The path to 3G

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3G: a wireless marvel or an investment disaster? This question is weighing heavily on the minds of many telecommunications carriers around the globe, especially as the initial allure of 3G wireless technologies wear off. The technology promises high-speed data, mobile streaming video and anytime-anywhere access. But implementation costs have significantly dampened enthusiasm. Depending on whom you ask, 3G wireless technology will be the greatest innovation in the 21st century, or the biggest bunch of hype in the world. As it stands, 3G is riddled with the deep craters indicative of an evolving wireless landscape. Naturally then the confusion surrounding this new and uncharted territory can be overwhelming, and the danger of losing one's way great. To help sort out the challenges and avoid potential pitfalls, we present this 3G map as a guide for the seemingly treacherous journey through the wireless world.

Definition

3G wireless technology is a global communication technology that makes possible packet-based transmission of digitized voice, data and video. The 3G umbrella encompasses a range of competing wireless technologies, such as Code Division Multiple Access (CDMA) 2000, Universal Mobile Telecommunications Service (UMTS) and wideband CDMA (WCDMA). The International Telecommunication Union last year spelled ot the guidelines for 3G in the IMT-2000 framework as being capable of data transmission speeds of 144K bit/sec inside a moving vehicle and 2M bit/sec in a fixed location, using packet-based rather than circuit-switched technology and permitting global roaming.

Carriers

The race to 3G is about spectrum. Nowhere is this more apparent than in the U. S., where a shortage of frequencies may seriously undermine 3G implementation. In an effort to comply with an agreement made at the World Radio Conference (WRC) in the spring of 2000, the U.S. Federal Communications Commission is examining ways to make more spectrum available for 3G. The range from 1710 to 1855 MHz, in addition to the 2520 to 2670 MHz frequency band, was determined to be the global spectrum assignment for 3G applications at the WRC.

Currently, the U.S. Department of Defense uses this 1.7 GHz band that is being eyed by prospective 3G wireless carriers for services such as wireless high-speed Internet access. The Defense Department uses this spectrum for satellite control and military purposes. According to the Defense Department, relocating to another portion of the spectrum would cost billions of dollars and take a decade or two to achieve. A proposed alternative has been for wireless providers to share the spectrum with the Defense Department, but that would impose many restrictions on the Defense Department and the carrier's operations. It remains to be seen how the FCC handles this sensitive issue.

Agreements made at the WRC in the spring of 2000 were designed to facilitate worldwide roaming capabilities. The establishment of specific frequencies for 3G wireless technology requires that the U.S. re-evaluate its spectrum allocation to embark on 3G at a global level. However, citing issues of national security, the military is leery of sharing this band, especially with the commercial sector. In an attempt to compromise, the National Telecommunications and Information Administration, the government agency that issues government-operated spectrum to the commercial sector, may pay the Defense Department to move to another spectrum.

Despite a potential deadlock in the U.S., the 3G frenzy in North America continues as carriers jockey for position. Although no 3G licensing has yet occurred in the U.S. or Canada, several of the major carriers have outlined their 3G plans. Unlike Europe, which has a uniform wireless standard based on the Global System for Mobile Communication, North America (and the U.S. in particular), currently uses Time Division Multiple Access (TDMA), Frequency Division Multiple Access (FDMA), GSM and CDMA. With four platforms in existence, the road to 3G is not guaranteed to be straight and narrow.

The existing networks are determining what path the carriers are choosing to get to 3G. In North America, as in the rest of the world, there are two seemingly related 3G options: WCDMA and CDMA 2000. While WCDMA is a natural progression from GSM networks, CDMA 2000 builds on platforms currently using CDMA technology. Because Europe already has GSM in place, these carriers will use WCDMA technology to provide 3G services such as mobile streaming video. This also means that North America and the U.S. may be using both WCDMA and CDMA 2000 to move to the next generation of mobile applications.

As if the challenges presented by spectrum allocation were not enough, it's also not possible for carriers to implement WCDMA and CDMA 2000 within their networks. So in addition to finite resources, North American wireless service providers must roll the dice on which 3G platform will be most advantageous to implement. Currently, CDMA 2000 and WCDMA have strong potential, according to preliminary 3G plans.

Hoping to be the first to implement 3G in the U.S., Sprint PCS Group and Verizon Wireless Inc. are conducting field trials of CDMA 2000 1XRTT. The 1X denotes a CDMA 2000 standard that is intended to double the voice capacity of current CDMA systems and improve data rates to 144K bit/sec. Sprint PCS expects to complete its network upgrade to CDMA 2000 by the end of the first quarter 2002 with Verizon following closely on its heels. On the other hand, VoiceStream Wireless Corp. and AT&T Wireless Group Inc. are taking the WCDMA route. Another major player, Cingular Wireless Inc., had not officially committed to either platform by press time.

The 3G path is also a guessing game from a global perspective. While Europe is moving toward WCDMA, countries such as China and South Korea seem poised to use CDMA 2000. This is in contrast to Japan where all eyes are on NTT DoCoMo Inc., which upon completion of a nationwide WCDMA platform for 3G will have $8 billion in committed resources, as estimated by The Goldman Sachs Group Inc. Currently, DoCoMo is conducting a beta test of approximately 4,000 users with a large-scale implementation scheduled for October.

However, until spectrum allocation is resolved worldwide, the technology used for 3G network implementation is not the issue companies are most worried about. With 3G spectrum auctions in Germany and the U.K. setting a dangerous precedent, some companies are finding that the prices they paid for licensing are affecting their ability to invest in 3G infrastructure. This has surfaced recently as a major pothole on the road to 3G, one that is causing many wireless carriers to need new wheel alignment.

Vendor talk

In addition to 3G's already hefty price tag, the end user devices to be used in conjunction with the next generation of wireless infrastructure are also expected to be expensive. It's estimated that 3G-enabled handsets will cost US$300, in addition to monthly service fees that could be as high as $90.

Further aggravating the delay of 3G implementation is the lack of availability of these pricey handsets. For example, of the 10 vendors expected to make phones for DoCoMo's 3G implementation this October, only two companies have products available. Moreover, the lack of applications for 3G handsets is another hurdle. Not only do equipment manufacturers need to speed up 3G development, but so do application developers if 3G is to reach its potential. The catch is that both players are motivated by demand, and the jury is still out on whether there will be widespread consumer demand for 3G products and services.

Despite these hurdles, major equipment vendors have mostly laid out their blueprints for migrating toward 3G technology. In general, companies are making devices for CDMA 2000 and WCDMA although many corporations have aligned themselves with specific platforms through strategic partnerships. For example, Motorola Inc., Lucent Technologies Inc., Nortel Networks Corp., Samsung Electronics Co. Ltd. and Qualcomm Inc. are providing equipment for beta tests of CDMA 2000 rollouts in the U.S. Meanwhile, L.M. Ericsson Telephone Co. and Japan Telecom Co. Ltd. recently partnered to test the world's first field trial of voice over IP using WCDMA. The following summaries give a brief overview of the direction some of these major players are moving.

-- Nokia Corp.: Nokia's solution for 3G implementation revolves around an all-IP network consisting of an IP radio access network (IP-RAN) and IP Mobility Core network. These networks can support major interface technologies, including GSM, wireless LAN Wi-Fi/802.11b and WCDMA, and are backward compatible with existing mobile networks. The IP Mobile Core network uses IPv6, providing easy interface for multivendor technologies and has quality of service and security management features incorporated in it.

-- Ericsson: Ericsson recently announced the completion of a 3G CDMA 2000 Mobile Switching Center (MSC) that is set to be deployed into its mobile networks. Actively involved in defining standards for CDMA 2001*EV DO (Evolution Data only), Ericsson's solution needs only a software upgrade from existing CDMA One networks and will support various technologies, such as Wireless Application Protocol, Bluetooth and Java on its 3G platform, focusing on offering real-time wireless voice and data capabilities to customers.

-- Motorola: Motorola's Aspira technology is based on all-IP core network in collaboration with Cisco Systems Inc. It devises separate paths for migration from CDMA and GSM platforms and includes IP billing, network management and operational support features. The company recently completed lab tests of delivering live video over its 3G product

Applications

With all the gray areas surrounding 3G, one might wonder what the rush is to use a technology that has different standards, costs a lot and evicts other residents from their spectrum assignments. The answer is in the potential applications that range from streaming video, integrated voice and data services, to full-scale multimedia.

Potential 3G-enabled wireless devices (mobile phones, PDAs and others) could include the functions of a video camera, computer, stereo and radio combined. The biggest attraction for mobile consumers would be "Mobile Internet" services, creation of personalized portals that would integrate unified messaging and mobile-commerce (m-commerce) features. Applications such as e-mail, Web-browsing, stock-quote tracking and airline reservations are only the beginning. Videoconferencing and online "window" shopping are set to be the next generation of applications, with roaming capabilities throughout Europe, Japan and North America being the next big step. In particular, one school of thought believes that the push for 3G will be driven by m-commerce, the idea that financial transactions can be carried out over mobile devices as easily as the wired network.

Studies supporting this predict that Europe will benefit the most from m-commerce in the next five years, consistently acquiring 40 percent to 50 percent of the m-commerce market. This is in contrast to North America, where the outlook is at 15 percent to 25 percent. But other reports cite spectrum issues and 3G infrastructure implementation delays as hurdles to the potential of m-commerce. These studies conjecture that m-commerce will not become a major market player until 2007.

Technical framework

From a technical standpoint, the IMT-2000 framework also supports both of the signal transmission technologies of WCDMA and CDMA 2000. In particular, European countries and Japan have chosen the UMTS terrestrial radio access (UTRA) as a solution to move their networks into the next generation of mobile networks.

This is the third generation of mobile developed by the European Telecommunications Standard Institute (ETSI) based on the ITU's IMT-2000 framework. On the U.S. side, the new generation, based on the same framework, is represented by the standard CDMA 2000.

UMTS is a packet-based transmission of text, digital voice, video and multimedia at data rates up to (and possibly higher than) 2M bit/sec. In January 1998, the European Institute settled a specification of the UTRA using a combination of two 3G-radio wideband multiple access technologies: WCDMA and Time-division/CDMA (TD-CDMA).

The first system, FRAMES Radio Wideband Multiple Access mode 1 (FMA1), operates on unpaired frequency bands and is used with time-division duplex (TDD) operations or TD-CDMA. Each carrier has a frequency spacing of 1.6 MHz, on which user channels are separated into time slots. Within each slot, spreading codes create supplemental separations. Its frequency range is between 1,885 and 1,920 MHz for the downstream bandwidth and 2,010 to 2,025 MHz for the upstream bandwidth.

The second system, FMA2, is used for wide-area service and refers to WCDMA. WCDMA is based on frequency division duplex (FDD) operations that operate in paired frequency bands.

The FDD bands use the 1,920 to 1,980 MHz downstream bandwidth and the 2,110 to 2,170 MHz band for upstream purposes. FMA2 allows 5-MHz frequency spaces per carrier slots to implement FDD. Frequency bands 1,980 to 2,010 MHz and 2,170 to 2,200 MHz are used for Earth-to-satellite communications.

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