3G wireless will require new mindset: study

Third generation (3G) wireless communications will require a new breed of operator which behaves like an Internet company, a study by Toronto-based Deloitte Consulting found.

Titled Third Generation Mobile: A Six-Step Guide to Building a 3G Telco, the report stated 3G will usher in a new era of “telconomics” based on greater bandwidth, competition and unpredictability. Moreover, the successful 3G operator will primarily be a data company and an information provider – highly flexible and entrepreneurial, global in outlook and customer-centric.

3G wireless technology allows for high-speed bandwidth throughput at speeds up to 384Kbps for mobile users, and 2Mbps for stationary users of portable wireless devices.

Lloyd Switzer, a senior manager for Deloitte’s American Communications Practice based in Minneapolis, Minn., warned that potential telcos must act quickly to migrate to 3G by putting the Internet culture at the very heart of their business.

“There are two immediate benefits to this coming technology – one is there will be more users on the network, the other is a higher bandwidth,” he said. “Companies need to think about their content and their applications, they need to see themselves as more than a carrier and they also need to consider the devices people will use, whether it’s a PDA or a cell phone. Speed is very important and no one at this stage knows what consumers want, so they need to see what sticks (with consumers).”

Switzer – who formerly worked out of Deloitte’s Toronto offices within the Canadian Communications Practice – added those who can think outside the norm and offer creative solutions to integration issues and adding value and services to the network are the most likely to gain a competitive advantage.

“No one knows what the killer app is just yet. Companies need to be nimble, they need rapid product development and they need to deal with different partners,” he continued. “That will ultimately be the key: the ability to get the content providers, the equipment manufacturers, the application developers, the systems integrators and the network access all working together. The most crucial part, however, is to really understand what the customers’ needs and wants are. What do they value and what are they willing to pay; you need to get close to your customer to really understand this.”

Switzer’s view of future of 3G communications is reinforced by a June 12 IDC Canada study which estimated that the Canadian market for wireless data and Internet services to cell phones will reach a saturation point of 95 per cent by 2004.

Furthermore, as the Internet service provider (ISP) market transforms itself into wireless ISPs, it will dramatically alter the Canadian Internet landscape by adding millions of new Web on-ramps, the report predicted.

The IDC Canada study, authored by analyst Jordan Worth, added that Internet services to cell phones are still in their infancy but the number of wireless phone subscriptions will nearly triple from 7 million in 1999 to 20.1 million in 2004.

Meanwhile, analyst firm GartnerGroup stated the mobile phone will be the most numerous Internet access device in the world with the total number of installed mobile phones exceeding one billion some time after 2003.

Worth said the full breadth of functionality that 3G wireless technology offers will be realized and embraced at the consumer level, but not for at least another three years.

“Companies are actively involved with building their networks…it’s still a few years away before it hits commercial markets,” Worth said. “Current wireless data that exists is primitive right now.”

Telecommunications giant Nortel Networks has been active in 3G technology. The latest news coming from the Brampton, Ont.-based corporation came on June 19 in Paris at the unveiling of its “Wings of Light” strategy – an initiative that enables IP-based services to be delivered over the air and builds on the power of the high-performance optical Internet.

“The coming together of the wireless Internet and the optical Internet is the fundamental [reality] that is enabling mobile commerce,” said Clarence Chandran, Nortel’s president of the service provider and carrier group, during the live Webcast.

“From an e-tail perspective, the amount of transaction value by 2003 will reach US$1.83 trillion…we need to unleash the bottleneck that exists in local area networks.”

Nortel stated its strategy will provide cost-effective, end-to-end 3G wireless Internet solutions spanning local Internet, optical Internet wide-area-wireless access, network management, and enterprise voice and data services.

“Cell phones today give you 9.6Kb of usage, while third-generation (wireless devices) will go to 2MB,” Chandran said. “Rather than get mundane information on your hand-held device, you can go from text to streaming video. These Web appliances will not be connected by any physical means but wirelessly connected to the network.”

“Everyone is, for the most part, at the same level right now,” Deloitte’s Switzer said. “But Canadian companies such as 724 Solutions (in Toronto) are looking at the applications side and they will clearly be a Canadian player. Experience matters so much in this game, and Canadian companies have taken a lead in North America.”

As convenient and advantageous as wireless technology is becoming, Worth added if you’re looking to a hand-held device to provide the speed of a home or office Internet connection, it isn’t quite there yet. Plus, trying to read an e-mail message on a pager or a cell phone doesn’t measure up to viewing it on a high-resolution monitor. That said, portable Web appliances are all the rage in the industry with new, innovative concoctions being heralded with increasing frequency.

For instance, a recent announcement from Belgian-based manufacturer Lernout & Hauspie revealed its intent to launch a voice-operated, hand-held, wireless Internet device in 2001. The yet-to-be-named device will enable users to access e-mail, the Web, and e-commerce services using voice commands and a touch-screen display.

“In time, high bandwidth wireless will serve us with huge amounts of data thrown back and forth on PDAs, cell phones, whatever can be enabled to do so,” Worth said.