Implementation causes headaches - European mobile phone operators are in a dilemma as to when and how to upgrade their networks for Internet Protocol - Industry Trend or Event

CommunicationsWeek International, Oct 23, 2000

Mobile operators cannot agree how best to implement next generation Internet wireless networks. A report due to be published next month by the Washington DC--based The Strategis Group Inc., on a survey of 43 European mobile phone operators, says that operators are in a dilemma as to when and how to upgrade their networks for Internet Protocol.

"There is a wide interpretation as to the best timing," said London-based analyst Jake Saunders, European director of Strategis. "Operators need to ensure that their networks work. They can't be too pioneering," said Saunders. Operators are retaining their existing circuit-switched core network for voice services, while adding a packet data capability on top of that. But ultimately IP will be used for all services--data and voice--in their networks.

Another challenge facing operators is base-station installation for third generation mobiles. This requires a significant amount of planning.

"Operating at a higher frequency, the size of the 3G cells is smaller," said Saunders. Operators are looking at how best to reuse existing second generation base station infrastructure. The typical reuse figure is between 40-50%, although for operators which also operate at the higher GSM 1800 band, such as Orange plc, of London, the reuse is estimated at between 60-66%.

Meanwhile competition among the network vendors for general packet radio service is hotting up. "It is a tighter race now," said Saunders.

Sweden's Ericsson AB is leading in GPRS network contract wins among European operators with 19 agreed.

Nokia of Finland is a close second with 17 known signed contracts up till September 2000.

Of the four publicly announced contracts for 3G systems in Europe, Ericsson and Nortel Networks are leading the way. "The real pot of gold is in [third generation] wideband CDMA," said Saunders.

Quality of service, sensible pricing and billing are the main issues when it comes to the services that will operate on the IP-enabled networks.

"All the operators state that developing billing solutions is one of their top priorities," said Saunders. "But the operators don't seen to know how much they will be charging for 3G services, nor which billing systems they will use."