3G: US Chooses Various Paths and Solutions
By Joachim Bamrud, Tue Apr 24 00:00:00 GMT 2001

History repeats itself: Operators in the United States are choosing various paths for both 2.5G and 3G - in many cases even defining 3G differently than their European counterparts.

As Europe focuses on implementing third generation technologies, including the high cost of building infrastructure and delays of handsets in mass volume, several leading operators in the United States are going full speed ahead with plans to deploy what they call 3G technology at a fraction of the cost.

One operator, Sprint PCS, is even set to launch the first phase of its 3G service by late this year, thus beating all major European operators and rivals in the United States.

While European carriers and Japan’s top carrier NTT DoCoMo are choosing a 3G technology based on Wideband Code Division Multiple Access (W-CDMA), Sprint PCS is opting for CDMA2000. It plans to launch the technology in four phases, starting this year with a technology called 1xRTT, which provides packet-switched data transfer speeds of 144 kbps. It does not provide for streaming audio and video, which will come in later phases, along with higher speeds.

Thus, the first phase of Sprint’s 3G service will be more similar to the 2.5G technology being implemented in Europe – General Packet Radio Service (GPRS), which provides packet-switched data transfer at speeds up to 114 kbps.

By early 2003, Sprint plans to launch the second phase, which will offer data transfer speeds up to 307 kbps. Then in late 2003, it will offer speeds up to 2.4 megabits per second using a technology called 1xEV-Data Only (DO), which in early 2004 will be replaced by 1xEV-Data and Voice (DV), which can provide data transfer speeds of 3 mbps to 5 mbps.

As a result, Sprint will offer speeds similar to W-CDMA’s 2 mbps in late 2003, in line with most European carriers.

Confused yet?

Although confusing compared to the widely held definitions in Europe, Sprint is not alone in defining its initial services as 3G rather than 2.5G. The International Telecommunications Union accepts CDMA2000 1x as a 3G technology, and it has already become commonplace to do so in the United States.

“The definition of 3G has kind of become difficult in the current environment because it depends on whether you define based on technology speed or services offered. The [US] operators and vendors are calling it 3G,” says Philip Marshall, senior analyst with the market researcher Yankee Group.

Unlike Europe, regulatory authorities in the United States are not holding specific auctions for 3G. Carriers have to bid for licenses of spectrum, but can then use that spectrum for any technology they want. In January, a one-year bidding process for 1900 MHz PCS-licenses in various parts of the United States concluded with operators having paid a total of $16.8 billion. The carriers plan to use the spectrum for a combination of purposes, including expanding existing mobile telephony services and deploying future 3G technologies.

In addition to Sprint, leading operators such as Verizon Wireless and Alltel are opting for CDMA2000 for next generation technology, while Maxtel is considering doing so.

The fact that Verizon Wireless is doing so has caused some surprise since it’s partly owned by Vodafone, the UK operator that is aggressively pushing for W-CDMA at its global subsidiaries.

By implementing two different standards, Vodafone and Verizon customers will be unable to roam in each other’s markets unless the two technologies become standardized. The two deny there is a problem and say Verizon’s “long-term migration path to 3G technology gives the company the flexibility to deploy different ultimate standards.”

However, several leading US operators are choosing W-CDMA instead. That includes AT&T Wireless and Voicestream, while Cingular will offer EDGE, which may be upgraded later to WCDMA.

AT&T, which has large international operations, chose W-CDMA and its precursor GSM-GPRS partly due to its dominance worldwide.

“You’re talking about scope. The majority of the world is using GSM-GPRS and 75-80 percent of the carriers are going to UMTS,” says AT&T Wireless spokesman Ritch Blasi, referring to Universal Mobile Telecommunications Standard, the common European name for 3G and W-CDMA.

AT&T Wireless, which boasts 14 million subscribers, plans to deploy 3G in 2003. The first GPRS service is being launched this year, with full rollout by the end of next year, according to Blasi.

Cingular Wireless, a joint venture between BellSouth and SBC Communications, refers to EDGE as a 3G technology, but sees it as a first step towards possible migration to WCDMA.

“We would view migrating [to W-CDMA] when the market demand is there and the spectrum. EDGE is a good interim standard,” says Kris Rinne, vice president of technology and product realization at Cingular, which boasts 20 million customers.

Most of the equipment deployed for EDGE can be upgraded to WCDMA, she says. Implementation will start later this year and go on through next year and 2003.

In the interim, the operator is launching GPRS, starting in three US states in the third quarter this year and then rolling out to its other GSM markets later in the year.

The fact that US operators are choosing different technologies is expected to compound the current problems of insufficient inter-operability of different mobile telephony standards in the United States and reduce potential demand for the new services, some analysts and industry officials say.

However, pressure from operators like Verizon and Vodafone eager to solve their inter-operability problem as well as consumers may spur the creation of harmonization between the two rival technologies.

“Even though UMTS W-CDMA and CDMA2000 are not harmonized, we fully believe that there will be harmonization. Customers [don’t] want to … worry whether it’s a GSM or CDMA system and get frustrated going to Europe or different parts of the US. When [harmonization will be ready] we don’t know [but] it will come,” says Rod Kelly, public relations manager for Motorola global telecoms solutions sector.

The introduction of 2.5G and 3G technologies comes after the United States already has managed to create a confusing map of telecommunications technologies.

While Europe only uses one wireless telecommunications standard (GSM), the United States uses several, of which two - CDMA and Time Division Multiple Access (TDMA) - dominate.

However, US carriers also use Global Systems for Mobile communications (GSM), Enhanced Specialized Mobile Radio (ESMR), Integrated Digital Enhanced Network (iDEN) and other digital standards, creating problems for inter-connection between different operators and reduced economies of scale for equipment purchases.

Many operators use more than one standard, although generally not in the same geographical area.

To top it off, analog communications are still being used, albeit in declining numbers. There are no updated figures, but the Cellular Telecommunications Industry Association (CTIA) reports that analog accounted for 40.6 percent of the 89 million wireless subscriptions in the United States in June last year. Since then, the number of wireless subscribers has grown to 113 million. “We expect that the majority of phones sold during that time were digital or dual band,” says CTIA spokesman Travis Larsen.

The breakdown

CDMA is the market leader, with 30.5 million subscribers, followed by TDMA with 28 million subscribers, as of December 2000. ESMR boasted seven million subscribers and GSM five million, according to data from The Yankee Group.

The decision by AT&T Wireless to start offering GSM and GPRS service was widely seen as a major boost to the technology and will likely help GSM win a higher proportion of the digital market.

There are about 4.1 million wireless Web users in the United States, according to industry publication Wireless Week. That compares with 7 million in Europe and more than 40 million in Asia, according to US market researcher eTForecasts and our own research.

By next year there should be some 18 million users and by 2005 the figure should grow to 83 million users, according to estimates from eTForecasts.

While the wireless industry is predicting that there will be more wireless Internet users than fixed Internet users worldwide within the next couple of years, eTForecasts predicts that the United States will be the exception. By 2005, there will be 131 million fixed Internet users, 57.8 percent more than wireless Internet users, eTForecasts says.

Those results are caused by several factors, including the fact that fixed Internet is cheaper than in Europe and that mobile telephony, with 39 percent penetration rate, is still not as pervasive as in Europe, where many nations boast 70 percent penetration rates.

And, until harmonization technology is in place, the wireless Internet market in the United States will face the challenges of rivaling and inter-operable technologies creating problems.

“The wireless uptake in the US market [including] coverage is more difficult to achieve. Wireless [telecommunications] would probably be more pervasive if the different technologies could talk to each other. All that does make wireless a little more inhibitive,” says Knox Berkin, a senior analyst with the Yankee Group.

Joachim Bamrud is an award-winning journalist with 17 years experience as a writer and editor in the United States, Europe and Latin America. Bamrud has worked for various print, broadcast and online media, including Latin Trade, Reuters and UPI. He can be reached at jbamrud@hotmail.com.