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3G Wireless: Breaking Communications Barriers

The year 2000 had varied connotations in the world of Information Technology. In the mobile world, however, it is widely recognized as the year, which introduced data to augment voice. While voice is and will continue to be a major market driver, data applications are now increasingly becoming prevalent in the wireless world. Business users and consumers alike realize the need for conducting daily tasks anytime-anywhere.

For the mobile operators, data presents an opportunity to distinguish their service offering in the highly competitive and ever consolidating industry and to ultimately increase the bottom line in the face of declining revenue generated from voice.

Current second-generation (2G) wireless standards, while providing the necessary bandwidth for basic data applications, are not adequate for bandwidth-intensive applications. Third-generation (3G) networks will ensure seamless convergence of wireless technology and the Internet. 3G is geared towards ensuring parity in the wireless and wire-line data world. It will bring with it the ability to accomplish tasks that were until now limited to the fixed world.

Industry analysts have varied estimates about the timeframe when wireless Internet users will outgrow wire-line Internet users, with the general prediction being within the 2003-04 timeframe. However, the underlying theme is 'when' and not 'if' this transformation will occur.

Many mobile operators are currently conducting 3G trials, with Europe and Asia Pacific are taking lead. Leading Japanese mobile operators, NTT DoCoMo and KDDI, have the head start in Asia due primarily to the current capacity constraints of NTT's PDC technology and the widespread adoption of wireless in Japan.

Today there is much publicity on the auctioning of 3G licenses in various countries with the focus primarily on the exorbitant price paid by operators to acquire these licenses. The validity of the business case is being questioned, as is the ability of the operators to realize positive return on their investment in the near term. There is confusion as to when the license winners will invest in 3G infrastructure and launch services, given the high up-front cost incurred. We believe that the steep license price will drive operators to launch the 3G service concurrent with the technology becoming available. The higher throughput available on the 3G network will enable operators to provide value-added services and applications such as video-on-demand, unified messaging, mobile commerce, etc. with the intent of reducing churn and increasing revenue. Stemming churn, especially in markets with high penetration rates, is a major objective for most operators today.

Current CDMA operators stand to benefit the most in the transition from 2G to 3G since all 3G standards are based off the CDMA technology. Not only will the migration path be relatively seamless and the technology backward compatible, but the CDMA operators and the vendors alike will have the relative experience of spectrum-based technology. This should translate to additional benefits for the cdma2000 subscribers, since the traditional CDMA vendors and operators will be able to develop and deploy services quicker and cheaper than their GSM and TDMA counterparts.

Third generation service provisioning is functioning as a catalyst for operators with plans to launch a global expansion strategy. Operators are establishing partnerships to allow for roaming and sharing of networks in countries where they may lack presence. Infrastructure investment, however, needs to be made to ensure the service promised by third generation networks. For instance, cell density will have to be increased to provide additional bandwidth. New transaction-based billing methods will have to be introduced in place of the time-based billing used today. However, the savings generated from a packet-network will more than negate the cost for the operator to lay the network.

In the battle to own the last mile, wireless is laying its own stakes. Acceptance of wireless as the de facto access medium will require network and service reliability which one takes for granted in a wire-line world. The key is to adhere to industry standards and to ultimately allow for global roaming while maintaining service quality. Wireless technology is now geared to deliver more than its initial promise. However, 3G should not be perceived as an end in itself. It's the dawn of a new era in which mobility will not be a productivity constraint but instead will be a catalyst for developing applications and provisioning of services that are not even envisioned today.

Information courtesy: 3 Com Inc

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