The path to third-generation services for many wireless operators appears to be anything but smooth. While Asian carriers seem to be taking the high-speed approach, European carriers recently have seen their paths clogged by uncertainty. For U.S. carriers, 3G plans are being dictated by their legacy network technology. Those carriers using CDMA and GSM technologies appear to have a clear path to their next-generation destination, while carriers using other technologies have had to find alternate routes.
“The way things are rolling out, [carriers] want to make sure they have the customers to support services,” said Larry Swasey, senior vice president of communications research at Allied Business Intelligence Inc. “Most carriers will do piecemeal applications until they are sure the customers are there, which is what they should do.”
Of the six nationwide wireless operators, three-AT&T Wireless Services Inc., Cingular Wireless and Nextel Communications Inc.-have implemented overlay changes to their networks to rollout 3G services.
AT&T Wireless updated its 3G strategy last year when it announced it would overlay its current TDMA network with a GSM/GPRS network. The overlay would allow AT&T Wireless to implement a stepped approach to full 3G services.
The steps begin with keeping its current analog and TDMA networks for voice traffic, with GSM/GPRS initially being used to handle data at speeds up to 62.4 kilobits per second. Even as AT&T Wireless rolls out its GSM/GPRS network later this year, the company said it will continue to fully support its analog and TDMA networks.
“You can’t leave your current customers by the wayside,” said Ritch Blasi, spokesman for AT&T Wireless. “We have more than 15 million customers currently using these services. Those are important customers to us.”
If consumer acceptance for high-speed networks meets projections, AT&T Wireless said it will then roll out EDGE services on its GSM/GPRS network on its way to UMTS services, also known as wideband CDMA. While many in the industry are still skeptical of EDGE’s potential, AT&T Wireless remains confident.
“We are still comfortable with it,” said Tom Trinneer, vice president of portal development for AT&T Wireless. “If consumers find they don’t need the additional speed of EDGE, we still have GPRS to fall back on.”
Besides the challenge of finding customers wanting EDGE services, which have potential data rates as high as 384 Kbps, some analysts don’t expect EDGE to make it out of testing. Andy Seybold, of the Andrew Seybold Group, recently proclaimed, “EDGE is dead.”
“EDGE is not looking good,” Swasey concurred. “It might just fall off the face of the earth.”
AT&T Wireless noted that even if EDGE is not feasible, the company is still interested in migrating to an UMTS network, with data rates as high as 2 megabits per second. Trinneer said AT&T Wireless currently has enough spectrum in its top 100 markets to deploy 3G services in the 850 MHz if it chooses, a claim backed by some analysts.
While AT&T Wireless’ ability to pull off a network involving potentially five different technologies has been questioned, Trinneer noted AT&T Wireless has a lot of experience operating multiple networks and has a very stable platform from which to work.
Cingular Wireless is expected to follow a similar path to AT&T Wireless in overlaying its network with GSM/GPRS. While the company has not officially announced overlay plans, there have been plenty of hints that an announcement to that effect will happen soon. In addition, roughly 15 percent of Cingular Wireless’ current network is GSM, with the rest using TDMA technology.
“We are expecting to roll out GPRS services on our GSM networks in the West,” said Dave Williams, vice president of strategic planning for Cingular Wireless. “We are expecting to make an announcement concerning our entire network soon.”
Williams said Cingular likely would make the transition from GPRS to EDGE and then W-CDMA if spectrum becomes available. The Federal Communications Commission is expected to auction off 3G spectrum sometime next year.
Williams also said Cingular’s plans to include EDGE were bolstered after the recent 3GSM World Congress in France, where some operators were confident of EDGE’s potential.
“EDGE is so spectrally efficient and easy to roll out,” Williams said. “It just makes sense.”
Whether EDGE makes it or not, Williams cautioned Cingular would not start rolling out next-generation services until it was sure customers needed them, noting, “you don’t want to use a sledgehammer to crack a walnut.”
UBS Warburg L.L.C. noted the only trick for Cingular to implement a GSM network is its limited spectrum in the 1.9 GHz band. This limitation could force Cingular Wireless to construct its GSM overlay in the 850 MHz band, which would be an industry first. Today no GSM network providers manufacture equipment at this band.
The operator with the most circuitous path toward third-generation services is Nextel, which recently announced plans to overlay its iDEN network with a cdma2000 1X network. While the move made sense from a spectrum standpoint, many thought Nextel would go with a GSM overlay since its current iDEN technology is roughly based on TDMA.
`The move shows they want to be a data player,” Swasey said. “They have always been aggressive with their offerings.”
With only 18 megahertz of spectrum in most of its markets, cdma2000’s need for only 1.25 megahertz of spectrum made sense for Nextel since it is seen as having voice-capacity problems on its networks now.
“While Nextel believes its average national spectrum position of approximately 18 megahertz is adequate for the current business plan, Nextel’s competitive position would be greatly strengthened if it acquired additional spectrum, especially for the use of 3G services,” said Chicago-based ratings company Fitch in a recent report.
The move to cdma2000 would also lift Nextel out from under its current problem of having to rely on Motorola Inc. to provide handsets. Motorola only offers a few handset models compatible with Nextel’s iDEN network. Most handset vendors are expected to manufacturer cdma2000-compatible handsets.
The remaining three nationwide carriers-Verizon Wireless, Sprint PCS and VoiceStream-are expected to follow well established routes toward 3G services along the lines of their current technology offerings.
CDMA operators Verizon Wireless and Sprint PCS are on track to implement cdma2000 1X services later this year on some of their networks, with nationwide rollout expected by next year. With data rates up to 153 kbps, analysts feel most subscribers will have all the high-speed access they need with these offerings.
The switch to cdma2000 1X service should be easily accomplished through a software change, instead of any network changes. Sprint has said it expects the switch to cost approximately $800 million for its entire network, a task helped by the carrier’s network concentrated in the 1.9 GHz PCS spectrum band.
“With 30 megahertz of spectrum in most of its markets, we believe Sprint PCS has ample spectrum for both its existing business and for the rollout of 2.5G infrastructure,” said Peter Friedland, wireless analysts with W.R. Hambrecht +Co., in a report.
Verizon is expected to follow a similar path to Sprint, though it might have additional costs due to its network being spread out over multiple bandwidths.
Another side benefit to cdma2000 1X is its ability to deliver up to twice as many voice channels along with its higher data rates. In addition to providing higher-speed networks, Sprint PCS and Verizon will find themselves with additional voice channels to handle network growth.
If customer uptake of cdma2000 1X is strong, both CDMA carriers are
expected to begin integrating cdma2000 1XEV technology, with data rates as high as 2 Mbps, by the end of 2002.
VoiceStream Wireless, which is the only exclusive GSM c
arrier of the nationwide operators, is expected to follow the European path to 3G services. The company has said it will launch GPRS services nationwide during the second quarter of this year, though many question whether handsets will be available to meet the timeline.
VoiceStream has not mentioned plans beyond GPRS, but with its pending merger with Germany’s Deutsche Telekom, the company is expected to follow DT’s path to a W-CDMA network.
While faster networks will allow carriers to introduce more robust data services onto their networks, ABI’s Swasey cautioned carriers to not overlook the fact that voice is still the killer application driving wireless growth.
