Subject: [NEXTEL-1] 3G: Where's The Spectrum?

From: [email-masked]
Date: Sun, 02 Nov 2003 13:54:15 -0500

3G: Where's The Spectrum?
Government officials hope bidders will come to the 3G spectrum party,
but less enthusiastic party goers likely won't suffer the hangover
European carriers experienced.
BY MARK ROCKWELL
NOVEMBER 1, 2003

WASHINGTON—Lawmakers and regulators pushing to get more spectrum for 3G
services may be opening the door for an initial trickle of new services.
And that soon may become a flood, according to 3G spectrum backers.

The situation puts regulators that want to free spectrum for wireless
broadband in a bind, similar to the character Kevin Costner portrayed in
"Field of Dreams." Providing a playing field for services slow to
materialize is a leap of faith FCC regulators and lawmakers seem willing
to take a chance on, knowingly or not.
Granted, the rush for third-generation wireless services–video phones,
music and video downloads, super-fast Internet access and location-based
e-commerce–hasn't developed as quickly in the United States as it did in
Japan.  That's due to a combination of factors, including new
technologies such as Wi-Fi and the lack of a focused killer consumer app
for wireless data, analysts say.

Verizon Wireless rolled out its broadband access 1X EV-DO (1X
evolution-data optimized) service in San Diego in September, followed
soon after by Washington, D.C., providing data speeds up to 2 megabits
per second–16 times faster than traditional CDMA2000 1X networks. The
service is aimed at corporations wanting to extend virtual private
networks, local area networks and company intranets.
Sprint launched its PCS Vision service in August 2002. Initially, Vision
had a take-up rate in the single digits, according to Stephen Falk, vice
president of global development at Sprint's PCS division. But, he adds,
the services are catching on. "By the end of the second quarter of 2003,
there was a 40 percent take rate. We've got 2.1 million subscribers," he
says. The primary application for the service is picture mail, he says.

Pictures with e-mail, however, are hardly the interconnected, broadband
services envisioned for 3G services a few years ago, analysts note. The
fight for hard hitting, rich applications continues. "3G has calmed down
during the last few years," notes Rebecca Arbogast, analyst at Legg
Mason in Washington, D.C.  "What do you actually do with wireless
broadband? You can't watch a movie while driving a car or walking down
the street."

SETTING THE RULES The FCC set up rules that will guide service providers
in bidding in a yet-to-be scheduled auction on blocks of 3G spectrum
that have been meticulously carved out of government spectrum holdings
for cross-over to commercial use. The commission made the spectrum
available in new ways, hoping that flexibility will draw bidders that
otherwise might not be interested.  Service providers would bid on
15-year initial licenses and be able to aggregate spectrum in the bands,
which could lead to national footprints for carriers with the means to
buy it up in the right places.

Winners in the auction, which could come as early as next year, also
would be free to partition and disaggregate their licenses, which means
they essentially could buy and sell their new holdings piecemeal to
other carriers with more pertinent holdings. The commission also
designates spectrum for smaller license areas in rural America.

The FCC has high hopes that the spectrum, at 1710-1755 MHz and 2110-2155
MHz, will support a variety of 3G services. "What we have done in the
order is build a creative framework, so we will try to maximize the
flexibility available to licensees in these bands," says FCC wireless
bureau chief John Muleta. FCC Chairman Michael Powell also stands
squarely behind the framework that once available, the spectrum resource
will draw services.

"The 90 megahertz made available today is a key building block for the
broadband Internet future of licensed wireless service," Powell stated
in mid-October when the new rules were unveiled. "Across the country,
wireless providers-from Verizon Wireless in Washington, D.C., to Monet
Mobile Networks in the Dakotas-are increasingly utilizing their licensed
spectrum holdings to build infrastructure to support Internet
applications. Another 90 megahertz of spectrum will add momentum to that
important trend."

Of course, the bidding isn't going to create the feeding frenzy that 3G
spectrum auctions touched off in Europe a few years ago, with monumental
sums laid out by companies that couldn't afford to roll out their
networks and services. Likely bidders include Verizon Wireless, AT&T
Wireless, T-Mobile and Sprint, Arbogast says. Smaller and specialized
carriers also could bid on smaller chunks that would yield regional or
application-specific holdings. For instance, Nextel has its sights set
on MMDS and companies such as Arraycom want to use spectrum for fixed
wireless applications, she says.

Manufacturers and carriers are looking forward to added momentum, saying
the industry is at the threshold of a golden time for 3G. In Asia,
particularly Japan and Korea, 3G services are thriving, according to
native carriers. "We have revenue of $8 billion," says Wonsuk Chung,
senior manager for SK Telecom's network research and development center
in Korea. Wireless data transmission contributes $1 billion of that
revenue, he says.

Chung says his company is finding that consumers increasingly and
dramatically are driving advanced 3G applications such as TV feeds to
wireless devices, both real-time feeds and video feeds, along with
movies and music video viewing and downloads. Tamer downloads such as
ringtones and characters took a backseat to the more advanced
applications long ago, he says. Some of the most successful services in
Asia, however, could give carriers pause. Chung says the downloading of
adult videos is a leading application.

That dramatic picture isn't equaled in the United States. Carriers and
3G technology backers may argue otherwise, but analysts say major U.S.
carriers have introduced only a few true 3G services, and even those are
limited in coverage and scope.

FOCUS ON ENTERPRISE Industry insiders say the growth won't come from
consumers, however. It will come from enterprise networks.

Ed Chao, senior manager at Lucent Technologies' wireless networks group,
points to Verizon Wireless' service trials of 1X EV-DO services as
evidence that some advancing "3G-ish" services are gaining traction in
the enterprise.

Lucent is working with Verizon Wireless on trials of 1X EV-DO
infrastructure within businesses. The trials, which began in October,
provide services to about 200 customers. "About 80 percent said the
services were beneficial," he adds.  "Two-thirds of the users considered
EV-DO superior to other high-speed wireless access."

Carriers are hoping such avid acceptance of the services will bleed over
into new revenue sources, but say they're dealing with a new environment
at companies these days. Corporate telecom managers have been replaced
by chief information officers who are more cost-conscious in these
tighter budgetary days.  "These days, the CIO wants to closely monitor
costs and benefits," says Gerry Flynn, director of advanced technology
strategy at Verizon Wireless.

Still, data networks increasingly are being used in enterprise
environments. "The consumer isn't interested in technology, but in
services," says Bill Plummer, vice president of strategic and external
affairs at Nokia. The enterprise will drive acceptance of multi-purpose
devices such as multimedia messaging phones and others, making them
essential business tools, which will in turn fuel more growth in the
enterprise space.
Ultimately, the enterprise and mass markets probably will have to
develop in tandem, says Jane Zweig, CEO at The Shosteck Group. With no
clear-cut killer application to drive either one, both markets will
figure into the developing 3G picture. "Voice isn't going away," she
says.

Although applications such as video and gaming will drive the mass
market and picture e-mail, data attachments to voice and text messaging
could drive enterprise adoption, voice applications probably will still
be the bulk of traffic on 3G networks, she says. "There's not going to
be a real 'Eureka!' moment for 3G," she says. Customers will continue to
use their wireless phones to talk and carriers will continue to transmit
that traffic–only they will do so on the more efficient and effective
networks that 3G will make possible.

http://www.wirelessweek.com/index.asp?layout=article&articleid=CA333026&spacedesc=Departments&stt=000

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