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3G, American Style

Broadband cell-phone services begin to roll out in the U.S., but face a standards mess–as well as competition from Wi-Fi.
September 22, 2004

September was a big month for so-called third generation, or 3G, broadband wireless services, which are intended to replace standard cellular networks over the next few years. Until recently, most of the 3G action occurred in Japan and Europe, but now the technology is appearing stateside. Earlier this month, AT&T Wireless introduced 3G service in Dallas and San Diego, following the company’s July rollouts in Detroit, Phoenix, San Francisco, and Seattle. Verizon Wireless had already introduced a service in San Diego (along with one in Washington, DC), making the California city one of the first markets in the world to see head-to-head 3G competition. Sprint, meanwhile, is expected to debut 3G later this year, and Cingular (which is hoping to soon merge with AT&T Wireless) is preparing its own launch. And last week the keepers of the spectrum at the Federal Communications Commission announced plans to allocate an additional 20 megahertz for 3G services, bringing the U.S. total to a still-limited, but not so cramped, 110 megahertz.

Has 3G finally turned the corner from hype, confusion, and high cost? Not quite. For starters, the AT&T and Verizon services are based on incompatible standards, and the Verizon service is currently available only for laptops. Even overseas, commercial deployments are rolling out much more slowly than anticipated. Unless the networks arrive more quickly, offering services and prices that consumers find appealing, the impact of 3G could be blunted by a variety of competing technologies that can provide broadband wireless connections. Already there is some pressure from Wi-Fi, and in particular, mesh networks that link Wi-Fi networks into larger service areas. In addition, major cellular carriers are testing out a 3G alternative called Flash-OFDM. And on the horizon is a potentially faster broadband wireless technology known as WiMax.

But first, lets give credit where credit is due: Unlike earlier 2.5G services, which rarely broke the 100-kilobit-per-second barrier, the new 3G sofferings are recognizably broadband. AT&T’s service promises 220- to 320-kilobit-per-second Web access, with burst rates of up to 384 kilobits per second. The service is surprisingly inexpensive at $25 a month, but its available only over $300 3G phones such as the Motorola A845 or Nokia 6651 or on laptops equipped with a $150 add-in card. Verizon’s pricier service ($80 per month) offers 300 to 500 kilobits per second, but its available only for laptops. These 3G services establish network platforms that are far more flexible in supporting new types of services (such as streaming video or push-to-talk) and they also provide vendors with more spectrum to relieve overtaxed cellular networks.

The problem with this picture is that the technology is expensive and the standards are still in flux. AT&T’s service is based on UMTS (Universal Mobile Telecommunications System), an umbrella 3G standard prevalent in Europe that was intended to unify the warring factions of the cellular world. In fact, however, it did not. (If you’re squeamish about acronyms, skip the next paragraph, but the take-home message is: What a mess!)

UMTS was meant to blend GSM (Global System for Mobile Communications), the cellular standard that represents about 70 percent of the worlds cell phone users, with CDMA (code division multiple access), which claims about 20 percent of users, mainly in the Americas. Yet two other related, but incompatible variations of CDMA have also survived: the CDMA-2000/Evolution Data Optimized (EV-DO) service being pushed by Verizon and Sprint in the United States, and the Wideband-CDMA based FOMA (Freedom of Multimedia Access) that NTT DoCoMo is selling in Japan. The latter boasts the largest number of 3G subscribers in the world.

There, that was easy, wasnt it? Unless of course you want a phone that supports more than one of these standards, in which case youre out of luck. Cell phone vendors are still struggling to reduce the cost of supporting both a 3G and a 2G service in a single phone, let alone supporting two different 3G services. Then theres the added problem of revenue generationgaining subscribers beyond the usual traveling salespeople.

Those applications will eventually emerge, from wireless gaming services to upcoming MP3 music-playing phones. But by the time they arrive, other wireless competition will have arrived along with them. The most pressing competition for 3G comes from Wi-Fi, the wireless networks that are popping up in urban locations around the world. Later this year, Motorola and other companies will start shipping cell phones that include Wi-Fi access both for data and for voice-over-IP telephony. A few days ago in this space, Deborah Asbrand reported on mesh networks being deployed by city governments in Philadelphia and elsewhere that knit together multiple Wi-Fi networks to cover a large urban area. Asbrand wisely suggests that this is not a feasible investment for cities; yet warnings over fiscal responsibility havent stopped dozens of cities from investing millions in money-losing convention centers, ballparks, and tourist traps. Why should they balk at relatively cheap Wi-Fi networks? The mesh networks are coming, whether installed in an organized fashion by cities and broadband providers, or piecemeal by businesses and individuals. And theyll cover the majority of places where people want to go online.

True, Wi-Fi is not likely to spread very far beyond urban cores anytime soon, but here is where a Wi-Fi related technology called WiMax might play a big role. WiMax is the latest and by far the most widely endorsed standard for fixed wireless broadband services, which use microwave towers to beam data to and from to homes and businesses equipped with the appropriate antennas. WiMax boasts transmission speeds of up to 15 megabits per second with a range of up to one mile.

Although still probably several years away from commercial feasibility, WiMax has gained backing from heavyweights such as Intel and Nortel; Intel expects to ship WiMax chipsets by next year. WiMax has also received support from U.S. politicians, who see the technology as the answer for upgrading broadband access for rural areas. Last week, the WiMax Foruman alliance of organizations that is promoting the standardreceived a boost when networking communications equipment giant Cisco Systems joined the 140-member group.

What does WiMax have to do with 3G? First, some cellular carriers are hoping to use 3G to compete with digital subscriber line and cable-modem providers in suburban areas, and to serve small-town users beyond the reach of DSL and cable. WiMax addresses the same market. Second, a mobile version of WiMax is only a few years away.

Another truly mobile technology that is closely related to 3G is even closer to commercial use. Flash-OFDM is a spread spectrum technology developed by Flarion Technologies that uses a scheme called orthogonal frequency division multiplexing to improve performance by continually seeking out the cleanest possible transmission frequencies, allowing multiple signals to travel over a single path without interfering with each other. That, together with its all-IP architecture, enables it to handle 1-3 megabits per second-roughly 2 to 10 times the speed of todays 3G networks. Nextel offers Flash-OFDM service in the Research Triangle area near Raleigh, NC; in addition, Telstra, T-Mobile, and Vodafone are field-testing the technology. Although Flash-OFDM can use the same frequencies and base station equipment as existing 3G networks, current regulations prohibit its use over those networks.

Meanwhile, 3G technology companies promise that enhancements coming in a few years will significantly boost performance. If so, they had better arrive quickly. And these companies had better hope that the need for ubiquitous data access outweighs the ubiquitous need for speed.

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