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August 17, 2007
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3G

civil war breaks out in U.S.?

The war between wireless standards is now being fought on 3G ground?

?

by Sean Buckley?

As mobile operators in the United States turn to their data business for revenue growth, the battle between different wireless standards advances to 3G turf. Sprint Nextel and Verizon Wireless fly the flag for CDMA2000, while AT&T and T-Mobile USA spearhead the W-CDMA charge.?

So far, CDMA2000 clearly has taken the high ground. Verizon laid claim to about 60.7 million CDMA2000 customers by the end of March 2007, while Sprint Nextel said it had captured 53.6 million. The W-CDMA operators, by comparison, could muster just 2.5 million customers between them.?

The CDMA Development Group (CDG), which lobbies for CDMA2000, attributes this gulf to a technology lead. CDMA2000 operators, it notes, have deployed enhancements like EV-DO Revision A, which can deliver speeds of up to 3 Mbps for VoIP and multimedia applications. W-CDMA, in stark contrast, is still unavailable in many parts of the U.S. Even where it has been deployed, it typically is capable of a far less impressive 384 kbps.?

W-CDMA, however, is definitely on the march. AT&T and T-Mobile USA are planning rollouts using HSDPA, a W-CDMA enhancement that offers speeds of up to 3.6 Mbps. More importantly, while W-CDMA’s customer base of 2.5 million appears low when judged alongside CDMA2000, it has grown from just 350,000 late last year.?

W-CDMA fights back?

The biggest operator in the U.S., AT&T, is starting to deploy HSDPA and EDGE (an enhanced 2G technology) after managing to fuse the operations of the former Cingular and AT&T Wireless, the two businesses that it merged in 2006.?

As it worked to integrate those networks, the new operator was able to reallocate capital by closing down and consolidating duplicate sites and investing some of the saved capital in its 3G business. Ultimately, it plans to launch W-CDMA in 165 cities throughout the U.S., and says it is on target to get a 3G service up and running in the top U.S. markets this year.?

To date, AT&T seems to have built up its 3G business with minimal disruption to service. As it ramps up its W-CDMA coverage, it reports churn of just 1.7 percent—slightly below the 1.9 percent it recorded last year. ?

Richard Lindner, the company’s CFO, says AT&T has met challenges its CDMA2000 competitors have not had to face, although he does not deny this has had some impact on its 3G launch.?

“Verizon hasn’t had a major acquisition to absorb,” he says.“AT&T has taken on AT&T Wireless, Cingular and BellSouth in a little over two years and Verizon didn’t have to move from TDMA to GSM networks as AT&T has done. All those issues are disruptive to customers and to company objectives.”?

The merger and the transition from TDMA to GSM to W-CDMA are not the only challenges confronting AT&T’s nascent 3G business.?

“AT&T uses a higher frequency [than its CDMA2000 competitors], which is a disadvantage,” explains Allen Nogee, a principal analyst with In-Stat.?

Generally, U.S. operators have deployed CDMA2000 using spectrum in the 800 MHz or 1900 MHz bands, while AT&T is rolling out W-CDMA using 2100 MHz spectrum. The lower frequencies have better propagation characteristics, allowing CDMA2000 operators to serve a wider area using fewer base stations.?

“AT&T is also in a transitional phase,” Nogee adds. “Although it can advertise its new HSDPA network, that network has not been rolled out everywhere yet.”?

Meanwhile, T-Mobile USA, the fourth largest operator in the U.S., plans to launch a W-CDMA service using the 2110 MHz to 2155 MHz spectrum it purchased in last year’s auction for advanced wireless services. Although it did not respond to requests for an interview, T-Mobile USA previously issued a statement on its 3G intentions in which it says the company will transition to a next-generation technology, which may include W-CDMA/UMTS with HSDPA, in the next two-to-three year timeframe. ?

Assault on CDMA2000?

So how difficult will it be for AT&T and T-Mobile USA to launch a W-CDMA attack on CDMA2000??

Certainly, Verizon appears to be the more daunting opponent. During 1Q 07 it claimed 1.6 million new customers, while Sprint Nextel acquired just 600,000.?

“Lately, Verizon has been doing much better than Sprint Nextel,” Nogee says. “Sprint Nextel has been having some issues, and its subscriber numbers are not growing as fast as it would like. Verizon’s are growing quite well.”?

One reason is frequency. Verizon is using spectrum in the low 800 MHz band to serve its 3G customers. As Nogee points out, the cost savings that come with that frequency give it a big advantage over Sprint Nextel—which uses 1900 MHz—let alone the W-CDMA camp.?

“If Sprint Nextel’s coverage is to be as good as Verizon’s, it will have to invest in more base stations,” he says. “I think Verizon’s coverage claims have really hit home, and that has helped the company a lot.”?

Coverage is only part of the equation. Verizon’s approach to services has been just as critical, as W-CDMA competitors will observe. While Verizon has taken something of a walled garden approach to service delivery, Sprint Nextel offers a wide range of applications. Although this diversity could be seen as an asset—giving consumers and business customers greater choice—it actually has led to confusion.?

“It’s harder for Sprint Nextel to advertise, because it has so many applications in competition,” Nogee says. “Verizon has a more limited range of services, but that gives it a much more unified picture from the perspective of the outside world.” ??

?

?

StatWiMAX ?

on the move?

Sprint Nextel and Clearwire set the pace ?for mobile WiMAX in the United States ?

by Jim Barthold?

?

Mobile WiMAX has moved off the drawing board and into field trials in the United States. This development could have widespread—and negative—repercussions for mobile operators around the world, if the WiMAX standard does what its backers say it can: deliver high quality VoIP and broadband data access on the move. ?

Scott Richardson, chief strategy officer of U.S.-based Clearwire, is a WiMAX believer. “A lot of our customers buy our [fixed and portable WiMAX] service, because they like the flexibility of wireless,” he says. “They want a broadband experience, and they want to take that experience with them even if it’s something that plugs into the wall today. It’s the personal nature of how they want to experience the Internet.”?

Clearwire markets its service as “personal broadband,” and Richardson believes mobile WiMAX is the next logical step. ?

Two months ago, the operator said it had “successfully completed” the first phase of its first mobile WiMAX trial in the Portland, Ore., suburb of Hillsboro. Using kit from Intel and Motorola based on the IEEE 802.16e mobile WiMAX standard, the trial’s first phase focused on coverage, capacity and speed associated with the air interface. The trial used a mobile laptop card, which is the first, says Clearwire, to be based on WiMAX. ?

Heavyweight backers?

The stakes are high for Clearwire to make a business case out of WiMAX. Last summer, Intel Capital, the venture capital arm of Intel, invested US$600 m in Clearwire as part of a US$900 m financing round that included outlay from Motorola Ventures. ?

Sean Maloney, Intel’s executive vice president of the mobility group, says the ambitious goal is to speed up the development of portable and mobile WiMAX networks and “lay the foundation for high-speed mobile broadband services across North America.” ?

Clearwire is making progress. Using licensed 2.5-GHz spectrum, it has deployed WiMAX networks in 39 U.S. markets, which cover approximately 9.9 million people in more than 420 municipalities. In May 2007, Clearwire also acquired the 2.5-GHz spectrum previously owned by AT&T and the former BellSouth. Clearwire’s spectrum holdings in the U.S. now give it access to potentially 223 million people, yet the subscriber base is still small. As of March 2007, Clearwire had 258,000 subscribers.?

Clearwire is not alone in its desire to fly the mobile WiMAX flag across the US. Using its own licensed 2.5-GHz spectrum, mobile operator Sprint Nextel announced a major nationwide WiMAX rollout starting later this year and running throughout 2008. Sprint Nextel says it will start delivering 7-Mbps fixed speeds and evolve to 2-4 Mbps in a mobile environment.?

Despite the promise of high-speed mobile data, Atish Gude, senior vice president of mobile broadband operations at Sprint Nextel, does not view mobile WiMAX as a direct competitor to 3G. “If I combine it [mobile WiMAX] with a home and away [cellular] package and allow people to experience the Internet on portable electronic devices away from the house, that is the sweet spot [for mobile WiMAX],” he says.?

Along with Sprint, Clearwire owns the bulk of 2.5-GHz spectrum targeted for WiMAX in the U.S. Although Sprint Nextel has attracted most of the WiMAX publicity for its fixed-to-mobile evolution, Clearwire claims credit for the idea and for being first to implement it.?

TowerStream is another potential big mobile WiMAX player in the U.S. Like Sprint and Clearwire, it is rolling out WiMAX-capable networks nationwide. Although TowerStream currently is concentrating on fixed WiMAX, it sees mobility as a “critical piece” for the future. ?

“People may not need 40 Mbps in their cars right away, but there are all kinds of applications that you’re going to use for mobility, whether it’s VoIP or getting instant traffic or looking at the ESPN clip in traffic,” says Arthur Giftakis, CTO of TowerStream. “There is a need for WiMAX and mobility that [a conventional, voice-based cellular network] is never going to provide.”?

WiMAX still has disadvantages compared to cellular. For one, it does not enjoy the economies of scale established 3G technologies have on network equipment and handsets. Two, lack of available licensed spectrum might restrict competitive growth. The opening up of the 700-MHz frequency band by the FCC, however, may allow more mobile WiMAX players in the U.S. market (see The 700 Club: Mobile WiMAX sets its frequency sights lower, page XX).?

A question of standards ?

Mobile WiMAX arguably has about a two-year lead over data-centric, mobile broadband technology, such as long term evolution (LTE). The IEEE 802.16e has stabilized specifications on mobile WiMAX and the WiMAX Forum is pushing interoperable technology into the field by next year.?

“WiMAX will be like WiFi,” TowerStream’s Giftakis says. “It’s standards-based and it will be ubiquitous” even as it evolves from fixed to portable to mobile.?

Getting to that point still needs work, but everyone from network providers to device makers are pushing to see it happen, says Mohammad Shakouri, vice president of marketing at the WiMAX Forum.?

WiMAX standards and WiFi have developed interoperability, particularly in Taiwan, which has rolled out a nationwide WiMAX network capable of supporting fixed, portable and mobile applications. “The Taiwanese are putting in WiMAX and WiFi and showing how you can hand off between these two technologies,” Shakouri says.According to its supporters, mobile WiMAX—since it is backwards-compatible with portable—will be the endgame for all network deployments, whether fixed or mobile. Intel intends to put WiMAX capability into a far wider range of portable and mobile devices by next year.?

“WiMAX is based on OFDMA [orthogonal frequency division multiple access], which really is much better for data,” says Julie Coppernoll, director for WiMAX marketing at Intel. “If you look in the future, broadband and mobile broadband is going to be totally based on IP.”?

LTE also has data elements, concedes Coppernoll, but not as developed as WiMAX. “[LTE] is conceptual at this point and WiMAX is probably a couple years ahead in terms of being delivered,” she says. “We expect to have mobile WiMAX networks up in the next year. We look at it from the perspective of saying we need something that’s going to deliver and not something that’s on the drawing board.”?

Other vendors with more entrenched mobile stakes are not so single-minded. Nokia Siemens Networks, Motorola and Samsung are the three suppliers Sprint Nextel has elected for its WiMAX rollout, yet all three build conventional 3G mobile gear.?

Mark Slater, vice president of Nokia Siemens, naturally defends mobile operators’ decision to stick to cellular. “A lot of operators want to evolve their current technologies and infrastructure, and we see technologies such as HSPA and LTE as extremely good options for those guys,” he says. ?

Weighing up ‘4G’ options in the U.S.?

Although W-CDMA is still in its early days in the United States, operators already are thinking about the next generation of mobile technology.?

While a 4G standard is not yet defined, marketing departments are applying the label to some technologies already in development. ?

For W-CDMA operators such as AT&T and T-Mobile USA, the technology typically viewed as 4G is called long-term evolution, or LTE. It represents the destination on their journey through upgrades to HSPA, but will use a different air interface called OFDMA and require more work. Theoretically LTE will deliver downlink speeds of 100 Mbps and uplink speeds of 50 Mbps. ?

CDMA2000 operators also have 4G in their sights in the shape of EV-DO Revision C. Like LTE, Revision C promises vast improvements over the current crop of wireless standards. Allen Nogee, a principal analyst with In-Stat, thinks both LTE and Revision C could see commercial deployment by 2010.?

In the meantime, Sprint Nextel has been vocal about another 4G technology. Last year, it earmarked US$2.5 bn for investment in a nationwide deployment of WiMAX, using 2.5 GHz spectrum it already owned. WiMAX proponents have made some bullish claims about its capability (promising up to 70 Mbps on the downlink), but the technology has not evolved from other standards—unlike LTE and Revision C—and will lack any scale economies when it is launched next year. ?

Chris Pearson, president of 3G Americas (a lobby group for W-CDMA), is unconvinced by the WiMAX business case. “It’s a wild card. In our view, most subscribers will be using W-CDMA and EV-DO for years to come.”

  • “Verizon didn’t have to move from TDMA to GSM networks as AT&T has done. All those issues are disruptive to customers and to company objectives.” ?
  • Richard Lindner,

    AT&T?

  • ?

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    CDMA2000 vs. W-CDMA

    3G battlegrounds

    3G battlegrounds

    CDMA2000 vs. W-CDMA

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    Mobile TV

    Mobile evolution

    Mobile TV

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    Mobile TV

    Mobile evolution

    Mobile TV

    ? www.telecommagazine.com ? October 2006 • Telecommunications ?

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  • “Lately, Verizon has been doing much better than Sprint Nextel. Sprint Nextel has been having some issues, and its subscriber numbers are not growing as fast as it would like. Verizon’s are growing quite well.”?

  • Allen Nogee,

    In-Stat

  • Revenue & market share of U.S. mobile operators

    ? Telecommunications • July 2007 ? www.telecommagazine.com ?

    ? www.telecommagazine.com ? July 2007 • Telecommunications ?

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