Like the harmony of opposites, caution and adventure characterize the journey to the wide-scale rollout of GPRS. Vendors are playing starry-eyed idealists while operators are avoiding a possible precipice on board the chief migration vehicle: handsets.
In view of their contrasting attitudes, operators’ low blood pressure urges them to simultaneously pull for GPRS and hold on to the time-tested certainties of 2G and 2.5G.
The vendors, operators and software companies are expected to be ready for the full implementation by the middle of 2001.
“Several operators have soft-launched GPRS or are piloting services with a selective corporate customer base. However, they are currently constrained from making full commercial launch,” said analyst firm Lehman Brothers in its recent report, “Wireless Equipment Update: GPRS-Challenges ahead.”
The report identifies handset availability, compatibility of equipment, end-to-end network testing process, optimization of radio network deployment and international roaming as the technical and commercial obstacles to full launch.
Lehman Brothers concludes its report with cautious optimism, expressing confidence in the ability of the vendors like Nokia Corp. and L.M. Ericsson to be in top gear by the middle of the year, while noting “that GPRS implementation would probably require more time and effort than anticipated, leading to probably some extra delays for a wide-scale launch.”
Not all in the industry see many obstacles. Scott Fox, president of Network Operations for Wireless Facilities Inc., believes that virtually all conditions are ripe for the launch, although he agrees with Lehman Brothers’ fear about handsets.
“Things are going very well on the networks side,” he observed. “Infrastructure is fine and 50 more operators will be launched in 2001.”
Referring to BT Cellnet in Britain and T-Mobile in Germany, he said GPRS is already gaining ground.
“The problem is with terminals and other devices.”
Fox, who will be stepping up as chairman of the GSM Association, does not anticipate handsets to shut down hopes, although he expects “terminal devices to slow things down a little.”
The caution Lehman Brothers expresses is also underlined by what it considers slow customer migration pace, partly because people are content with existing services and GPRS service features are limited.
Software companies are expected to provide the features, but they face the challenges of unstable software and how to standardize radio interfaces and interoperate vendor equipment for voice and data calls as well as the “always on” feature.
Of the three interfaces, only the network interface has been fully tested. The radio interface with handsets and base stations and Gi/Gp interface with IP applications servers and core network have not been ascertained.
But Fox says applications are beginning to roll out for Internet access and e-mail.
The launch will also face the problem of limited variety of handsets linked to components, software management as well as radio interface testing.
“Only two brands with limited speed are commercially available to date, Motorola and Sagem, and two other brands, Trium of Mitsubishi and Ericsson are still struggling with software compatibility in trials,” said the report.
However, the report exhales when it says that from the third quarter on, the problem should be much reduced when Nokia, Samsung and others release their GPRS models.
Providing billing systems is the other software problem the report anticipates. The difficulty may be compounded with operators adopting differing systems, which could affect international services and roaming. Lehman Brothers believes that roaming services will be launched across all GSM countries by the end of 2001.
Despite efforts by vendors and operators, the report expects 12 million subscribers to migrate to GSM in 2001 and 34 million in 2002, which is lower than it earlier anticipated.
“Overall we believe that investors’ expectations are still based on the bullish case, which is likely to put more pressure on the wireless sector,” said the report.
Fox believes the vendors are up to the task.
“Manufacturers have been pushing hard since they know that time is money,” he said, stressing this as a reason the vendors will keep up with the expected time frame for the launch.
Two different market dynamics stand in the horizon: Traditional vs. data-enabling handsets. The report expects 90 percent of handsets to be data-enabled by 2005.
Nokia, Motorola and Ericsson have demonstrated the intention to turn most of their production to data-enabling handsets by 2002. Siemens, Sagem and Alcatel also eye the same productions.
Nokia expects to dominate the market once its handsets are ready just in time for rollout by the middle of the year. Motorola’s position as No. 2, while secure, may be tormented by its denial of unrealistic guidance for 2001 issued last August. The report is cautious about Ericsson, although it is cheered by its technical expertise.
“It remains to be seen on revenue who will be a big player, but it may depend on who comes out first,” said Fox.
