Mindmeld, here is just about everything I have been trying to knock into your thick head about the SAD REALITIES of 3G.
Now WAKE UP, and SMELL THE &*^&$'n COFFEE !!
Victor
Investors Business Daily
Internet & Technology
Wednesday, May 23, 2001
3G Not Living Up To Promises
After hyping 3G technology, wireless firms are now moving a lot more slowly
By Peter Benesh
Investor's Business Daily
Only months ago, the term 3G projected a brave new world of wireless communication. Its promoters touted fast Internet access, streaming video and a host of new services not yet conceived for cell phones and wireless gadgets.
The Tech Wreck forced a reality check. Battered wireless shares make 3G seem more illusion than fact. Many observers question whether 3G services are wanted or needed.
“3G is a fantasy that’s not going to happen,” said wireless executive Mark Dickelman. He’s vice president for mobile commerce and wireless at Bank of Montreal (BMO) and its Harris Bank of Chicago unit.
The recent 3G news is ominous. Japan’s dominant carrier, NTT DoCoMo, has put a double whammy on 3G. Last month it said it’s pushing back introduction of 3G from May 30 to year’s end. It said only two out of 11 handset makers could deliver phones that work.
Then on Tuesday, an NTT official told a Singapore audience that the company won’t be able to cover all of Japan with 3G for at least three years.
“We will be the first in the world to offer 3G, but we want to provide 100% reliability,” a DoCoMo spokesman said.
British Telecom’s About-Face
British Telecommunications PLC (BTY) in March said Chief Executive Iain Vallance soon will exit, in large part for driving the company $45 billion in debt chasing 3G dreams abroad. And this week, BT pushed back into late 2001 the launch of a 3G pilot on the Isle of Man because, says a spokesman, the system has been dropping calls during testing.
The world’s largest wireless carrier, Britain’s Vodafone Group PLC (VOD), announced it can’t keep its promise to deliver live, streaming wireless video in its first year of 3G service. The technology isn’t ready, it admits. Vodafone plans a 3G launch in late 2002.
That’s three of the biggest names in wireless backing off, to one degree or another. It all adds up to throw 3G in doubt.
The term 3G stands for third generation, the next generation of wireless communication. The first generation was the analog cellular phone service of the 1980s. Second generation was digital. Third is broadband, high-speed digital. Big companies and garage start-ups alike are competing to offer 3G services.
While standards and technologies differ within the U.S. and from country to country, the basics are the same: Wireless is radio. The amount of radio frequency, or spectrum, available is limited, regulated and auctioned by governments. To deliver the pictures, games, music and live video-conferencing the 3G advocates say we want requires a lot of bandwidth on frequencies not now used by cellular systems.
But analysts now say that 3G might not be needed, based on what the public wants and what the technology can deliver. They say an interim stage, 2.5G, which won’t demand expensive spectrum and technology, will suffice for a long time.
Dour Outlook
A report last month by Cahners In-Stat Group called the prospects of a fast 3G launch “bleak.”
“The financial impact of megaspending for spectrum followed by seemingly unreal financing arrangements has taken its toll,” said analyst Ray Jodoin. “3G is not for those with weak hearts or shallow pockets.”
The biggest plus with 3G is that it’s supposed to work with a mix of traffic - high bandwidth, low bandwidth, data and voice, says Jane Zweig, CEO of the Shosteck Group, a Wheaton, Md., research firm.
The biggest problem, she says, is that 3G simply doesn’t make good on this promise. She says that is because there are so many competing wireless standards. “3G is an R&D deployment disaster waiting to happen,” she said.
Bank executive Dickelman agrees, citing Europe. “They’ve spent $45 billion on spectrum and now they’ve got to spend another $45 billion on infrastructure,” he said. “The reality is that on 2.5G today I have a 14.4 kbps secure data connection with out-of-the-box operability.”
Moving Away From Hype
And that, he says, is more than good enough. Using this existing technology is “focusing not on the hype but on creating fundamental value for consumers,” he said.
In fact, he says, his bank’s wireless services work over 2G and even 1G analog networks. With those technologies, he says he can do his banking faster on a wireless device than on a personal computer.
Wall Street is partly to blame for misimpressions about 3G, says Larry Swasey, an analyst with Allied Business Intelligence in Oyster Bay, N.Y. “These technologies are evolving. But everybody wanted 2.5G and 3G now.”
Wall Street doesn’t understand the wireless market, he says. “They thought it was going to be huge. Every technology has an evolutionary curve, and that curve has hype, then depression, then reality,” he said. For now, 3G is in the depression stage, he says.
The 3G hype-meisters weren’t just on Wall Street, though. Zweig says some greedy government regulators overhyped the technology.
“They’re auctioning off spectrum to pay the national debt,” he said.
Then there’s the hype sparked by fear; carriers worried that rivals will get the jump on them. “I call it carrier paranoia,” Zweig said. “They all try to do the same thing, whether or not there’s a business case for it.”
Makers of wireless gear also have a vested interest in hyping 3G, Zweig points out. “It has nothing to do with a rational business case or end users wanting to do all these great and wonderful things.”
The fallout from the slide of wireless shares and disappointment over the technology’s quality will set 3G back even more, Zweig says. “But the ironic thing is that for 3G to succeed, there has to be innovation, services and applications,” she said. “The real challenge for the wireless industry will be to keep the innovation flowing under this kind of stress.”
That innovation takes cash, but Zweig says the venture capital world has awakened. “All these 3G companies have no revenue model,” she said, “though they’ve already spent vast amounts of money.” |
