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When I talk about 3G wireless I often refer to it as a colossal failure a technology looking for a problem to fix. The American telecom market
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suffers from an ongoing love affair with the technologies that underlie the functionality of the network rather than with the capabilities and applications that the technologies facilitate. In my office I have a folder of 3G ads from 1999 to 2000 that herald the service providers collective abilities to deliver 2 Mbps of bandwidth to the cell phone! Yet, nowhere in those advertising blasts does anyone talk about the applications that a 2 Mbps cell phone might be able to take advantage of. 3G deployment has been plagued with issues. In July 2002, Finlandbased Sonera abandoned its $9 billion 3G joint venture with Spain s Telef nica in Germany. At roughly the same time, Orange postponed its Sweden rollout of 3G until 2006. Similarly, Sweden s Tele2 threatened to abandon its planned deployment of 3G in Norway unless the license requirements were changed. In Spain, operators demanded a deposit refund. And why Because W-CDMA, which was mandated by the EU commission as the de facto standard for 3G systems and upon which the enormously expensive European spectrum auctions were based, did not work as advertised. It had significant hardware interoperability issues. On the other hand, CDMA2000 worked well, as evidenced by the presence of some 17 million users in Korea, Japan, and the United States. Don t lose sight of GSM, however: Its users still dominate the planet in terms of sheer numbers more than 750 million of them.
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At the time of this writing there are about 80 million homes in the United States with broadband access, a number that is expected to grow to well over 150 million by the end of 2005. According to a report from the highly influential Gartner Group, in order for 3G to succeed, 50 percent of the population must have access to 75 percent of the offered services, 5 percent of the population must have the most recent devices, and an obvious and widely lauded killer application must be evident. Reality rears its ugly head, however: Today, only about 25 percent of United States and Canadian subscribers have access to broadband, while another 20 percent simply cannot get it. This lack of broadband access cannot be allowed to continue: Studies show that widespread broadband access will add hundreds of billions of dollars to the national economy and will add three billion work hours annually numbers that tend to make regulators and legislators sit up and take notice.
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6
The Wireless Data Conundrum
As voice revenues decline through competitive commoditization, wireless carriers are looking for alternative revenue sources that they can turn to. One is wireless data. The first protocol that was announced for data transport over mobile environments was the Wireless Application Protocol (WAP). Originally developed by Phone.com for mobile Internet access, it was largely a disappointment among users. Early on in its deployment, Germany s D2 network administrators announced that customers were using it less than a minute a day. The WAP acronym was soon redefined as the wrong approach to portability because of the complexity involved in its use (one article reported that it took 32 clicks and scrolls to access a simple stock quote). Many, however, believe that WAP failed because service providers that implemented it were unwilling to share revenues with the content providers that they supposedly partnered with. Historically, given the choice of protecting their existing service margins or allowing new markets to emerge based on new models, service providers choose what they are most comfortable with protecting existing service margins. Now they are changing the way they view this because of the success of text messaging and other applications, but they still have a long way to go. For all intents and purposes WAP is dead. Wireless data faces a number of significant challenges, each of which could become a showstopper. First, most wireless data networks are designed as overlay IP networks, reflecting the ongoing evolution from circuit to packet architectures in the public network. Unfortunately, these designs don t integrate seamlessly with the preexisting PSTN. Second, spectrum limitations severely limit the number of voice channels that can be provisioned as well as the amount of bandwidth that is available for data. Low bandwidth applications such as SMS and IM serve the market adequately for the time being, but over time and not all that much time higher bandwidth applications such as multimedia messaging (including video and still images), gaming, and multiuser collaboration applications will drive the demand upward. Mobile gaming alone is expected to grow from 7.9 percent of the user base actively playing games wirelessly to 35 percent by mid-year 2008. Third, broadband users (cable and DSL) have come to expect alwayson connectivity. Because of current spectrum limitations, most wireless players will, because of cost and spectral scarcity, drop broadband con-
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