- Posted
- Oct 1, 2004
- | By
- Ian Grayson
3G momentum gathers speed
3G services are gaining traction after a slow start, with Hutchison being the only carrier. This is all about to change with Telstra sharing Hutchison's network and Optus and Vodafone planning to build and operate a joint national 3G radio network. Ian Grayson reports on the current status of 3G and how business users and consumers will benefit.
Made a mobile video call today? Chances are you haven't. Not even subscribers connected to Australia's first third-generation mobile network, who've had the ability for more than 12 months, seem to do it very often.
When 3G networks first emerged from the development labs, it was their capacity to offer two-way video calling that captured the attention of equipment vendors, mobile network operators and early-adopter customers around the world.
Visions were painted of millions of users conducting mobile video conferences with business associates, family members and friends. High-speed 3G networks would give subscribers communications freedom and network operators big revenue gains. But to date, reality has been somewhat different.
Australia's only 3G network, Hutchison Telecoms' 3, has attracted some 240,000 subscribers since going live in April last year, just a fraction of the 14 million-strong total mobile market.
Plagued by patchy network coverage, handset troubles and low consumer awareness, 3 has battled to lure subscribers from the more established mobile networks of Telstra, Optus and Vodafone. Industry observers have patiently waited, expecting the expensive foray to fail.
But despite the slow start - and people's evident reluctance to make video calls - network operators and telecoms equipment vendors remain bullish about the future prospects for 3G mobile services, buoyed by the higher-than-average revenues from those subscribers who have taken the plunge.
In early August, Hutchison struck a $450 million deal with Telstra under which the dominant national operator gets a 50 per cent stake in 3's radio access network. Telstra's commitment to 3G has breathed some new life into the industry and the competition it will generate is expected to grow the market for all operators.
Mobile operators are also excited by a range of new high-speed technologies that promise to push the data speeds of existing GSM and CDMA mobile networks to 3G levels and beyond. They point to the fact that 3G service take-up rates mirror those experienced when GSM networks were first established in the 1990s. GSM is now the dominant mobile platform in the country.
Hutchison's director of stakeholder relations, Steve Wright, says 3 is enjoying ARPU (average revenue per user) rates of $85, significantly higher than those of competing operators.
"The people we are appealing to are those familiar with mobile phone technology and recognise a good offer," he says. "People are also buying because of the content they can get on the service."
Wright recognises there were early problems, particularly with handsets and people's understanding of exactly what a 3G network could offer. Hutchison took the step of establishing its own retail stores to give prospective customers the opportunity to see demonstrations and touch and feel the range of handsets.
As for the low level of video calls, Wright says it is a matter of getting a critical mass of video-capable handsets into the market.
"We would have expected greater use than we have got, but there are still not enough customers to get a higher level of interactivity," he says. "It's a niche but we expect to get better results in the future. Video calling is certainly part of the reason people are buying."
Australia's other mobile carriers appeared happy to sit back and watch Hutchison as it invested millions of dollars establishing its network which now covers the central areas of Sydney, Melbourne, Brisbane, Adelaide, Perth, and the Gold Coast.
Until it announced its decision to invest in Hutchison's infrastructure, Telstra had been playing its 3G cards close to its chest. The carrier is now in a position to offer 3G services and content early next year.
In May of this year, Vodafone signed a $1 billion deal with Nokia for the supply of 3G network equipment. Vodafone chief marketing officer Ian Scherger says the company "is committed to offering 3G services in Australia by mid-2005".
Scherger says his company is keen to share its 3G infrastructure with another carrier, but is also prepared to go it alone if such an agreement cannot be forged. Industry watchers say the most likely candidate for such a sharing deal would be Optus. This proved to be on the money when Optus and Vodafone announced plans to roll out a shared 3G network. This plan will enable both carriers to enter the market much more quickly than if they built independent networks.
Telstra's managing director of wireless and mobility products, Holly Kramer, says 3G represents "an important part of our evolutionary path" for the country's dominant mobile player.
"From a services perspective, 3G is critically important," she says. "There is a whole new world of content and services being opened up for customers and all of a sudden it's becoming more viable to provide them."
Kramer says a number of factors, including network reliability, handset battery life and content, have now come together and she expects take-up rates of 3G services to climb during the next 12 months. Usage will come from both consumer and business users as the potential of high-speed mobile data links becomes better understood.
While Hutchison's 3 network has been built using WCDMA (wideband code division multiple access) standards, other technologies are emerging that promise even higher speeds as well as an upgrade path for Australia's existing national CDMA network.
Telstra has already made the investment to upgrade its CDMA network using the 1xRTT standard, delivering data speeds of around 80 Kbps. This gives the network similar capabilities to GSM networks that have been upgraded to GPRS (general packet radio service).
A further enhancement to CDMA networks, called EvDO (evolution data only), will increase data speeds to as high as 1 Mbps. Telstra is planning to begin offering services using this technology by the end of the year.
A further standard called EVDV (evo-lution data and voice) is awaiting standards ratification and is not expected to be in commercial use until late 2005. This standard changes the way voice traffic is carried over a data network.
Marketing and business development director at telecommunications equipment vendor Ericsson, Tony Malligeorgos says the technologies give carriers two paths to follow in their journey to 3G.
"There is not a lot of difference between whether you go down the CDMA/EvDO path or the GSM/WCDMA path in terms of the user experience," he says. "The technical limits of each technology vary slightly but not a lot."
Malligeorgos says theoretical peak data rates for the technologies are one thing, but a more important measure is the typical rates in real-world operating conditions.
"If you are the only person in a WCDMA cell, and you are standing one metre from a base station, you will probably get data speeds of 2 Mbps," he says. "And if you were the only person in an EvDO cell, standing one metre from the base sta-tion you might get 2.4 Mbps. But both speeds are very unrealistic."
He says typical 3G mobile speeds, regardless of the underlying technology, are more likely to be between 200 and 300 Kbps. Limiting factors include everything from the number of users in the cell to the performance of the handset and atmospheric conditions.
For carriers still grappling with in-corporating 3G speeds into their networks, another technology has emerged that has already been dubbed 3.5G. Called HSDPA (high-speed downlink packet access), it offers speeds far in excess of anything currently available.
Nortel Networks Asia-Pacific 3G product marketing manager, Antoine Rouot says HSDPA will offer peak data speeds of up to 10 Mbps with typical rates of more than 1 Mbps.
"We're not going to see this until later in 2005 or into 2006, but it will come and open up a range of new opportunities for carriers," says Rouot.
Alcatel Australia's executive general manager for mobiles, Tony Cullen agrees, saying every incremental increase in performance is welcomed by users.
"We are finding there is a real hunger for faster data speeds," says Cullen. "Before we introduced 3G, people were saying 'there will never be a need for 1 Mbps on a mobile', but when you give it to people they grab it with both hands and use it."
But rather than trying to entice users by explaining arcane technologies and transmission standards, mobile carriers have realised it is content and services that are going to make or break 3G networks.
Telstra's Kramer says her company will be positioning EvDO as 'wireless broadband' and aimed primarily at business users looking for data connectivity while away from the office. The 3G network, on the other hand, will be more a consumer offering for people looking for wireless content.
"The reason for the difference is that it is not just about the network but it is about the devices and services that go with it," she says. "EvDO is more about modems and connectivity while 3G is about handsets."
Around the world, mobile carriers are finding streaming video and music - rather than two-way video calls - are what is capturing the public's imagination and translating into bottom-line revenue.
Kramer points to i-mode, which Telstra has licensed from Japan-based NTT DoCoMo, as an example of packaged content that is likely to appeal to large numbers of subscribers. Running initially over the carrier's GPRS network, i-mode will allow access to a range of customised websites offering everything from news and weather to shopping and banking. Eventually Telstra plans to migrate the service to a 3G platform, enabling it to offer richer content and more video services.
Hutchison's Wright is also convinced content is what will drive users to 3G networks, pointing to 3's success with television show Big Brother. 3 users could view streaming video feeds from the Big Brother house and exchange video messages with housemates.
Ericsson's Malligeorgos agrees, saying technologies are nothing more than an enabling platform for services.
"There will be a range of other mobile technologies, such as WiMAX and Wi-Fi that will also form part of the mix," he says. "It's about trying to create an always-on, best-connected environment for users."
Users will have access to a range of devices capable of connecting seamlessly via GSM, WCDMA, Wi-Fi, or HSDPA, depending on what is available at a particular location.
"Our vision beyond 3G is of multiple radio access technologies, depending on market and geographic requirements," he says.
After a slow start and teething technical problems, 3G networks are firmly on the agenda for all mobile operators. As well as providing a platform for high-speed data access and content, they also offer vastly improved radio spectrum efficiencies. Such efficiencies will become important as networks become ever more crowded with traffic.
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