US: 3G or Not 3G?

Carriers are taking a more pragmatic approach to the rollout of third-generation wireless data services due to pressure from investors, the need to prove the business model, and continuing problems over the availability of spectrum.

In the latest move in the saga over NextWave Telecom Inc.'s "3G" licenses, the Federal Communications Commission (FCC) is now planning to allow carriers, who collectively bid around $16 billion for NextWave licenses, to pull out of the sale (see Nextwave Case Drags On, Drags 3G Down and FCC Offers 'Opt-Out' Plan).

The FCC is mulling the possibility of allowing carriers to either fully or partially opt out of the auctions. Industry figures say that this will help to remove a dark cloud that has hung over the entire sector.

“[This] action promises to provide a boost to every wireless carrier, whether they participated in the auction or not," says Tom Wheeler, president and CEO of the Cellular Telecommunications & Internet Association (CTIA) in a statement. "This debt overhang had created severe capital restrictions throughout the entire industry."

But where does this leave the rollout of advanced 3G services in the U.S.? Back when the FCC seized the licenses from bankrupt service provider NextWave and auctioned them off in January 2001, the prevailing wisdom was that most operators needed extra capacity to provide whiz-bang wireless services like streaming video.

But now, with the slowdown in the U.S. economy, a distinct lack of new spectrum on the horizon, and investors on Wall Street looking for return on investment -- not massive debt burdens to be paid off sometime in the future -- analysts say carriers are looking at a variety of ways to develop their services.

Seamus McAteer, principal analyst at the Zelos Group LLC, expects to see more networking swap-and-share agreements as major carriers look to plug the holes in their networks. Cingular Wireless already has a sharing agreement in place with T-Mobile U.S. to cover their bald spots in New York City and California respectively.

Cingular and T-Mobile are the two GSM/GPRS operators that are seen as most likely to merge because of spectrum concerns, according to McAteer (see T-Mobile US up for Grabs?). AT&T Wireless Services Inc. (NYSE: AWE) has enough spectrum to move to UMTS in most of its markets, according to both McAteer and Roger Entner, program manager of the Yankee Group's Wireless/Mobile Services research and consulting practice.

However, both analysts question just how relevant the original hype around 3G and the need for [data transfer] speed is anymore.

After all, early UMTS systems have delivered data transfer rates of around 64 kbit/s -- certainly nothing like the 2 Mbit/s originally proposed.

"It's very difficult to build a rationale for wideband," McAteer claims. "It's hard to come up with any compelling applications." "It's not about speed, it's about strong coverage with packet data, appealing applications and services, and great handsets," he adds.

— Dan Jones, Senior Editor, Unstrung
sridave 12/4/2012 | 9:45:51 PM
re: US: 3G or Not 3G? I disagree with the point made by S. McAteer and R. Enter regarding data transfer speed of 2.5/2.75/3G wireless data services. I believe that increased speeds will be important to the business user segment and especially for those individuals that constitute the mobile work force. D.Benson SRIC BI
Guglielmo 12/4/2012 | 9:45:48 PM
re: US: 3G or Not 3G? While I concur with sridave that speed is important, the billion-dollar question is whether 3G gives you enough boost over 2.5G/2.75G. (The nomenclature is getting ridiculous: 2.93124G anyone?)

If W-CDMA networks are delivering 64 kbps, that's not significantly better than GPRS or 1X. Verizon Wireless routinely delivers over 70 kbps to my laptop today.

Without a substantial improvement (~10 times), why invest billions of dollars in a new 3G network? Why not incrementally invest in capacity for your current 2.5G network, and wait for 4G?

Companies like Flarion and IP Wireless show that substantial improvements are technically possible. Just a matter of time before standardization and interoperability reduce risk enough for an operator to make the leap.

Of course, if 3G is dead on arrival, that's bad news for equipment vendors that bet their survival on its widespread deployment, and for European operators who mortgaged their future to buy a license. But that's no reason for other mobile operators, particularly U.S. operators, to follow them off the cliff.

From a business perspective, 3GPP starts looking more like a suicide pact every day.
spc_King 12/4/2012 | 9:45:46 PM
re: US: 3G or Not 3G? This debate is based on false premises. WCDMA will NOT suppport only 64kbps. Yes, 64kbps is the widest *CIRCUIT SWITCHED* bearer (RAB) in the INITIAL rollout of WCDMA based 3G, but with *PACKET SWITCHED* bearers the available frequency spectrum and number of simultanous traffic is the only theoretical limit to bandwidth. Of course, in a real network you will have fading issues etc, but the last I heard was that ~200-300Kbps was the realistic values (and not the theoretical 384Kbps) when moving outside and even higher when stationary/indoors.

Get the facts straight and don't base your discussion on half baked analysts reports like this one.

Now whether there are any services that will be able to PAY for the use of that much expensive bandwidth that is another, and much more worthy discussion!


joset01 12/4/2012 | 9:45:44 PM
re: US: 3G or Not 3G? Cleary those figures are from the early implementations of WCDMA. However, the early implementations are the only "real-world" figures that are out there. Unless, of course, you know different. Where are you getting your 200-300Kbps figures from?

I think one of the big questions going forward is how will ANY of these networks perform when they have a decent number of subscribers using them?

Vis-a-vis: 3G USA. I think the question is worth asking, does the US need 3G? (and I'm not talking bout 1xRTT here) Obv. European carriers have to have it to have to deal with voice capacity issues, but that's not a problem for the US.

Might it not be better to sort out coverage issues, develop a set of good apps and sort out billing etc.?

Obv. not if you are an equipment manufacturer, but if you're a carrier...certainly worth thinking bout.
spc_King 12/4/2012 | 9:45:38 PM
re: US: 3G or Not 3G? Dan, I've got the 200-300kbps numbers from numerous sources. I can double check to make sure they are recent and based on 'live' testing, but can you tell me where you guys got the 64kbps from? It just sounds too round a number to be based on a physcial constraint and that is why I assumed it was refering to the 64kbps CS RAB...

I agree US 3G can be quoestioned to an even greater extent, but if high bandwidth services are so useless then why is WLAN so hot???!! Tell me that!

Guglielmo 12/4/2012 | 9:45:37 PM
re: US: 3G or Not 3G? x-Eri wrote:
"I agree US 3G can be quoestioned to an even greater extent, but if high bandwidth services are so useless then why is WLAN so hot???!! Tell me that!"

WLAN access point: <$1000
Nationwide 3G rollout: >$1,000,000,000

Obviously, not an "apples to apples" comparison, but affordable entry prices certainly help the adoption of any new technology.
spc_myles_telos 12/4/2012 | 9:45:36 PM
re: US: 3G or Not 3G? 1 million accss points...
mixed in with bluetooth and cordless phones... that's pretty good interference...

WLAN is a great pop'n'drop access technology. Fixed. Attempts to make it mobile are probably service/backbone oriented at best. Maybe it would help to unify billing... so at least your ID is the same, you get a single bill at the eod.

If you sit down somewhere, office/hotel/retail hotspot, get WLAN. Ok.

If you're on the road, trying to find out where to drive to, your 3G enabled car probably would like to see maps and etc... over 3G better than say satellite? Location based services to the mobile and the car HUD ;-)

On the road, need those document templates, can't find the nearest Starbucks? - Probably get someone to email you or Corporate VPN to pick it off.

Bored on the bus? - Play a game over 3G/2.5G.

The problem today is easy. News/Media travels too fast, we share too many opinions. Deploying towers, antennas, fiber, microwave, and telecom equipment interconnect/interop actually takes a little while... since that's not up yet, the boys doing the apps are not sure what they "have to work with"...

more delays... oy... then you have governments who want calea, wnp and e911 based on every standard supported in telecom... and you wonder why we're not all sitting at home working via our wireless 3g Virtual Reality offices...

hmmm whatever happened to the VR buzz?

Technically, things are achieveable. It's mostly the socio-economical political aspects on the implementation side that are hurting, and more so on the process, rather than the actual technology development.


spc_King 12/4/2012 | 9:45:35 PM
re: US: 3G or Not 3G? Guglio,

That was one very unbalanced example!

Yes, each WLAN basestation can be had at a tenth of the cost of a 3G basestation, but that isn't the full picture is it?! A 3G basestation has the option of covering a much wider area than one WLAN basestation which means 3G is better suited for public wide-area coverage and WLAN better suited for hot-spots. That is why they can be said to be completmentary technologies, but of course they also do compete in certain situations.

Your $1000 box probably isn't going to be engineered to the same exacting standards as a 3G basestation so there is also the reliability aspect.

However, I'll admit there is a point in comparing the WLAN/3G costs though: WLAN spectrum is free and basestations are low cost so potentially you could launch a whole different category of high speed services profitably on WLAN that just won't make sense for 3G.

I guess it is up to the operators to tell us all what type of services they envisage that will require the high bandwidth and that cannot be done much more cheaply with WLAN.

For instance, is there a point in having a WLAN enabled PDA to roam around with? WLAN coverage is likely to be spotty and 3G could give you more seamless connetion.

Guglielmo 12/4/2012 | 9:45:33 PM
re: US: 3G or Not 3G? The point of my obivously slanted comparison was not that WLAN obviates any need for 3G, just that getting started with it is easier. That's not an inconsiderable advantage, considering the role of past upstart technologies, like PCs, Ethernet, etc.

Agree about mobile data services filling in among WLAN hotspots, just not convinced an upgrade to 3G is warranted.
deepciscothroat 12/4/2012 | 9:45:17 PM
re: US: 3G or Not 3G? So the $64K question is

- why do mobile devices need more bandwidth
- since PCs are the most likely devices to use, for some period of time, increases in bandwidth, and since you are not walking or driving most of the time with your PC, isn't a 802.11 solution a better way to go
- isn't the 3G upgrade mostly about increases in VOICE capacity?
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