EDGE will happen
theregister.co.uk
By Simon Rockman, What Mobile
Posted: 23/04/2002 at 10:22 GMT
Mobile phone technologies used to
be mapped out clearly. GSM,
HSCSD, GPRS, EDGE and UMTS,
but most networks are playing hop, skip and jump. They've
skipped HSCSD, will they jump over EDGE? Simon Rockman,
publisher of What Mobile, thinks this would be a mistake.
Like most mobile phone acronyms EDGE is as meaningless spelt
out as it is when presented in its compact form. Enhanced Data for
GSM environments, so EDFG, but not as catchy. EDGE takes
mobile phone data speeds and triples them. You need to be very
careful with such things: memory capacities and processor speeds
have grown at a rate which always astounds, but bandwidth, and
particularly mobile bandwidth, consistently disappoints.
Mobile data ran at 9600 bps in 1995 and today, for the vast
majority of people, it still does. Every new technology which is
presented with a high data rate ends up being much, much slower.
GPRS was originally touted as being capable of 171kbps. We've
seen a ceiling of 48kbps to receive and 24kbps to transmit. Third
generation, originally touted at 2048kbs, is now being promoted at
384kbps best case 64kbps most of the time. Taking the 48kbps
and tripling it to 144kbps suddenly starts to look very powerful.
How will the world take to that power? It's a question I've been
asking the major decision makers in the mobile phone industry for
the last six months.
Close to the Edge
"Will EDGE happen?" - a question that seems to demand a binary
answer and yet results in fuzzy logic. The most common answer
from handset manufacturers is: "If our customers want it we will
make it". But if their customers wanted a phone with bright pink
spots they would make that too.
A second answer is that the people who want EDGE are those
who don't have a 3G licence. Which is to say France's Bouygues
Telecom.
My opinion is that EDGE will happen. The networks want 3G, but
they can't have it. They have spent their billions on licences and
need to use that to make the money back. They will develop the
systems, technologies and services to generate extra revenue.
Gambling, gaming and pornography. Watch the video streamed
horse race and bet on it. Play backgammon with a bloke in
Boston, or text message with a girl in Amsterdam. All from the
back of the bus.
But the networks won't have the infrastructure, there won't be the
3G systems to deliver these services and so they will resort to
EDGE. It's expensive but better than waiting another five years to
see the income streams they need. To a company with a 3G
licence it is a brave decision. It's admitting to the banks and
shareholders that the £6bn piece of paper isn't worth anything just
yet. It's a statement O2 isn't prepared to make. The O2 line is that
EDGE isn't necessary, 3G will be here soon enough to deliver the
services. It's a fanciful view.
History has shown that technology takes a long time to roll out. O2
announced GPRS in the summer of 2000 and started trials in
November 2000.
Today the consumer service is still only WAP access, unless you
are a corporate customer you can't use it to pick up your email.
Vodafone and Orange both have full GPRS. Vodafone has had
press briefings but Orange deems it a soft launch, if you ask they
will tell you that it is available, there is nothing aimed at selling it.
GPRS is a year late. GPRS is quite a simple upgrade, just think
how late 3G is going to be, a system which needs horribly
expensive handsets, tens of thousands of new base stations,
many of them in the face of anti-mobile campaigners and an
untried business model.
It's not a technology problem, it is a business case problem, as
John Thode, vice president and general manager of 3G products
of Motorola, points out.
Traditionally, handset manufacturers make the running with
technology, committing huge resources to get it working in the
hope of making a sale. The leading company making the headway
and helping the networks does this in the hope that the networks
will commit to their handsets. And then they hope the networks
won't switch when something else comes along. It's "The hen
contributed to the breakfast, the pig was committed" school of
business.
In the future Motorola doesn't want to be the pig. It wants to see
ongoing commitment from the network - otherwise it won't develop
the handsets. Or at least it says it won't: the new Motorola A820
sounds pretty close to production.
Whither 3G?
Ask Chris Hall of Manx Telecom when the number of 3G
subscribers he has will overtake the number of GSM ones
and he has to think. Manx telecom is the best possible case
for 3G. There was no licence fee to recover. Inhabitants of the
Isle of Man pay a maximum of 18% tax which attracts many of
the wealthiest people in the country. O2, NEC and Siemens
are building the network to learn about the technology. It's
got huge advantages over most of the world. Yet Chris Hall
doesn't see a rapid take up of his third generation phones.
When pushed, the bullish and enthusiastic man predicts it
will take six years for number of 3G subscribers to match the
number of GSM subscribers on the island.
This does not bode well for the rest of the world where there
are significant financial and logistical hurdles. If the leading
3G site in Europe reaches 3G mass market status only in
2008, the vast majority of the world is looking at well into the
next decade. The protestations of those who have spent
billions on third generation are starting to sound like the
readers who write to car magazines when their new car has
just had a bad review. The Orange view that we will look back
at £5bn and think it cheap sounds hollow.
I think that EDGE will happen at GSM frequencies and I think
we will see GSM use the 2.4GHz spectrum of 3G. The
networks, faced with the need to roll out their new services
and the lack of 3G infrastructure or handsets, will look to see
a return on their 3G expenditure. To call it an 'investment' is
flattery.
Mexican stand-off
The networks will say to the government: "We can't sell all
the services we need to pay for our licences in our 900MHz
and 1800MHz spectrum, can we use the 3G frequencies for
GSM". And the Government will say: "No, that wasn't the
terms of the licence." So Vodafone will point to 650
redundancies, O2 to 1900 redundancies and say: "OK, how
many more cuts do you want us to make." And the
government will say: "Oh, OK, we suppose that you have paid
for that spectrum so you can do what you want with it."
So will EDGE fill the gap? Keith Woolcock of Nomura looks to
another technology. He thinks that wireless networks are the
way forward, that 802.11 which gives a comfortable 2Mbs, if
not the future, will fill the gap between 9.6kbps and 384kbps.
But the CTO of Ericsson points out that to cover the area
filled by one GSM cell you need 10,000 802.11 cells.
Worse, hand-off isn't so well sorted and perhaps the final
problem is that while 802.11 looks attractive as a technical
solution there is no billing mechanism. Which means there's
no relationship between the users and the customers. You
can't look to the mobile phone networks to install 802.11
when they are committed to 3G. The best billing model is
Starbucks - all the bytes you want as long as you buy our
coffee. It's fine for them (and after all Wrigleys chewing gum
turned into a business empire after being started as a free gift
with flour). But no-one is going to drink that much coffee.
Perhaps the most compelling argument that 3G will not be
late and that EDGE will not fill the gap comes from Ed Moore,
the CTO of Carphone Warehouse. He points out that the GSM
networks are between six and eight years old. All technology
starts to creak after time. They also have around 10 million
customers paying around £20 a month. If you start to add new
technology on top of these old foundations you stand a good
chance of breaking the system, and then you start to imperil
that revenue stream. If EDGE broke one network for just a day
the cost would be far more than the cost of losing
approaching a million pounds for that day's calls. Customers
would deem it as unreliable and migrate to rivals. Market
share would dive. So EDGE looks risky.
It's a compelling argument, but the networks have been here
before: they understand how to roll out new technologies and
they don't have to imperil the whole network at once. What's
more, networks are now multinational, they can try it in one
territory and see if it works, and if it does, what that does to
call revenue before trying elsewhere.
The final views on why EDGE will happen come from Motorola
and Nokia. Motorola once had the strategy of: "We build it
and hope they will com." That is dead, yet Ron Garriques
waved the unannounced T720 at me and revealed: "This is
our first EDGE phone." He expects them to do more. Motorola
is particularly good at this kind of technology, it is the leader
in GPRS and is the only company which has the PBCCH
technology which is necessary to charge for data by the type
of packet, so horoscopes can be cheaper than stock prices.
It's something the networks really want and are sacrificing
because other handset manufacturers, especially Nokia,
cannot do it. But Annsi Vanjoki of Nokia also believes in
EDGE. And Not to the detriment of 3G. He presents a
compelling argument irrespective of when 3G happens. The
world wants more bandwidth. People playing games, playing
with themselves or gambling don't care about the acronyms
necessary for their pleasures: they want the services.
Vanjoki believes that all the technologies will succeed in
parallel. As we become a more wired, wireless world the need
for bandwidth will be insatiable, we'll need EDGE not as a
stepping stone to 3G but as a supplement, a way to make use
of radio spectrum to deliver the revenue the networks need.
Spectrum is usually portrayed as a finite resource, but it isn't.
We've seen technology improve to cope with much higher
and lower frequencies and to make more use of the space
with faster processors and smarter programmers improving
compression, EDGE is just another part of that picture. The
people who say it is a stepping stone to 3G, and in particular
a stepping stone we can jump over, are missing the point.
Of course time will tell who is right, the US networks which
are adopting GSM 1900 and 850 are ordering EDGE, but the
US is a long way behind the rest of the world in mobile
phones. It isn't really a matter of who is right and who is
wrong, but of who is most right. By betting on all horses
Nokia and Motorola know they will win and I would say that
O2 has been most wrong.
What Mobile. All rights reserved.
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