A growing number of operators, vendors and analysts are not convinced EDGE technology will make significant inroads in Europe.
“In Europe, I’m not expecting a major deployment of EDGE,” said Lothar Pauly, head of Siemens AG’s global wireless business.
EDGE, or Enhanced Data rates for GSM Evolution, was designed as a migration path option for European Global System for Mobile communications operators migrating to third-generation wideband Code Division Multiple Access technology. Ideally, standards makers believed GSM operators would migrate to General Packet Radio Service, a technology designed to offer always-on data connectivity at speeds up to 150 kilobits per second, then to higher-speed EDGE technology and eventually to W-CDMA technology. But EDGE technology may not make many deployment debuts in Europe.
GPRS technology will make a late start in Europe, probably not heavily penetrating the market until mid-2002, say analysts. At the same time, European incumbent operators are positioning themselves to buy some high-priced 3G spectrum and will pump in the dollars to develop W-CDMA technology.
“EDGE is an orphan technology,” said Jane Zweig, vice president of Herschel Shosteck Associates Ltd. “It’s not required to get to 3G or anywhere else … If someone has to do 3G and EDGE is not required, why would an operator spend money that way?”
EDGE technology today is being positioned as an option for incumbent operators that don’t secure a 3G license. But in reality, said Zweig, most incumbent operators will receive new 3G spectrum.
“It’s more or less a crystal ball today,” said Siemens’ Pauly. “When the phase-in of 3G and the phase-out of GPRS happens, it’s difficult to predict because it depends very much on the embedded base of GPRS phones and the deployment of 3G phones compatible to GPRS and GSM.”
“I don’t think EDGE will be deployed here,” said Marten Vading, associate director of research with Warburg Dillon Read in Stockholm, Sweden. “There might be a version of GPRS that will support higher speeds for the next generation, but I don’t know if they will call it EDGE … It’s pretty unclear how EDGE will evolve.”
Forrester Research, in a recent 3G study, predicts operators will deploy EDGE technology only in the countryside, if anywhere.
“Uncertain network upgrade costs, limited handset availability and close proximity to UMTS will confine EDGE to niche status,” said the report. “Operators will deploy it only as a cheap alternative to building out UMTS base stations in rural areas, or as a way for operators lacking UMTS licenses to compete with higher-speed rivals.”
The U.S. Time Division Multiple Access community, whose 3G strategy is migrating to EDGE technology to gain commonality with the GSM community, isn’t worried.
“If you really look at what’s going on in standards activity around EDGE, there’s a lot of interest from carriers and vendors,” said Greg Williams, vice president of wireless systems with SBC Technology Resources Inc. “Right now, everyone is focused on W-CDMA and UTRA spectrum. If I’m busy making the case of why I need more spectrum, new spectrum and/or free spectrum, I wouldn’t want to spend a lot of time determining how I can set up EDGE on my network … Until the auctions are over and all the winners identified, we won’t truly know what everyone is going to do.”
Niels Andersen, chairman of the 3G Partnership Project, the group handling 3G specifications for the European Telecommunications Standards Institute, said he can find another reason operators may want to deploy EDGE technology. There is a real threat that European regulators may refarm existing second-generation spectrum if operators don’t develop advanced services in that spectrum fast enough. Regulators in some Nordic countries have already removed analog Nordic Mobile Telephone licenses to replace them with GSM services.
“An operator might be under pressure for refarming 2G spectrum in return for 3G services later,” said Andersen. “If they deploy EDGE, they can do a larger percentage of what they can do with 3G, except perhaps on peak data rates. It will be more difficult for a regulator to say they have to give back frequencies … At the end of the day, one of the key assets for operators is spectrum.”
Analysts and vendors say U.S. TDMA operators run the risk of lacking the economies of scale they are looking for if Europe does not widely deploy EDGE technology. Today, not many handset makers support TDMA technology.
“It’s a real political can of worms for all of these carriers,” said Zweig. “What happens to the TDMA operators really banking on interoperability moving forward to EDGE? There will be no economies of scale, no manufacturers supporting it. It will be the situation TDMA operators have today with very few manufacturers supporting it.”
Manufacturers today plan to build terminals with EDGE and GPRS support along with terminals that have all European frequencies, says the U.S. TDMA community. By the time EDGE technology and other high-speed technologies are deployed, they expect multiband, multimode phones to gain volumes and bring down costs.
Most vendors attacking the GSM market plan to make base stations that can handle GSM voice, GPRS and EDGE technologies in the same radio. While Siemens doesn’t see widespread deployment of EDGE technology in Europe, Pauly said the company still is committed to EDGE. It will develop EDGE base stations and focus on two markets: the U.S. TDMA market and the European market for those deciding not to compete for 3G licenses.
WDR’s Vading believes EDGE technology in the United States will be a way for European vendors like Nokia and Ericsson to grab a larger share of the U.S. market.
Still, TDMA supporters say the economies of scale will be there regardless of whether EDGE technology deployment is widespread in Europe or not. Both GPRS and EDGE technologies use the same core network.
“I believe the economies of scale will be there because GSM is going to continue to grow, and the backbone for GPRS and EDGE will be the same, which also allows all the network hardware to be the same,” said SBC’s Williams. “So, the only difference between GPRS and EDGE is the radio modulation scheme will be different, and the speed gain provided by EDGE will be worth it.”
British Telecommunications plc and TDMA operator AT&T Wireless Services Inc. plan to offer international wireless services and have begun interoperability testing between GSM and TDMA technologies. BT said it will predominately use W-CDMA technology throughout Europe, but anticipates both EDGE and W-CDMA services to work on the same platform.
