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January - 2000 - issue > Cover Feature
3G Stretching The Last Mile
Saturday, January 1, 2000

When will the mobile phone stop being a tool for incidental communication, and start being your number-one source for time sensitive data? When it’s economically feasible. If the necessary technology isn’t already in place, it’s being developed at a breakneck speed. Because of the high demand for existing wireless service, it’s assured that customers will indulge as much as the companies allow them to.

By 2008, predicts worldwide consulting firm Ernst & Young, wireless will overtake wire line as the dominant method of worldwide telecommunication. Finland, home to the wireless pioneer Nokia, already has more wireless handsets then wire line, and wireless call minutes already surpass wire line minutes. In fact, most of Europe is ahead of the US when it comes to taking advantage of wireless technology.

For example, French citizens can get a Coke from a vending machine and have it tacked on to your phone bill. The vending machine has a “phone” number that you call from your mobile phone to release the beverage. In wireless penetration, the UK has recently overtaken the US rate of 24 percent. More importantly, the spread of wireless in the UK is twice as fast as in the US, and is expected to increase in penetration by 12 percent over the next 12 months.

The Alternative: Less Labor, No Standards

Wireless technology is an attractive alternative to wire line. It’s quicker and easier to lay out a satellite-based cellular network then to dig up ground and lay down wires. For this reason, the trend towards wireless will be as important to the developing countries as to the high tech countries. In the US and Europe, the wireless industry also hopes to bypass the problematic “last mile” that is hampering the spread of broadband data to people’s homes. Current wire line carriers are having trouble meeting the data demand — it is estimated that the data needs of 750,000 multi-tenant buildings in the US are being ignored. Improvements in digital technology promise to deliver data at a rate of 2 Mbps in the near future.

In Europe, where the GSM standard is uniformly applied, cell phones have been more attractive. There are no roaming charges between countries, let alone states and service areas. Industry leaders recognize this, and initiatives like AT&T’s Digital One Rate plan, which offers a fixed rate with no roaming, were meant to tackle this problem. But experts estimate that AT&T still pays other carriers between 30 and 35 cents a minute for their services.

Add to this already hot mix the explosion in data traffic. Consumers will soon expect their cell phones to be PDAs as well. With the increase in demand leading to an increase in services, a consolidation of technologies into one platform is the wireless industry’s solution. And 3G, or the third generation of wireless technologies, is the tenuous hope of such a platform.


For 13 years, the International Telecommunications Union (ITU) has been trying to push its unifying initiative. 3G was supposed to establish objectives for future mobile phone networks, determine suitable frequency bands and determine a set of required characteristics and the degree of adherence desired to those characteristics. Instead, it become a matter of business-politics, each player pulling for its own interest.

For the second generation, the importance of the manufacturer and operators was exaggerated. As a result, three 2G digital radio transmission technologies – code division multiple access (CDMA), global system for mobile communications (GSM) and time division multiple access (TDMA) were born. Since then, each has had support from its own carrier camp: The CDMA Development Group, North American GSM Alliance, and Universal Wireless Communications Consortium on behalf of the TDMA.

Because of the growing consumer demand, a convergence of platforms is a must. How it’s going to be done, and who’s going to come out ahead remains to be seen. In a sense, whatever happens will define the third generation of wireless technologies.

3G: Toward a Better Business Model

A common misconception about 3G portrays it as an effort to establish a singular global radio transmission technology. Instead, the international, intergovernmental effort has the somewhat vaguer goal of high-data rate communications and universal roaming. The ITU has also requested that the number of radio interfaces be minimized.

With the growing consumer demand, competition among carriers will be the force causing a migration to 3G. Not all carriers will choose the same business model. It will most likely be a trial-and-error process, with each carrier leveraging their current advantages. What remains to be seen isn’t if carriers will build up to this new platform, but the way in which they will migrate to the new landscape. What services will be offered, how will the carriers profit from them and who else will be brought into the explosive rampage?

These questions will be answered by the business models major carriers take on. A host of interesting possibilities come about with speculation in this direction; for example, high-fidelity voice communications for the masses, high-speed Web access for the digital elite and the proliferation of communication devices in everything from cars, to vending machine to security devices.

Deployment: Businesses or Home PC?

Another question faced by the carriers will center on the method of deployment for the new technology. New high-tech products are generally pitched at the upper business class first, those users that most need them. But with the new economy shattering previous paradigms, this may not be the case. The average consumer no longer feels alienated from technology and the demands in quality from this group has been consistently increasing.

The extreme scenario is wireless being incorporated as another facet of the Internet economy. In this model, vendors offer products and services at zero margin or even free. Some businesses may hope to make a profit by advertising, an approach that could easily be adapted to the emerging wireless platform. If only one of the major carriers decided to offer free wireless communications services to consumers who are willing to accept voice and text (and, by then, video advertisements on their device), the industry would have to change its face.

3G is a solution to the existing inadequacies of wireless technology, and also the vindication of this technology to its full potential. When and how this will happen remains to be seen.

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