re: Gartner on GPRS & UMTS deployment Pace
>> Forget 3G, Look Out for 2.5G Instead
April 13, 2001
Gartner
The next generation of telephony may not be the widely touted third generation (3G) technology, which would allow mobile telephones to remain constantly connected to the Internet.
Instead, the so-called "2.5G" GPRS (General Packet Radio Service) is more likely to come to the fore as a more affordable technology as telecommunications companies come to terms with the cost of implementing 3G networks and services.
Originally meant to be an interim stepping-stone on the way to 3G, GPRS delivers some of the benefits of 3G at much lower cost.
Some governments around the world have enjoyed a multi-billion-dollar windfall as telcos outbid each other for licenses to use the 3G spectrums. The next country to undertake these much talked-about auctions will be Australia on March 15 and then Singapore on April 23.
Some companies have paid incredible prices for access to the digital spectrum that is essential for 3G to operate. For example, Vodafone's successful bid for British spectrum cost 7 billion pounds (US$10.2 billion).
Vodafone and other successful telcos must confront similar costs to take 3G to market. It will require new base station hardware, software and handsets. Projects of this magnitude could take up to three years and billions of dollars to complete even in the most mature markets such as the United States, Britain and Germany.
To stay alive, the 3G telcos will have to charge a premium for their service--even though they have no real concept of what that service should be, or how much their customers would be prepared to pay for it.
The most often touted feature of a 3G service--video phones--is still a long way from becoming a reality for consumers, and there is considerable doubt if those consumers will pay the necessary premium.
GPRS is a cheaper and more practical alternative, even though it is sure to have a limited life span once 3G does appear on the horizon as a viable proposition.
It can also be installed as an overlay to GSM networks. While that is not a simple job, it is much cheaper and faster solution than converting an entire mobile telephony network to 3G.
GPRS achieves two key goals. For marketers, it fulfills the "Always On" promise for a mobile phone to be continually connected to the Net. For the consumer, this technology should be much more affordable than 3G which forces telcos try to recoup their massive investments through usage charges.
Today, users can send and receive information on the current GSM and CDMA networks. However, a user needs to dial into a system that would take up to 45 seconds to connect to a data network.
That can be an expensive habit, especially when the maximum connection speed is just 9600Kbs, and the user pays for every second of connection time.
While GPRS will initially not offer speeds much faster than 28Kbps, there is no need for the lengthy wait to connect to a data network, and users will pay only for the data they send, not how long they are connected. Technologists promise that increasing the cell density of the transmissions can accelerate data rates.
Many Asian telcos will now give GPRS serious consideration as a longer-term solution rather than commit to the significant capital expenditures required to implement 3G. GPRS still allows them to fulfill the "Always On" promise, albeit at lower data speeds.
The transition to GPRS should be relatively smooth in Malaysia, Singapore, Australian and New Zealand, where GSM telephony dominates.
In China and Hong Kong, GSM has attracted the majority of customers. However, those on CDMA handsets will miss out on the GPRS revolution. Koreans faces a similar prospect because of their CDMA infrastructure.
Mobile phone users with a CDMA handset will have to wait for the next CDMA standard before being able to move to CDMA2000--their own version of 3G. <<
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Gartner also commented recently on comments by former BT head of technology Professor Peter Cochrane who has stated that 3G systems will be so expensive that networks might never be built. The statement was made on a BBC television program broadcast on 28 March. At issue are the vast sums of money paid in the United Kingdom and other European countries for 3G licenses, coupled with the high cost of deploying the network. According to some sources, the UMTS network will require four times as many base stations as the current 2G network to achieve the high data rates touted for 3G.
>> Gartner Dataquest says:
Considering the question marks regarding value-added 3G services, a more realistic approach to deploying 3G would be to take advantage of the added spectrum made available by UMTS to alleviate capacity problems in high-density areas. According to various sources, 3G can be colocated in the GSM 1800 cell sites in Europe. Its performance would be limited to 64 Kbps, rather than the 144-Kbps or 384-Kbps rates normally quoted for 3G systems. In this mode, 3G could be deployed in areas where capacity is not sufficient to support traffic demands. Handsets or network cards offering multimode WCDMA/GSM/GPRS capability would operate in the mode available at the subscriber's location.
Gartner Dataquest predicts that the deployment of 3G is going to be slower than some are predicting, as it will take time to develop data services that will be the revenue driver for 3G.
The bottom line is that operators will be looking for the most economical way to introduce 3G services to maximize revenue and the scenario outlined in the previous paragraph is one approach. This will result in a slowdown in rollout in the shorter term.
Telecoms operators in the United Kingdom and Germany have recently met with their respective regulators in an attempt to lessen the license burden and reduce legislative barriers on network build cooperation where possible. Governments also wish to see a rapid deployment of 3G and the statement by Professor Cochrane may be seen as part of the lobbying process. Success or failure in this process may have a significant effect on the size and growth of the 3G market for the next four to five years. <<
- Eric - |
