from the economist Move over 3G: here comes 4G

[Dave Farber <dave () farber net>]

> Date: Thu, 29 May 2003 23:47:12 -0400
> From: Claudio Gutiérrez <gutierrezclaudio () terra cl>
>
>
>
> THE future always comes too fast," Alvin Toffler, an eminent futurologist, 
> once said, "and in the wrong order". The state of
> wireless telecoms is a classic example. Even as "third-generation" (3G) 
> mobile networks are being switched on around the world, a
> couple of years later than planned, attention is shifting to what comes 
> next: a group of newer technologies that are, inevitably,
> being called 4G. More hubris from the technology-obsessed industry? Not 
> exactly. Some 4G networks are operating already, with more
> on the way. A technology once expected to appear around 2005 is here now.
>
> Interest in 4G owes much to the mess surrounding 3G. Operators spent 
> euro100 billion (about $100 billion) buying licences to run 3G
> networks, only to find that the technology that most had agreed to use was 
> harder to implement than expected. Even where 3G networks
> are up and running, demand for the snazzy video and multimedia services 
> they make possible is still uncertain. Expectations are
> being scaled down: 3G could end up merely as a way for mobile operators to 
> boost their capacity for voice calls in overloaded parts
> of their networks, rather than a goldmine of new revenues from multimedia 
> services. Last week, mmO2, a European operator, wrote down
> the value of its 3G investments by nearly $10 billion-although this week, 
> despite reporting a pre-tax loss of $9.6 billion
> (reflecting write-downs of goodwill related to acquisitions), Vodafone 
> chose to postpone its inevitable 3G reckoning.
>
> As 3G has stumbled, another wireless technology, called Wi-Fi, has 
> inspired a mania unseen since the great internet boom. Wi-Fi
> provides high-speed internet access to suitably equipped computers within 
> 50 metres or so of a small base-station. It is widely used
> in homes, offices and universities. Several firms offer fee-based Wi-Fi 
> access in airports, coffee-shops and other public places
> known as "hotspots". But because of the short range of Wi-Fi technology, 
> universal coverage is impractical. Although a dozen or so
> start-ups are working on ways to extend the range of Wi-Fi, it now takes 
> hundreds of Wi-Fi base-stations to cover the same area as a
> single mobile-phone base-station.
>
>
> Best of both worlds
> But what if you could combine Wi-Fi-style internet access with the blanket 
> coverage, and fewer base-stations, of a mobile network?
> The various 4G technologies developed by such firms as IPWireless, 
> Flarion, Navini, ArrayComm and Broadstorm offer just such a
> blend. There is no formal definition of 4G, but what such technologies 
> have in common, says Andy Fuertes, an analyst at Visant
> Strategies, a research firm, is that they are high-speed wireless networks 
> covering a wide area, designed above all for carrying
> data, rather than voice or a mixture of the two. They can pipe data to and 
> from mobile devices at "broadband" speed, typically 10-20
> times faster than a dial-up modem connection.
>
> Such 4G wireless-broadband systems can be seen in two ways: as a rival to 
> Wi-Fi that offers wider coverage, or as a wireless
> alternative to the cable and digital subscriber-line (DSL) technologies 
> that now provide broadband access to homes and offices.
> Mostly, the wireless operators evaluating 4G see it as the first, and 
> fixed-line telecoms operators as the second. But the
> convergence of wireless and broadband, argues Chris Gilbert of IPWireless, 
> is actually entirely new: a fast internet connection that
> follows you around. Navini calls it "nomadic broadband"; ArrayComm's term 
> is "personal broadband". Mike Gallagher of Flarion, a firm
> backed by Cisco, likens Wi-Fi to cordless phones that work within a 
> limited range of a base-station, whereas 4G is akin to mobile
> phones that work anywhere.
>
> Numerous 4G technologies are working today. The first commercial 
> deployments are in parts of America, Canada, New Zealand, South
> Korea, Germany, Italy and the Netherlands. Vendors are licensing 4G to 
> telecom-equipment makers such as Alcatel, Nortel and LG
> Electronics for high-volume production. So far none of the 4G vendors has 
> secured the endorsement of a leading "tier one" operator
> for a nationwide deployment, but many claim to be close to this goal.
>
> Regulatory and technical differences will determine which technologies are 
> likely to be adopted where. Flarion's technology is
> well-suited, for technical and regulatory reasons, to both America and 
> South Korea. In Europe, the IPwireless system may appeal
> more. When mobile operators bought their 3G licences, extra spectrum for 
> high-speed data services was often thrown in, and
> IPwireless's technology uses this spectrum. (IPWireless's technology uses 
> a protocol that technically falls within the European
> definition of 3G.) Flarion and other vendors hope that Europe's regulators 
> will relax the rules to allow their technologies to be
> used in this 3G spectrum too. In South Korea, operators have tested every 
> 4G technology; which will be adopted depends on the
> regulators, who are due to decide later this year.
>
> Advocates of 4G technology argue that, unlike with 3G and Wi-Fi, the 
> business case for 4G is sound. 3G was predicated on consumer
> demand for multimedia services that may never materialise. Nobody is sure 
> how commercial Wi-Fi hotspots will make money-the number
> of connections per day at most hotspots is still tiny-yet even so a 
> "land-grab" is under way, with dozens of operators rushing to
> build thousands of hotspots. But 4G is being priced like fixed-line 
> broadband, a service for which millions of users worldwide are
> already willing to pay about $50 a month. Emphasising speed first and 
> mobility later, 4G networks may be built initially in regions
> where cable and DSL are unavailable, to capitalise on pent-up demand for 
> broadband, then expanded later to provide blanket coverage
> for mobile users.
> 4G could thus prove a very disruptive technology indeed. Fixed-line and 
> cable operators will face a new competitor in the broadband
> market. Wi-Fi hotspots will seem hopelessly limited. Mobile operators will 
> find that there is yet another hole in their 3G business
> plans. Unless, that is, they decide to embrace 4G as the technology that 
> 3G should have been all along.
>
> Some operators may be leaning in this direction. In America, Nextel, a 
> mobile-phone operator, is said to be considering skipping 3G
> altogether in favour of Flarion's 4G system. In Europe, some operators may 
> scale back 3G plans and adopt IPWireless's technology. As
> their 3G licences entitle them to do this, they may not be as worthless as 
> they now seem. Mobile operators already own the key sites
> for base-stations, unlike fixed operators or new entrants, so they are 
> well-placed to build 4G networks fast. They are already
> attacking the fixed-line voice market. 4G would let them attack the 
> broadband market too-and neutralise the Wi-Fi threat.
>
> It is not clear how investors would judge an operator that decided to 
> favour 4G over 3G. So far, operators have kept quiet about
> their 4G plans, to avoid confusing the marketplace. Yet when Telefonica, a 
> Spanish operator, abandoned some of its 3G investments
> last year, its share price went up, notes Mr Fuertes. For phone network 
> operators willing to give it a try, skipping a wireless
> generation might not be such a bad idea.
>
> http://www.economist.com/business/displaystory.cfm?story_id=1816742


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