday, and as nifty as all the other things 3G promoters tell us they'll be able to deliver may sound, in fact the 2.5G services now starting to explode around the world deliver what mobile users say they want. Not what they fantasize about.
In particular, 2G+ general packet radio services phones deliver a big improvement in speed -- presently 64 Kbps, soon 128 Kbps -- as opposed to the 9.6 Kbps to 19.2 Kbps speed of current mobile services. Maybe even better, global packet radio services phones, like personal computers connected to cable and DSL fast-access lines, are always on, and so can send and receive data instantly, without user intervention. Plus, you don't pay for that GPRS connection when it's idle, only when it's actually shipping data back and forth.
None of that is whizzy, Buck Rogers, coming-someday stuff, but a part of today's global packet radio services. GPRS isn't nirvana, but it's a good compromise between the needs of voice service and the needs of data service.
In a sense, GPRS is the logical next-step evolution of global system for mobile communications, already by far the most widely used technical standard for cellular phones.
Some examples of GPRS activity, worldwide:
Sonera, the Finnish wireless-service company, confirmed last week that, right on schedule, its GPRS service goes on sale on Dec. 11. Initially, the service will be limited to the greater Helsinki area, Sonera says, but will be truly national within three months. The service uses Motorola (MOT:NYSE - news) GPRS-ready handsets. (Motorola is emerging as the early leader in general packet radio services handsets.)
In Australia, Cable & Wireless Optus is working with Nortel to offer GPRS service nationally. Cable & Wireless Optus is the No. 2 carrier in Australia, and is using the speed and performance of GPRS to compete with the flaky, cheaper-than-thou tariffs Australian wireless users have traditionally been offered by its competition. (Nortel believes in GPRS, sees it as an important part of its intelligent-networks initiative ... and wants to be the big back-end GPRS supplier.)
India Infoline is pushing GPRS, and is especially promoting the wireless application protocol minibrowser's usefulness with GPRS' high-speed transmissions. (Wireless application protocol browsing on GPRS' always-on connections will be a big deal.)
Also in India, Motorola India is pushing hard to promote GPRS service and handsets to the many local wireless providers -- think of the U.S. Internert services provider model -- which dot the Indian mobile landscape. India has doubled its cell-phone user base over the past year; the data-centric, or at least data-friendly nature of GPRS is expected to be a big hit there. (Again, though Ericsson (ERICY:Nasdaq ADR - news) and Nokia (NOK:NYSE ADR - news) are expected to be big players in GPRS handsets, Motorola is getting aggressive in this space.)
In China, a country which already has 60 million GSM cell-phone users as potential upgrades, the government is trying frantically to kick-start GPRS service. Four Chinese ventures have received GPRS licenses from the government, and Chinese handset makers are well into subsidized general packet radio services manufacturing ventures. Each of four groups -- led by Konka, the emerging Chinese electronics powerhouse, is making at least 25,000 GPRS phones in their first runs, with the government committed to buying all their output, for distribution to domestic users. Lucent, Texas Instruments and Motorola are the chip providers of choice in the Chinese venture. (U.S. chipmakers seem likely to dominate GPRS technology on the chip level.)
In the U.S., Voicestream says it will start delivering GPRS service next year. Texas Instruments and Microsoft have developed a prototype data-centric handset, code-named "Stinger," which will use that service. (I've handled the early Stinger prototypes, which seem to me the best compromise yet in the nascent personal digital assistant "smart phone" league. You get a decent-sized display with tolerable overall size and weight. Subsequent units should be even smaller and lighter, I'm told.)
I said GPRS was a relatively affordable system for carriers. The British wireless consulting firm Ovum estimates that an established GSM wireless operator can deploy GPRS across its network for about $225 million. That's not small change, but it dwarfs the costs of going directly to a 3G system. (Ignoring license-cost issues.)
I don't see GPRS as a permanent derailing of the 3G express, but only a detour. I still think 3G-level features are coming for mobile users, but given the standards' chaos and the financial chaos right now, I'm skeptical that we're going to see widespread 3G use anytime soon.
I know all this is a heresy for a lot of mobile people. But I'm not alone.
Two weeks ago, Nick Negroponte, technology guru and head of the MIT Media Lab, told an audience at a European tech conference in Monte Carlo that, "3G is not good enough, and I believe it will not see the light of day.
"When GPRS comes online," Negroponte said, "people will have 64 Kbps, and they are going to love it. People are going to say, 'Wow! GPRS is really great!' Which will lead them to ask the real question about 3G: 'What's so much better than GPRS?'"
How to play this heretical notion?
I've been down on the prospects of Ericsson and Motorola in the handset business. Nokia has trumped them time and again. But thinking about the chances of a GPRS surge, I've been re-evaluating both. Motorola, especially, looks better to me in this light, and worth playing.
Among the carriers, I am completely out of the big European telcos -- for example, Deutsche Telecom and British Telecom . The billions they've poured into de facto 3G wireless licenses alone justified that move -- there's simply no chance of a return on those investments anytime soon, even if 3G takes off. But the possibility of a GPRS-3G contest would have led me to those sales even if I weren't worried about the payback period on licenses. And I'm out of Sonera, which I sold to take a small profit, but I'm rethinking that, and if it gets a big early response to its new GRPS service in Finland, I will get back in.
Remember what I said in part one of this series: This is a minority view, a notion only a contrarian could love. But contrarians have made a lot of money this year. Maybe they'll make even more in the GPRS-3G contests over the next few years. <<
- Eric - |
