Third generation (3G) telecommunications services hold tremendous revenue and growth potential. 3G continues, however, to be dogged by implementation delays, standardization issues, and high rollout costs. The near-term future of 3G was the topic of one of several Technology Road Mapping in Action sessions that were part of CITO's Knowledge Network Conference, held last fall in Ottawa.

3G is an International Telecommunications Union (ITU) specification for the third generation of mobile communications technology. Analog cellular was the first generation (1G) and digital PCS was the second (2G). 2G offers digital voice service, one-way data transmission and enhanced calling features, but lacks an always-on data connection. 3G features include increased bandwidth, superior voice quality, high-speed mobile access, broadband data services such as video and multimedia, and enhanced roaming capability.

The 2.5G Solution
Robert Crow, director of University and Government Affairs for Research in Motion (RIM), believes 3G will come about "if operators open their eyes and use its business remedies as weapons. Big money has been put on the table for the privilege of allowing 3G."

Standardization continues to be delayed by "definitional issues" and problems with field trials. 3G service trials in Singapore, Australia, Korea and the UK have been pushed back until 2002, and commercialization of 3G services is not expected until 2003. There is increasing consensus, Crow says, that limited 3G rollout will occur in 2003 and that further rollout is expected in 2004.

Other issues affecting 3G service include the availability of portable software, equipment costs, the integration of 2.5G and wireless LAN technology, as well as the competition from these two technologies.

Initially, 2.5G technology was seen as a small step toward 3G, but it is increasingly considered a technology in its own right. 2.5G will provide additional network capacity and always-on, high-speed wireless access. Crow notes that it "offers operators the opportunity to capture revenue by offering '3G-lite' services". The acceptance of 2.5G, however, could jeopardize financing for a 3G rollout. The big winners could be the carriers and users of 2.5G services.

The Legacy Challenge
According to David Crowe, editor of Cellular Networking Perspectives, 2G standards will be around for much longer than expected. Why would carriers want to get rid of networks that work so well? He acknowledges, however, that 2G technology is "constrained by protocol parochialism".

Telecommunications networks are difficult to upgrade because components must remain compatible across networks. "What you designed for the network in 1984 will probably still be part of the network in 2004," Crowe explains.

While wireless and the Internet technologies are converging, they are also in conflict: a telecommunications network almost never fails, while the Internet goes down often. Crowe adds that "this is a big change in philosophy; you can't shut the network down."

The 2.5G network is considerably more complex than 2G and its requirements must also be supported in 3G. 3G features include high-speed data that "you can access in a train or in a moving car." Crowe wonders, however, whether the importance of data is overstated: "do people really want to give up voice?" The issue is the bandwidth that is taken up by data transmission compared to voice, and whether telecommunication companies' pricing structures should change to reflect utilization rates. "You are talking about 400 to 500 times the resource utilization by one data user." One of the benefits of an always-on IP-based network is that users can be charged only for the data packets that they send and receive.

Session moderator Louis Bergeron of Bell Mobility adds that his company will probably introduce packet pricing for its data users. Robert Crow notes that RIM is moving away from a connection circuit to a packet-oriented approach.

Is Data Compression a Solution?
Surfing the Internet using a mobile wireless device is a painfully slow experience. Today's users are not enjoying "a rich Web browsing experience," says Ron Newmann, president of 3C Infotech, He suggests that compression technology be applied to Web content, allowing it to move in a wireless context.

Compressed data travels much faster and at a lower bandwidth. Resources are optimised because more users can share the same environment. Newmann notes that compression technology makes wireless Web browsing possible with today's pre-3G infrastructure.

3C Infotech's technology ensures that the quality of an image is maintained even after compression and decompression. For Web pages, compression ranges of 15:1 to 20:1 have been achieved. On corporate intranets, Newmann says, compression rates can be even higher.

3C Infotech's compression technology can be applied to handheld devices by embedding a small piece of software in the device. This is similar in concept to Adobe Acrobat, which requires users to download specific software in order to view a .pdf file. 3C Infotech sees its potential customers as either the owners of the content (i.e. the technology is put on their servers) or resellers that offer it as a value-added feature of their service package.

The Need To Succeed
As Robert Crow noted, wireless carriers have spent huge sums to secure the rights to offer 3G service to their customers - more the $100 billion in 2000 in Europe alone, according to research firm Gartner. Given this vast outlay, carriers have a lot of motivation to experiment and find the 3G-based applications that will attract an audience and generate a return on their investment.

If the initial efforts by Japan's NTT DoCoMo prove to be a harbinger of what lies ahead, carriers may be in for an uphill battle. The company's initial efforts to rollout its 3G network in May 2001 were so trouble-prone that the introduction was rescheduled for the fall. Given DoCoMo's history of success in finding vast audiences for a host of services, including games and instant messaging, it projected it could attract 150,000 subscribers for its 3G service by March 2002. But the company currently has less than 50,000 subscribers. Still, DoCoMo is hopeful that by 2003 it will have found the applications it needs to attract 1.5 million subscribers.

Ultimately, the fate of 3G will rest on finding those killer applications that cannot be delivered by 2.5G networks or by using older, cheaper networks in conjunction with other technologies such as data compression. With billions of dollars invested in spectrum licenses already, and more money required to actually build 3G networks, the industry collectively has a lot on the line.