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European operators face now the costs of delays on WCDMA deployment
Posted on 26-Nov-2003 19:31. | Tags Filed under: News.

With uncertainties over the success of WCDMA in delivering advanced mobile data and multimedia services, mobile operators across Europe are increasingly faced with the dilemma of whether or not to adopt one or more of the emerging alternative wireless technologies, according to a new report, The Role and Impact of Emerging Wireless Technologies, from Analysys.

Hampered by problems with equipment availability and teething problems with network and handset performance, most European operators have already deferred the launch of their WCDMA networks until 2004 or 2005. Those operators that have launched 3G services have encountered limited success – for example, NTT DoCoMo’s 3G FOMA service has been adopted by just 2% of its cellular customers, some three years after commercial launch. This contrasts sharply with the rapid growth to 40 million subscribers of its 2.5G i-mode service.

“Compared with three years ago, when WCDMA was the only game in town, operators are now facing up to the possibility that they may need to adopt alternative wireless technologies to deliver the sorts of advanced data services that their customers are demanding and which their investors expect to generate higher ARPUs,” says Alastair Brydon, co-author of the report. “Operators are asking themselves, should we plough ahead with WCDMA, should we deploy EDGE, should we consider WLAN or broadband wireless access technologies, such as the proprietary systems from companies like Arraycomm, Flarion and Navini, or put our faith in standards such as 802.16e and 802.20?”

The report states that the decisions taken on these questions will have profound implications for operators, infrastructure vendors and handset vendors. “Wireless LAN is an early example of a technology that has threatened to change the economics and competitive dynamics of the wireless data market,” says Brydon, “but 802.11b is only the start – other emerging technologies are set to have even greater impact.”

The report points out that the first thing operators need to do, before deciding on which technologies to invest in, is to decide on their service portfolio strategies. The high costs and capacity constraints of 2G/2.5G cellular technology have limited most operators to providing premium-priced voice telephony and data services such as SMS, that don’t consume much network resource and deliver high revenue per Mbyte. Co-author, Mark Heath says: “If mobile operators continue to focus on services like messaging and ‘small-screen’ browsing, WCDMA may not be needed at all.”

The report also suggests that there is still scope for mobile services to compete directly with fixed voice and broadband data services. “3G should not be written off yet,” says Heath. “WCDMA wireless technology coupled with its new speech coding provides the necessary capacity, quality of service and cost base to rival fixed-line voice services.” Beyond the opportunities for voice, a number of other advances such as data compression and HSDPA will provide WCDMA operators with the capability to rival fixed broadband services. Heath says: “HSDPA allows WCDMA to deliver a true wireless broadband experience at a cost per Mbyte one ninth that of GPRS. This will allow operators to cut prices dramatically.”

The report shows that the technology investment options for mobile operators are not clear cut and suggests that if WCDMA does not prove as successful as initially expected, a diverse range of alternative wireless technologies are likely to see significant deployment as operators jostle to differentiate themselves in the market.

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