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Technology Stocks : 3G Wireless: Coming Soon or Here Now?

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To: Eric L who started this subject3/31/2004 11:42:21 AM
From: Eric L  Read Replies (1) of 666
 
ARCchart on the HSDPA 'swerve ball'

* With Intel planning to add W-CDMA to Centrino next year, HSDPA may also be on its wireless technology checklist.

>> HSDPA - Not Another Wireless Acronym!

ARCchart
Blueprint
Newsletter
31 Mar 2004

You’ve got to the love the wireless world. No sooner do we get used to a new technology acronym when the industry throws another one at us. Having got our tongues around W-CDMA and CDMA 1xEV-DO, we must now contend with HSDPA. But joking aside, although its name may suggest otherwise, HSDPA is no gibberish technology. HSDPA is to W-CDMA as GPRS is to GSM; an interim technology which acts as an upgrade to existing cellular infrastructure, enhancing network performance without the CAPEX burden of overlaying an entirely new radio network.

Ever since it was realised that the 2.4Mbps speeds claimed for W-CDMA (3G) were more delusional than theoretical, GSM operators now recognize that they must be armed with a more powerful wireless data technology to take on the likes of EV-DO and WiMAX. Originally slated for arrival in 2008, HSDPA roll out dates of 2005 and 2006 are now being muted. The boost this technology will give to the cellular players and the threat it presents to existing wireless services - such as Wi-Fi hotspots – and to emerging technologies - like WiMAX – throws a new swerve ball into the wireless space.

High Speed Downlink Packet Access, or HSDPA to its friends, sits at the next stage along the W-CDMA evolution curve – W-CDMA being the preferred flavour of 3G for most GSM operators. It might be considered premature to start looking at a standard whose parent technology has not seen much daylight, but HSDPA has important qualities worth examining today, and it is a lot closer to deployment than many originally thought.

HSDPA is to W-CDMA as GPRS is to GSM; an interim technology which acts as an upgrade to existing infrastructure, enhancing network performance without the CAPEX burden of overlaying an entirely new radio network – some are now referring to the technology as 3.5G. HSDPA is standardised as an element of the 3GPP Release 5 WCDMA specification and provides a two-fold improvement in network capacity and boost data speeds up to five times, to over 10Mbps. End user speeds of 2Mpbs are expected to be achievable - even higher under optimal network conditions. Shorter network latency and better response times are also enabled by the technology upgrade, allowing time-dependent applications, like live video streaming and multi-player gaming, to perform more effectively.

With the exception of a handful of operations, such as Hutchison’s 3G dally in Europe, Hong Kong and Australia, next generation mobile services from the established operators are only now starting to come online. Consequently, few in the industry expected 3G operators to begin looking at HSDPA until 2008 at the earliest, and while many infrastructure vendors boast that their W-CMDA equipment being installed today is “HSDPA ready”, some additional CAPEX is required to actually enable the technology within the network.

But what the industry expects and what unfolds in reality have a habit of disagreeing, and things look no different on this occasion. Ever since it was realised that the 2.4Mbps speeds achievable by W-CDMA were more delusional than theoretical, the next generation cellular standard has become the industry whipping boy for its inferiority when compared to other wide area technologies like CDMA 1xEV-DO (not to mention local area standards like Wi-Fi). The emergence of new wireless technologies, WiMAX in particular, have only served to exacerbate this technical inadequacy.

However, the GSM operators now seem ready to respond, and the word coming out of a number of leading players is that HSDPA is their weapon of choice. Nowhere is this more apparent than in Japan where KDDI’s 1xEV-DO customers are enjoying download speeds of almost 1Mbps, while W-CDMA customers at NTT DoCoMo and Vodafone are stuck at around 380Kbps. DoCoMo has now indicated that they intend to have HSDPA live by the second half of 2005. Vodafone Japan has not yet stated its HSDPA intentions, but it’s difficult to see how the operator would stay competitive with a kilobit offering while its rivals push megabit speeds.

In Europe also, operators are now whispering that they are prepared to bring their HSDPA roll-out forward considerably, and word coming out of the vendors supports this. Even O2, which is not in the habit of trailblazing technology, has publicly stated that it is targeting HSDPA in 2006. And across the Atlantic, Verizon Wireless’ ambitions to take its 1xEV-DO network nationwide leave many to believe that when the newly created Cingular/AT&T Wireless does eventually deploy W-CDMA, HSDPA will have to be enabled at the same time.

Upgrading a W-CDMA network with HSDPA is one thing, but integrating the technology on the handset side represents another challenge. Shrinking the silicon and managing power consumption at maximum data rates, so as not to hammer battery life, are issues that still have to be resolved. However, squeezing the technology into a notebook PC card form factor is more achievable and such devices have a more generous supply of power. These peripheral cards are expected to be the first HSDPA-enabled devices to appear.

This would inject an interesting new dynamic into the wireless access market, particularly in relation to paid-for Wi-Fi hotspot services. In this situation, Wi-Fi would lose the bandwidth advantage it enjoyed over vanilla W-CDMA.

Theoretically, Wi-Fi is capable of multi-megabit speeds, but in a hotspot environment the bandwidth of the location’s broadband backhaul represents the bottleneck, and with most operators using DSL or T1 links, an overall connection of 1Mbps is the norm. This available bandwidth will drop the more users there are at a hotpot venue.

At best, Wi-Fi hotspot data speeds will match that of HSDPA, but the 3G extension is more secure, ubiquitous and does not require an additional billing relationship with another operator provider. Authentication onto the network is also more straightforward since the technology simply uses the subscriber’s SIM card. Authentication is still an issue the public wireless LAN industry is coming to terms with.

With the availability of HSDPA notebook cards (and a deployed network), the question will be, with ubiquitous HSDPA coverage, will anyone pay for a hotspot service available at only selected locations? There are two possible scenarios where they might. Bandwidth at Wi-Fi hotspots may be hugely price competitive, or even free; and Wi-Fi will come pre-installed on many notebooks. The success of the Intel Centrino platform will see the majority of notebooks ship with in-built WLAN support by the end of 2005, and slotting in an additional wireless card may be overkill for some users. However, with Intel planning to add W-CDMA to Centrino next year, HSDPA may also be on its wireless technology checklist.

As HSDPA settles more into mainstream awareness, we should expect the usual levels of hype to start flying. Already, the technology is being flagged as a potential competitor to DSL, placing a lucrative portion of fixed-line operator customers in the hands of the cellular providers. WiMAX is another opponent being lined-up for a bout with HSDPA. How effectively the 3G upgrade can compete in these arenas will depend on infrastructure cost and coverage density. Regardless, we must admit that the introduction of this new cellular standard has made things a little more interesting >>

- Eric -
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