Lucent threat to 'third generation'
By Alan Cane in London
Lucent Technologies, the world's largest telecommunications equipment manufacturer, has developed a technology that confers many of the capabilities of the next generation of wireless networks on today's cellular phones.
The development will have profound implications for companies planning to invest in licences and equipment to offer so-called "third- generation" (3G) mobile services, which promise to bring multimedia, including full-motion video, to people on the move.
The Lucent development will cast fresh doubt on the commercial viability of 3G services, set to be launched worldwide around 2002. The services will require operators to build new networks at considerable cost. There are already worries over whether 3G services will attract enough demand to warrant the investment.
Preparations for the introduction of 3G services vary widely. In the US, where most operators are still offering first-generation services, there has been comparatively little activity. In Europe some countries, such as the UK, see the auction of 3G licences as an opportunity to raise revenues, while others may simply charge a licence fee.
Operators in mainland Europe are generally opposed to high licence fees, preferring a "beauty contest" to a spectrum auction. An example is Finland, the first European country to issue 3G licences. In Japan, NTT DoCoMo is already well advanced with plans to offer 3G services.
Since 3G was mooted, however, manufacturers have been improving today's technology, known as GSM, to the point where it is capable of providing some 3G-like services.
The Lucent development, called PacketGSM, takes this trend a big step forward. Carlo Baravalle, the Lucent manager responsible for GSM said: "Operators will be able to launch third generation-like services combining voice, video, fax and data on a modified second-generation network."
The new technology is unlikely to stop the development of 3G systems, but by persuading subscribers to stay with second-generation technology longer, it could set back the point at which investment in the new services could be hoped to pay off.
Mr Baravalle says the Lucent development will provide an educational step for subscribers moving to 3G rather than a threat to the new services.
But the US consultancy Herschel Shosteck Associates warned this month that operators were over-estimating the willingness of consumers to pay large sums for advanced data and video services on third-generation networks.
Jane Zweig, the consultancy's executive vice-president, noted: "At the moment, consumers are getting a lot of these advanced services, such as internet access, for free on wireline networks. So why is it assumed that they would be prepared to pay enormous sums for wireless access to these same services?"
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