GPRS: Slow & Steady Wins the Race
By Joachim Bamrud, Wed May 29 00:00:00 GMT 2002

Slow GPRS adoption rates are cause for concern, but there's a silver lining to all of this.

General Packet Radio Service is neither a success nor flop. The number of networks is growing at a fast speed, although handsets are trailing. This year should see the first real GPRS uptake.

There are already plenty of critics who charge that GPRS is just another WAP fiasco, referring to the Wireless Application Protocol that was launched with much hype in 1999 only to face widespread criticism by consumers and industry people alike.

Like WAP before it, GPRS has been suffering from delays in both networks and handsets as well as a deficit in GPRS-enabled content.

"GPRS is quite a way behind schedule in Western Europe," says Neil Mawston, a wireless analyst at Strategy Analytics. "The shortage of GPRS devices has been the ultimate bottleneck."

Added to those problems, comes the fact that there is still no major GPRS content that has caught the attention of consumers.

Rumors of its Death are Greatly Exaggerated

However, news about the GPRS technology's death might be premature. Despite the network and handset delays, there has been a dramatic increase in both the past six months alone. And most analysts believe that combination will lead to the first serious GPRS usage late this year and early next year.

Some analysts also see the recent European launch of i-mode, the hugely popular mobile Internet service in Japan - as a factor that will focus more on content and applications that will help drive demand for GPRS.

"The question is not whether i-mode is going to make it, but whether it will push the rest of the European content providers to do something," says Ray Jodoin, principal analyst for wireless technology & infrastructure at U.S-based In-Stat Group/MDR.

There are currently 108 operators worldwide that have launched GPRS networks, while another 15 are testing their networks and 33 are still constructing theirs, according to informal data from the GSM Association.

That's a 40 percent increase in GPRS networks from six months earlier and 93.5 percent more than a year earlier, according to calculations by TheFeature. Operators that have launched GPRS networks the past six months include Orange (UK operation), Airtel (Spain) and Rogers AT&T Wireless (Canada).

Of the GPRS networks that are live, 70.4 percent are in Europe and 18.5 percent in Asia, according to an analysis by TheFeature based on the data from the GSM Association. The ones that are in the process of being tested or implemented are roughly divided between the two areas.

In terms of devices, there are currently 51 GPRS-capable models, with another 35 on their way, according to the GSM Association. Among the most recent GPRS-models to reach the market are Ericsson's T65, Nokia's 6310 and the Motorola V70. Upcoming phones include the Siemens M50, which also comes with Java.

All in all, there were 9.6 million GPRS phones shipped to market in Western Europe last year, according to Strategy Analytics. A separate report says around 3.3 million GPRS devices were actually sold and that only 31 percent of the market - around 1 million people - was using the GPRS services.

Carphone Warehouse - one of Europe's leading phone retailers - typically only signs up around 200 GPRS customers a month in the UK, company chief executive Charles Dunstone told the Financial Times recently. Many more buy GPRS handsets, but without activating the GPRS subscription, he said.

Room to Grow

Strategy believes this year will see a significant uptake, forecasting that the number of GPRS handsets shipped in Western Europe will reach 35.4 million. "We think GPRS will begin taking off in Western Europe in the second half of 2002 and first half of 2003," Mawston says.

One major obstacle for the uptake of GPRS handsets, however, has been the lack of color screens. "The lack of color-display GPRS phone has been a notable constraint on the take-up of GPRS services, " says Mawston. "Monochrome GPRS handsets offer little tangible reason for consumers to upgrade from WAP."

And the delay in getting handsets to the market has also made matters worse. For example, Ericsson's T68 ironically enough suffered from its own success. After receiving rave reviews and good press, initial demand significantly outstripped supply, leading to consumer complaints.

The lack of any popular content has also been a factor behind the slow uptake, analysts say. "To date we have seen no evidence of any compelling content specifically oriented to GPRS," says Gartner analyst Ben Wood.

Philip Taylor, a senior analyst with The Yankee Group, agrees. "We have yet to see any services or applications designed to make use of the increased transmission speeds offered by GPRS," he says.

To be sure, there is some content that takes advantage of the higher data transfer speeds and always-on connection of GPRS. These include a Norwegian chess site that allows users to play matches with a virtual opponent. Such a game could only work on GPRS since a user only pays whenever he or she makes a move. There have also been some offers of real-time access to stock information that can take advantage of the always-on connection. But these content launches have not seen widespread demand, partly due to their owners' limited resources to market them.

The reason behind the lack of compelling content is less technical than commercial. Like WAP over GSM before it, operators in Europe have been unwilling to offer revenue-sharing models that are attractive enough, content developers say. Unlike NTT DoCoMo, the Japanese operator that manages i-mode, operators in Europe typically keep most of the revenues from content on WAP and GPRS.

"Content providers can't make money because operators won't share sufficient revenues with them," says Taylor.

Technology vs. Services

Jodoin also believes operators need to take the blame for being too focused on the technology at the expense of content. "The Japanese are buying i-mode not because of [technology or] revenue sharing, but because the content is something they are willing to pay for," he says.

Current GPRS services that have seen most demand so far include adult content and entertainment (including games), says Taylor. The faster data transfer speeds make it easier and more appealing to download images ranging from Playboy bunnies to Disney characters. "MMS and mobile entertainment applications hold much promise," says Wood.

Another example: the decision by Hutchison, the Hong Kong-based international operator, to pay significant sums for the rights to broadcast Italian premier league football (soccer) over streaming media through GPRS and UMTS, says Taylor.

In the corporate area, many believe wireless e-mail will be a key factor behind GPRS demand. "E-mail will be the killer application [on GPRS]," says John Strand, president of Strand Consult. However, both Strand and Wood believe e-mail traffic will initially be slow.

Working out the Bugs

While the migration to GPRS is seen as a relatively easy and inexpensive process compared to 3G, the rollout of GPRS networks hasn't been without problems. Wood says reliability problems with networks and terminals are among the key barriers against GPRS' success.

One recent example occurred on the network of Norway's Telenor Mobil, which in February 2001 became one of the first operators to launch GPRS in the world. On April 12 this year, between 3,000 and 5,000 GPRS phones connected to the operator's network suffered from a blackout.

The operator is still investigating the cause, but believes a software bug, according to Norwegian IT web site ITavisen, likely caused it. Most of the affected phones were Nokia 6310s, although also Ericsson T68s and Nokia 8310s were affected. In the end, resetting the whole network solved the problem.

Another technical challenge, analysts say, is implementing widespread GPRS roaming. "With a customer base dominated by corporate customers and business travelers, the ability to offer GPRS services in many different locations will be vital, and establishing roaming agreements is therefore a high priority," said a report from Analysis.

While GSM roaming is near-universal, only a fraction of operators have signed GPRS roaming agreements and much less implemented them. The main exception is UK-based Vodafone, the world's largest international operator, which announced in March that it could offer GPRS roaming in 12 European countries.

At stake is not only the success of GPRS itself, but also that of 3G services, analysts and industry experts say. GPRS is seen as a way for operators and equipment producers to test out many of the applications and technology solutions that will be key in 3G, such as imaging and streaming media.

"GPRS is ...helping to smooth the path for 3G, by allowing operators to address issues associated with providing advanced mobile data services to prepaid customers and international travelers now, " Analysys says in its recent report. "With delays expected in the arrival of third-generation (3G) mobile services, Analysys predicts a wide window of opportunity for GPRS as an interim technology."

Strategy forecasts that worldwide shipments of GPRS terminals will grow from 54 million this year to 190 million next year, of which about half will be in Western Europe. Analysys predicts that Europe alone will have 40 million GPRS subscribers by the end of next year if operators focus more on the content than the technology.

Jodoin predicts that GPRS will see a "robust market" within the next 18-24 months.

"GPRS can become 'The SMS Story, II' if the operators want," predicts Strand, referring the huge success of Short Messaging Services.

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.