So Where Is the
Wireless Web?
Technology proponents are touting a world of mobile
Net surfers. But, despite all the hype, the U.S. is still years away
from widespread cellular data services.
DcColvlo's 3 million "i-rnode" cell
phone subscribers (roughly 10 percent of
the company's total customer base), for
example, it will mean wireless high
speed Internet news, banking, video
streaming, travel reservations, Web
radio, and a slew of other services.
But here in the U.S., matters are not
proceeding at the same headlong rate.
Most wireless carriers are still smarting
from their enormous (and painfully
recent) investments in upgrading
their network to support
digital services
(PCS). There is also some concern that
the data market will bloom slowly-a
prediction that may become a self-fulfilling
prophecy.
The long and short of it is that next
generation cellular data services will
happen on this continent, but it will be
at least a three to six-year engagement
before they do.
Wireless data is hot. You can't
open a magazine without read
ing about microbrowsers on
cell phones or turn on a television with
out seeing an advertisement for the
Internet-in -your-pocket.
Japan is blasting away, with all jets
driving, toward the new wireless
Internet. As far back as October 19,
1998, NTT Mobile Communications
Network (NTT DoCoMo, To), Japan's
leading mobile operator, piloted a cellu
lar network that joined together the
cell phone and motion video.
Expected to launch commercially
in March 2001, the network
and others like it will give
birth to a new wireless
communications
era. For NTT
Data That Grabs You
Few cellular operators can ignore
the importance of data. In
major cities, up to eight
wireless-network
operators now
compete for business. Data transmission
represents a new source of revenue
extraction from their customer base.
Even though data currently represents
less than 2 percent of wireless traffic,
according to Datacomm Research, a cur
sory look at the 40 percent growth of
messaging in Europe during 1999 (to a
whopping billion messages sent per
month, according to the Yankee Group)
indicates that wireless data services have
profit potential.
Most observers expect that wireless
data services will evolve - in much the
TE LECO M M U N I CATION S
In Europe, 1 billion messages per
month were sent in 1999.
same way the landline Internet grew. E
mail and other text messaging services
will come first. "I think in the North
American market, what hasn't had any
widespread adoption yet is messaging.
Whether it's done through e-mail and
browsers or through SMS, I think that is
going to be an initial step that will get
people used to wireless data devices,"
Fighting for the Next Generation
Battles over technology standards are
commonplace, but it's not every cat
fight that manages to get the gov
ernments of several countries involved.
Ericsson and Qualcomm develop the
majority of transmission technology for
network operators' base stations as well
as the technology for their respective cell
phones to pick up transmissions from
those base stations. Qualcomm, with
1999 revenues of $3.9 billion, is the
digital-cellular-network phenorn whose
COMA technology all but owns the digital
market in the U.S. Ericsson, with reported
1999 revenues of $22 billion, connects
over 40 percent of the world's mobile
callers, as the maker of TDMA, GSM,
and COMA base stations and cell phones.
The trouble started during the debate
of the International Telecommunication
Union (ITU) on its International Mobile
Telecommunications 2000 (IMT-2000)
initiative, intended to bring about
third-generation (3G) cellular audio,
video, and high-speed Internet
applications.
Ericsson and Qualcomm proposed dif
ferent CDMA variants. Qualcomm's pro
posal was a better alternative for the
majority of U.S. CDMA operators migrat
ing to high-speed data, and Ericsson's
proposal was a better alternative for its
customer base in Japan and Europe,
which accounts for more than half of
Ericsson's revenue.
The quarrel became so heated that it
prompted governments to get involved in
what was quickly escalating into trade
tensions between Europe and the United
States. At the heart of the debate were
COMA intellectual-property rights. A
December 1998 letter signed by U.S.
Secretary of State Madeleine Albright and
Federal Communications Commission
Chairman William E. Kennard urged the
European Commission, not to impose
unnecessary 3G obstacles or "barriers
to trade."
Finally, the ITU stepped in and
announced that it would disqualify all
CDMA proposals from its IMT-2000
initiative if the two companies didn't
hold their fire.
Eventually, Qualcomm and Ericsson
resolved their differences, coincidentally
right around the time one of the strangest
unions in recent history took place.
Ericsson purchased Qualcomm's terrestrial
infrastructure business in May 1999.
Not long after, in November 1999, the
ITU recommended transmission specifica
tions for all countries and COMA, TDMA.
and FDMA technologies on the evolution
ary path toward 3G, including two
"harmonized" COMA standards from
Qualcomm and Ericsson. The set of IMT-
2000 specifications will fit the 3G wireless
migration path of the Americas as well as
the new-spectrum licenses of Asia and
Europe, although it hardly fits anyone's
definition of one single global
standard.-D.M.
says Larry Paulson, president of _--r::"-r.1I'lr
line management for Nokia
handsets.
Eventually, the goal is "third _~_-
tion," or 3G, devices (digital ceI.
were the second generation) .::...
deliver data rates of up to 2
comparison, current cellular-ceo ••••••••
transfer rates plod along at 9_6
14.4 Kbps, at best, which is 0
mail and some of the new In
ices being lauded by cell-pho
Phone. com's Wireless
Protocol (WAP) microbrowser ~
squeeze the Web into these ~
that's a stopgap measure. In -=-
term, 3G will bring about
multimedia-video streaming
streaming, plus location-based
that will be able to notify a r.-;"...J.,- ..;_ ••
a concert in which he'll be 11' hl::::5I:E.
the city he's visiting, for ~
Every Call 15 a Winding R
Any and all of these nifty data
will require investment in h:nr.. .••.•• ·_.
software upgrades. How m
and how fast will depend on :- ••• ~- ••
tor's existing transmission a;_~IIII"
Network operations are currezz;
ed into three technology f
division multiple access (CD_
division multiple access (TD_
global system for mobile co'=::mJl"
tion (GSM). Each is facing a r::=~_
erational path to higher dara
two-and-a-half generation
modification followed by
generation (3G) modification. ID_ ~
GSM operators can take the ..:
with Ericsson's general packer
service (GPRS), which will give
up to 115 Kbps, and then step up
with enhanced data rates for
evolution (EDGE), which
them up to 384 Kbps an
cases, 2 Mbps. CDMA IT:-'''-:rr.w~
step into 2.5G with
CDMA2000 lX, for up to ---
and then step up to 3G
CDMA2000 3X, which will give them
up to 2 Mbps. 2-Mbps Wideband
CDMA CW-CDMA) is also a 3G
option for GSM and CDMA operators.
Part of what is making it hard for US.
wireless operators such as GTE Wireless to
immediately commit to 3G is their reluc
tance to give up a cash cow. ''If we gave you
800-kilobit packet-data service as a user,
we could fit 100 voice calls into that same
bandwidth," explains Keith Radousky, vice
president of engineering for BellSouth
Cellular, which is also deploying 2.5G
modifications as a soft step into 3G. Voice
currently makes up the majority of operator
income. "So there's a question of opportuni
ty loss," he adds.
"European operators running out of
bandwith can license new spectrum
for 3G; u.s. operators cannot."
Japan's NTT DoCoMo doesn't have
the same concern, one reason why it's not
hesitating to jump into 3G. Japanese and
European operators running out of band
width can license new spectrum for 3G;
US. operators cannot. The marriage
between high-speed data and voice is a
longer shot for US. network operators,
because the operators already occupy the
2GHz band that other countries are now
For every step up the high-speed
migration path, phone manufacturers
Nokia, Motorola, and Ericsson plan to
come out with progressively more feature
rich phones, starting in early 2001.
Subscribers will need to upgrade or
replace phones to get more-advanced
features. But according to Nokia, which
makes TDMA and CDMA phones for the
worldwide market, the current life
expectancy of a mobile phone is just
two years-upgrades which have about
the same life span as the carriers'
upgrade steps to 3G. There could be a
premium market for multi mode phones
as well, because the ITU's global stan
dards are not globally compatible with
each other after all. U.S. cell-phone users
traveling abroad will need either a mul
timode phone or some sort of adapter
for their phones to work with some
other countries' cellular networks.
Smart chips. The complexity of these
phones will require smarter and better
chips, and lots of them. In December
1999, Quaicomm agreed to sell its hand
set business to Kyocera, so it wouldn't
have to "wrap the plastic" around what
it expects will generate enough volume
to keep its profits on the rise: chipsets.
Quaicomm is working on next-generation
chipsets that will have global positioning
for push-type, location-specific messaging
and voice-recognition capability for
hands-free user interaction. It unveiled a
3G handset prototype in October that
offered voice command for all major
functions plus a video display for when
3G comes about.
Motorola is also working toward
smarter phones. "As you've seen from the
PC world, mobile chipset technology
will be very fast," says Valy lev, corporate
vice president and director of 3G,
advanced technology and software
operations for Motorola's Personal
Communications Sector. The math for
these companies is simple: Carriers will
continue to subsidize phone sales.
Datacomm Research, a research firm,
predicts that 330 million smart phones
will be sold per year by 2003.
PDA's too. There's also room for
PDAs, specifically Palm Pilots, of which
there are now 5 million worldwide.
Before it announced its spin-off from
3Com, Palm announced a partnership
with Sony to develop audiovisual
applications based on its platform. It
also began licensing its Palm OS to
cell-phone manufacturers Quaicomm,
Motorola, and Nokia as well as Hand
spring, a handheld-device manufacturer.
Datacom Research predicts that
36 million PDAs will be sold in 2003.
-O.M.
licensing for 3G. Moreover, US.
operators are running voice over
band-very profitably, thank Yoll->
operators are already vested in
infrastructure.
Taking Baby Steps
Some believe that the world of
speed wireless data will come quickly"
to a broad range of customers. 0:
operators we spoke to, AT&T ¥.~_
is the farthest up on the high_:
staircase. AT&T runs a TDM..A.
work, and it will start major depl _
of EDGE in 2003, which will ner i
transfer rates necessary for quality
and advanced high-speed data. _!C
will test GPRS CTDMA's 2.5G
internally in order to get its ope::z:::t~
ready for EDGE. AT&T \\-:...
Services tracking stock, to be 0
May 2000, is expected to round -::
billion in capital, which will
help pay for that lead. The com
closed plans to spend $3.5 to
this year to boost capacity and -
service quality.
AT&T Wireless has relativelv
sive plans. It's betting that al
services will appeal initially
users, third-party companies th2:;;:lII!:zI:::II
provide advanced services (st
retail services, and the like) to s:
range of consumers will help _~. =t::--oa.
adoption. "3G will be pri.m2ri::_
zontal offering," predicts
senior vice president and chie::=:IIII"
gy officer for AT&T Wireless- _
adopters will be businesses ri'...,-.."....,.
give their mobile workers
corporate data. Pure consumer
based on portals, music, au :
applications will emerge at -
same time."
But many carriers are ski:::JQ.::L
Wireless's Randy Crouse, 25.S:s:::a:l1r
| president of technology _~-'-' |
_ |
implementation for the 0
E-BUSINESS IS HlmNG
us ON All SIDES!!
There are a
lot of steps
along the
way before we
get serious
about 3G.
share AT&T's blue-sky vision. He says
he's heard all the talk about "people run
ning up and down the street with
streaming video cameras at 2 megabits,
but it's just not clear yet how that will
shake out." Not surprisingly, GTE
Wireless is taking the more conserva
tive, 2.5G approach with its 6.9 million
subscribers.
"Two-and-a-half generation is going
to provide the proving ground. If there's
more take-up of2.5G, if they deliver the
kind of usage and subscriber growth that
people are hoping
for, it will help make
the business case for
3G. But there are a
lot of steps along
the way before we
get serious about
3G," points out
Mark Lowenstein,
senior vice president
of the global wire
less practice of the
Yankee Group.
To these uncer-
tainties add the hidden costs of convert
ing even to 2.5G. Operators have to turn
their voice business model into a data
business model, with all the billing and
logistical nightmares that follow-the
business equivalent of a Buddhist con
verting to Catholicism. ''All the back-end
support, all the financial reporting, all
the marketing, all the distribution,
billing-all those things are voice-cen
tric," comments BellSouth Cellular's
Radousky. What operators are doing
now is starting to move "from voice to
data. It really is the first step to becom
ing a data company."
Silver Lining
Happily for access providers, moving to
a data -oriented infrastructure offers
them benefits, too. For example, 2.5G
will bring operating efficiencies to oper
ators so they can offer more access time
to data subscribers. That's going to be a
big step in the matrimony of the
Internet and cell phones, because it gets
operators past that hurdle they're now
facing with high-overhead, session
based access.
The operator with the
from 2.5G is Sprint PC
investing mightily in m . _
synonymous with the te::=:
Web. John Yuzdepski, vicer- ::'c:sIm ••
product management and Gs·~"'_
for Sprint PCS, says up~
will essentially bridge the
what was good for voice-e
based traffic-and what is
IP. He says, "When you pick
set and dial a number, you
between yourself and me. Vi,Te:=
the same.l!:::lll_1II
bandwici=
users star" ~
the Web =
at home
lines. H
Sprint PC_
upgrade to CDMA2000 IX.
us to create more capacity. It a......:~; ._
move to new billing paradi
us to move to more of a stOre-"!::lH_
ward system, as well as opti·1Il.!·=~
network. So the really big ~-
the network side, and on the
rience," says Yuzdepski.
More important, CDMA2 -
also give Sprint PCS double -:.
capacity-the next best thing
spectrum.
So, despite the
rounding Internet-any
carriers' move to high
ices will more likely be
than a quick sprint. "I
to go in small steps-
"We have a very sp . -
delivery of data services
involve the industry
this huge 384-type servi
the chute." •
Dee McVicker is a free a-.:.~
specializing in br o adcast.r ;
mation technology, and te ;0=_
nications.
