3g and more 3g

3g Cellular Market Opportunities looks at the proposals for a 3g cellular standard, discusses which are likely to succeed and how the technology wars are likely to affect companies that participate in the market. It includes regional infrastructure and terminal forecasts for Japan, Europe, and North America. The important information about the proposed standards is discussed in terms that the non-engineer can understand. The study also discusses the advantages and disadvantages of each proposed standard.

This study is a must for anyone who needs to get up to speed on the emerging 3g technology. Commercial 3g service is scheduled to begin in less than two years and will offer wireless voice, data, video, and Internet services of much greater quality than most wired connections do today. Those who wish to profit from this technology must begin to understand it now, or they will be left behind.

Which will win: W-CDMA or cdma2000? Which companies will benefit if both standards are deployed? Which will lose. Why is there such a conflict between the American and European ways of doing business?

3g Cellular Market Opportunities is the result of extensive face-to-face consultations with executives of companies in the cellular market, telephone interviews, and electronic research. To this body of information, Micrologic Research brings its analysis, interpretation, and forecasting skills developed during years of reporting on the wireless market.

Major Topics Covered:

1. Synopsis of 3g Cellular Market Opportunities

Micrologic Research’s study 3g Cellular, Market Opportunities analyses the rollout of third-generation (3g) cellular services and forecasts the market for 3g infrastructure and terminals in Japan, Europe, and North America through the year 2005. This brief synopsis has compiled to enable the prospective buyer to evaluate the quality of the study’s writing and information. 3g Cellular, Market Opportunities carries a money-back guarantee. If after purchasing the study you are dissatisfied with it for any reason, you may return it within 30 days for a full refund.

Analog cellular systems such as AMPS and TACS are considered first-generation (1G) technologies. Second generation (2G) is the tern used for today’s digital cellular systems including GSM, cdmaOne, IS-136, and Japan’s Personal Digital Cellular (PDC). 2G systems were designed for voice, although they now also transport a limited amount of low-speed data communication. Third-generation (3g) cellular systems will begin to appear in the next decade and will communicate voice, video, and data at speeds of up two megabits per second. The first commercial 3g cellular system is scheduled to begin service in March 2001 in Japan.

3g cellular telephone technologies will be needed to meet the future demand for high-speed wireless data services such as Internet browsing, database access, multimedia services, and real-time video. Even without the introduction of new high-bandwidth wireless services, today’s second-generation digital cellular telephone systems would be replaced in the next decade to take advantage of advances in technology, to improve capacity, and to expand service. Japan’s PDC system is already overloaded in some areas of the country. In Europe, cellular service providers have invested large sums of money to install microcellular base stations in some city centers to relive congestion on their 900-MHz GSM systems, although there is still adequate capacity in the 1.8-GHz band.

The change from 2G to 3g will not be abrupt except for NTT DoCoMo’s PDC system in Japan. None of the proposed 3g standards is compatible with PDC, so DoCoMo plans to scrap its PDC network and adopt a variation of Europe’s proposed W-CDMA. Backers of the GSM, cdmaOne, and IS-136 digital cellular technologies have plans to upgrade present systems to provide increased data communications capabilities in steps as shown in Figure 1. The intermediate steps are referred to by the unofficial names 2G+ or 2.5G. Backers of cdmaOne have plotted a smooth transition course from today’s cdmaOne 2G systems through and intermediate 2.5G step to the 3g cdma2000 technology for systems that operate in the PCS band. Today’s GSM systems can also be upgraded to offer improved data-communications, but GSM base stations cannot be upgraded to 3g. The transition from GSM to W-CDMA will require new licenses, new frequencies, and new cellular base stations. However, there are plans to upgrade the GSM backbone network in phases until it has full 3g capability.

Figure 1 – Upgrading 2G Systems is an Intermediate Step to 3g

2. Proposed 3g Services

In addition to superior two-way voice and video communication, 3g cellular terminals will be able to deliver a variety of entertainment, information, business, financial and educational services as listed in Figure 2. To provide those services, 3g cellular systems will have to be able to make very high bandwidths available at a reasonable price.

Figure 2 – Possible 3g Cellular Services

There is a consensus as to the minimum requirements of a 3g system. The most important of the requirements are that the technology be available for deployment by the year 2000, that the technology be capable of supporting high bandwidths, and that the technology be available to all manufacturers and service suppliers in the wireless industry.

In countries that have only two or three service providers competing in each geographical area, 3g service providers may offer a full range of services. Providers in more competitive markets may specialize. Several 3g licensees may offer a range of voice and data services to highly mobile users, while another licensee may specialize in high-speed Internet access for low-mobility subscribers.

The specific services provided will determine the characteristics of 3g terminals, so there will be no single 3g terminal design. A user interested in broadband Internet access will want a terminal with a fairly large graphics screen. A subscriber who is interested mainly in voice service and only uses the data-communications ability to send and receive an occasional E-mail message will be willing to live with a smaller screen in exchange for a more compact terminal design and longer battery life.

The Bluetooth technology will make it possible to use a variety of devices with a single terminal. Bluetooth will establish a short-range data connection between two electronic devices—for example—between a notebook computer and a cellular telephone. The Bluetooth technology will allow the same RF terminal to interface with a variety of devices such as a handheld computer for E-mail or Web browsing or a video camera and display screen for videoconferencing. The terminal will also probably use a variety of user interfaces including a touch screen and voice recognition. The traditional keypad will disappear to be replaced by a virtual keypad that appears on the touch screen when it is needed.

3. The 3g Cellular Forecasts

The study forecasts the 2G and 3g subscriber base, and it forecasts the 3g infrastructure and terminal markets by geographic region. Only a sampling of the forecasts is given here.

3.1 Total Cellular Subscriber Base by Region

Figure 3 graphs cellular telephone subscribers by world region since 1996 and forecasts subscribers for those regions through the year 2003. The graph shows that Americas have the largest number of subscribers, mainly because of the high penetration rate in the United States. However, we expect the number of cellular subscribers to grow more rapidly in Asia during the next five years, and by 2003 we expect the "Rest-of-the-World" to have considerably more cellular subscribers than the Americas, Europe, or Japan.

The compound annual growth rate (CAGR) for cellular subscribers from 1996 through 1998 was 30.0 percent in the Americas, 40.0 percent in Europe, 34.3 percent in Japan, and 55.8 percent in the rest of the world. The worldwide CAGR was 38.5 percent during the same three years. From 1999 through 2003, we forecast that the number of cellular subscribers will increase at a CAGR of 22.8 percent worldwide. The forecasted CAGR for each of the four regions is 15.1 percent for the Americas, 11.7 percent for Europe, 14.1 percent for Japan, and 40.7 percent for the rest of the world.

Source: ITU & Micrologic Research

Figure 3 – Cellular Subscribers by Region

3.2 3g Subscriber Base by Region

Figure 4 graphs Micrologic Research’s forecast for the number of 3g cellular subscribers by region. We believe Japan, which is already conducting trials of 3g technologies, will be the first country to deploy a 3g cellular system. We believe that Japan will provide service to a limited number of trial subscribers before the end of the year 2000. In 2001, we expect Japan to continue to build its 3g systems or—more likely—its systems, because we believe Japan will deploy more than one standard. In 2001 we expect Europe to also begin limited 3g service followed by the United States in 2002. We expect the three regions combined to have 40 million 3g subscribers by the end of 2005.

Source: Micrologic Research

Figure 4 – 3g Cellular Subscribers by Region

3.3 3g Terminal Market

Figure 5 graphs expected worldwide revenues from the sale of 3g terminals until the middle of the coming decade. In the following pages of this chapter, you will find separate forecasts for Japan, Europe, and the Americas.

Terminals sold during 1999 and 2000 will be used in experimental and trial systems, as we have noted earlier. The first commercial 3g system is expected to begin operation in 2001. From 2001 to 2005, we expect worldwide revenues from the sale of 3g cellular terminals to grow from $1,498 million to $9,176 million, a CAGR of 57.3 percent.

Source: Micrologic Research

Figure 5 – Revenues from Worldwide 3g Terminal Shipments

4. IMT-2000

The International Telecommunications Union’s Radiotelecommunications Sector (ITU-R) envisions a single 3g cellular standard that would provide high-bandwidth communication anywhere in the world. The IMT-2000 goals included global roaming, integration of terrestrial and satellite systems, high-speed data, pocket-sized terminals, and a single system for residential, office, and mobile use. The ITU 3g vision was originally given the name the Future Land Mobile Telecommunications System (FLMTS), but it was re-designated International Mobile Communications 2000 (IMT-2000) in 1996. The number 2000 was chosen, because the ITU’s timetable calls for a standard to be defined by the year 2000.

IMT-2000 is best understood as a minimum set of capabilities for delivering communications services. IMT-2000 does not define the air interface that will deliver the services, nor does it specify what the IMT-2000 services will be. As shown in Figure 6, the IMT-2000 recommendations call for a wireless data speed of 144 kilobits per second for high-speed mobile users, 384 kilobits per second for users moving at pedestrian speeds, and two megabits per second for stationary users.

Figure 6 – 3g Will Supply Service from144 kb/s to 2 Mb/s

Once 3g systems are in place, they will probably be used for applications that are not envisioned today. However, one can speculate. Figure 7 shows some probable 3g applications and the bandwidth that they might require. High-fidelity voice communication could be easily accomplished with a data speed of 28 kilobits per second in each direction. Two-way multimedia services such as videoconferencing would use several hundred kilobits per second in each direction.

Figure 7 – Possible 3g Services

Figure 8 shows the ITU timeline for developing the radio transmission technology (RTT) to be used with IMT-2000. Proposals were submitted on time, and most of the proposals have been subject to extensive evaluation. But consensus building has not proceeded as planned. There was supposed to be enough agreement by the beginning of 1999 to begin implementing a final RTT specification. However, the battle between Qualcomm and Ericsson has stymied the adoption of final standards.

Figure 8 – Timeline for Developing the IMT2000 RTT

Most members of the cellular industry believe that a CDMA-based technology will be clearly superior to one based on TDMA. However, both Qualcomm and Ericsson are withholding the rights to patents they claim to hold that are needed to implement a CDMA-based system. In frustration, the ITU informed the two feuding companies that if they did not release the rights to any intellectual property they may hold that would affect a 3g CDMA proposal by January 1, 1999, the ITU would proceed with a TDMA standard and would no longer consider a CDMA-based solution. Both Qualcomm and Ericsson called the ITU’s bluff. This puts the ITU in a quandary. Under its own rules, it cannot consider a CDMA-based technology unless that technology is available to all who wish to use it. If the ITU were to drop CDMA and only give its blessing to a TDMA-based air interface, the industry would thumb its nose at the ITU and deploy CDMA-bases systems by working with regional standards groups. In late February 1999, Qualcomm and Ericsson announced that they would cross-license some of their patents. The discussions between the two companies could result in an agreement that would allow work on CDMA-based 3g technologies to progress.

IMT-2000 recommends that spectrum in the two-GHz range be reserved throughout the world for 3g cellular systems. In Europe, the Middle East, Africa, Japan, and Korea two 60-MHz-wide blocks of spectrum have been designated for IMT-2000. These blocks are 1,885 to 2,025 MHz and 2,110 to 2,200 MHz. New licenses are to be granted in these bands only if they provide 3g services. In the U.S. and Canada, the lower portion of this spectrum has already been assigned to PCS cellular services, and as noted previously, much of Latin America and some Asian countries are expected to do the same. DECT in Europe and PHS in Japan also occupy part of this spectrum. This means that different parts of the world will have to use different band plans. Allocations of frequencies near two GHz in different world regions are shown in Figure 9.

(MSS = Mobile Satellite Service)
Source: Motorola & Micrologic Research

Figure 9 – 3g Cellular Band Plans

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