News Analysis: US wireless carriers send 3G into a spin
Theresa Foley
02 April 2001
The largest equipment contract to date for a third generation mobile network, a
$5-billion award from Verizon Wireless to Lucent Technologies for CDMA2000
technology, will put high-speed data services into the hands of one of the largest
CDMA operators in the world by year end.
The 3G landscape in the United States almost assuredly will be divided between two
standards for mobile data: wideband CDMA technology championed by European
and Asian suppliers, and CDMA2000 licensed from Qualcomm Inc.
of San Diego. Lining up with CDMA2000 networks will be Sprint and Verizon, while
Voicestream, Cingular and AT&T Wireless are likely to have the W-CDMA systems
more compatible with Europe's global system for mobile (GSM) standard.
Analysts say the Americas will follow what the U.S. does in 3G, meaning that all of
North and South America will operate with two standards.
That does not mean users will have to roam between data networks nationally,
because most wireless operators in the United States have national footprints.
Eventually, they say, software and equipment suppliers will make even the different
flavors of U.S. 3G work together.
But other analysts say the outcome is not the one which the world's standards
makers had planned. "The (International Telecommunication Union) agreed to one
global standard, but when it comes down to it, it's against the American way," said
Brownlee Thomas, research director at Giga Information Group, of Cambridge,
Massachussetts.
Perry LaForge, executive director of the CDMA Development Group, a consortium of
CDMA manufacturers and service providers in Costa Mesa, California, said the
Verizon contract means that 3G services will be available in the U.S. ahead of some
other parts of the world.
"This will influence South America and China," said LaForge. "The demise of TDMA
is occurring faster this year than before. People are looking to get off TDMA
networks," he said.
Phil Marshall, senior analyst with the Yankee Group Inc., of Boston,
Massachussetts, said that while Europe will have GSM and a single 3G technology -
the Universal Mobile Telecommunications System (UMTS) - both North America and
Asia will have multiple 3G standards. International users visiting the U.S. may need a
dual-band handset, and even a tri-band set if travelling in all three regions.
But some analysts said the mixture of two network standards in the U.S. is not an
issue for domestic users.
"Global roaming would be nice, but it's not the most important thing to the carriers,"
said Peter Friedland, wireless securities analyst at WR Hambrecht & Quist in San
Francisco.
But European telecoms industry representatives at last month's exhibition of the
Cellular Telecommunications and Internet Association, of Washington, D.C., said the
U.S deployment of CDMA2000 raises doubts that European 3G customers will be
able to roam in the U.S. with their phones.
Steve Fleischer, Sonera Corp. U.S. vice president for investor relations, based in
Bridgewater, New Jersey, said international usage would depend on whether
handsets are available that allow roaming between 2G and 3G networks. Sonera
owns five GSM networks in Europe.
According to Jane Zweig, chief executive of wireless industry consultancy Shosteck
Associates, of Wheaton, Maryland, the number of W-CDMA users will be greater,
but CDMA-2000 networks will still be large enough to have economies of scale.
And Hambrecht & Quist's Friedland said multi-mode chipsets should eventually allow
roaming between W-CDMA and CDMA 2000 networks.
"In a couple of years, it will be possible to roam across networks and frequencies,"
added Zweig.
Verizon already has installed CDMA2000 equipment in two markets, Las Vegas and
San Diego, although it is not in commercial use because no user equipment is
available. The newly contracted equipment will begin deploying services by year end.
Sprint PCS said it will spend $700-$800 million with four vendors, including Lucent,
on the first phase of its CDMA2000 3G network - it spent about $3.4 billion in
auctions for spectrum. The company said it will offer services late in the year.
But in financial terms, Verizon's commitment appears to dwarf the other U.S.
operators.
"This puts CDMA back in the spotlight," said Brian Bolliger, Lucent's director,
wireless networks group. In the U.S., "CDMA 2000 will be the dominant 3G standard
for several years," he said.
But he noted that U.S. carriers often don't seem overly interested in providing global
roaming, perhaps because "90% of the U.S. population doesn't have a passport."
"The problem I have with international roaming is that it's not global roaming, it's
global robbery," said Bolliger, referring to the $1.90 per-minute rate that U.S. users
pay to roam to a cell phone on a non-U.S. network.
The CDMA2000 operators will have an advantage, according to Yankee's Marshall, at
least in the U.S., because that standard can be implemented over the existing
network on already allocated spectrum, whereas W-CDMA needs new spectrum.
Aggressive moves into 3G
As well as giving an enormous boost to the Lucent workforce, the contract win
signals an aggressive posture toward 3G on the part of Verizon, which has spent $9
billion in spectrum auctions in the U.S. But even if 3G flops, Verizon's investment is
low risk because the upgraded CDMA2000 network - which uses technology known
as 1XRTT that can handle a data rate of 144 kilobits per second - can be used to
increase voice capacity and will make Verizon more cost-effective even if no demand
for data services materializes.
Yankee's Marshall said the 1XRTT technology that Verizon and Sprint will deploy is
superior to general packet radio service (GPRS) - the so-called 2.5G standard -
because it provides greater capacity with the same resources by more efficient
spectrum use.
The newly-emboldened CDMA Development Group plans this year to push harder
into China for CDMA deployments, accelerating its adoption in South America and
"educating Europe that there might be another approach," said LaForge.
"EDGE doesn't look like it will happen, and GPRS is not going to give the promised
data rates," said LaForge. A year ago, he would have said Europe was closed to
CDMA, he said, but now he is talking to operators there.Contact the CWI editorial team at:
editorial@cwi.emap.com |
