I Want My 3G Wireless! - Industry Trend or Event

Telecommunications, Nov, 2000 by Bob Carl

For the past several years, wireless consumers have heard rumors, seen commercials, even passed along old wives' tales about the ever-approaching 3G wireless data revolution. Real wireless Internet connectivity is still on its way, however the evolution from today's voice-centric phones to tomorrow's data-intensive 3G smart-phones will be much more difficult than anybody cares to admit. 3G promises--and will ultimately deliver--bandwidth on demand to enable streaming video applications; digital audio such as MP3; mobile commerce and conventional voice calls. Handsets are already appearing with basic Internet access and e-mail functionality. It's time to think about paving the way for full-fledged 3G.

As with any industry evolution, several developments will need to take place before 3G becomes a reality:

Standards must solidify. Unlike earlier generations of wireless technology, 3G was meant to be a uniform standard worldwide--but isn't. This discrepancy among standards is a nuisance for users who want to use the same handsets anywhere in the world. These differences of opinion also cause a serious setback in 3G development. Duplicate standards trigger duplicate development efforts that waste valuable technical talent and siphon off investment capital. When it comes to manufacturing components and equipment, varied, changing standards hamper true global economies of scale.

In the wireless industry, standards depend on government regulations. Internationally, the same frequency bands have been allocated to 3G, but there are gaps in some regions.

The price should be right. Underlying 3G hardware and software technologies need to be manufactured at an attractive cost for the mass market. Fortunately, experience demonstrates that it doesn't take long to overcome cost barriers once the fundamental technology is in place. Lowering costs to achieve the right market price requires capital commitment; manufacturers will time their investments according to perceived market demand.

Set the groundwork. Service providers must invest heavily to establish 3G infrastructure. This includes backend equipment to store information, wireless Web portals to guide users, and applications that will drive an insatiable appetite for wireless data services.

Activate base stations. Service providers must install new base stations and upgrade existing stations to make them capable of handling 3G data transmissions.

Handsets will follow. Once the first 3G base stations are established, 3G handsets will become available. There will be a period of initiation--hopefully short--followed by rapid ramp-up as users discover and demand next-gen services.

Before carriers commit substantial investment capital to 3G, they must be convinced the timing is right. Once service providers have been assured that market conditions are ripe for 3G introduction, they will face tough business decisions.

Division of frequency. With the addition of rich, high-bandwidth 3G data services, operators will need to balance the spectrum they require to successfully roll out new data services against maintaining the quality of existing voice services.

Service charges. Consumers currently pay for airtime from the moment they press "send" to the time they hit "end." Wireless data, however, is a different story. Location services such as GPS tracking, mobile commerce and other wireless data services will require mobile devices to be "always on," necessitating new pricing structures. Whether consumers are charged per-kilobit or per-minute of activity, a balance is needed so that both consumers and service providers come out winners.

Consumer education. The introduction of 3G wireless will also present intensive marketing challenges.

Customers need to be educated about new service options and convinced of their usefulness. Since it may be some time before new services are viewed as essential, providers will have to experiment with different types of offerings until they hit on those that consumers and businesses want. Until then, 3G wireless will remain a supplier-pushed technology rather than one pulled by user demand.

It's all about the applications. Innovative software developers are creating the next big crazes in wireless entertainment, ranging from video and audio streaming to multiplayer interactive games. While we have some idea what these applications will be, no one knows for sure until the infrastructure is in place and delivery begins.

Once high-demand applications are identified, new types of wireless equipment may combine phone networks, computers and entertainment systems. This new equipment may not only provide the applications that drive 3G demand, but also be a force that changes life in the 21st century, just as telephones, TVs and PCs did in the 20th. When that happens, we'll know we've succeeded in making 3G wireless a reality. Then we can ask about 4G.

Bob Carl is general manager of wireless computing at Texas Instruments, which he joined in 1983. He earned a BSCSE degree from the University of Texas-Dallas and is working on a master's degree in international management.