As the next generation networks take shape, 3G licence holders have unveiled their plans for 2004.
Vodafone: Data days
2004 will be the year of 3G, says Gerry Fahy (pictured), strategy director of Vodafone Ireland. “In common with the rest of the Vodafone Group we see 3G as being an integral part of our future strategy. Ten years ago we turned on the GSM network on top of the analogue one and people said it wouldn’t take off. We got over that resistance with significant investment and new handsets. I think when we look back at the introduction of 3G we will see a similar story,” he says.
Many observers have pointed out that the move from GSM to 3G is more of an incremental movement rather than the quantum leap of analogue to GSM. They argue that at the time GSM was a major advance over the existing product. For a start, GSM was digital giving far superior voice clarity and greater security against eavesdropping. Furthermore, the GSM standard was international and unlike the case with analogue phones, users would be able to use their handsets when they travelled to Europe.
“By and large I would accept those observations,” says Fahy. “However the capability to access the internet at 250Kpbs and the ability to have things such as video messaging will be seen as significant steps forward as well. There may not be quite the same degree of differentiation but it is still not a bad analogy to say that 3G will come into its own just as GSM did.”
According to Fahy, Vodafone turned on its Irish 3G network on May 1 2003, making it the first of the licence holders to do so. The initial network covered Dublin and Cork with footprints in Galway and Limerick. “We had coverage of just under 35pc of the population from day one,” he says. “Since then we have been building out the network and we are investing significant amounts all the time. We now have more extensive coverage at the original locations and we are covering the major urban locations along the state’s major arteries,” he says.
The biggest problem so far is the lack of handsets. According to Fahy, Vodafone’s 3G customers are using test handsets from Nokia. However, handsets are not the only way of connecting to the network. “We are trialling new products for data transmission,” says Fahy. “It is possible to connect a mobile phone to a computer but it’s a bit too awkward for most customers. We found that our 2G/2.5G data card worked well so we are trialling a similar card for 3G and customers are finding it very easy to use. To be honest, this is the key product for the data segment and we would argue that you can achieve almost broadband speeds when accessing email and internal office systems over a 3G network.”
Fahy expects to see handsets in the shops in time for Christmas. “These handsets would be fit for the mass market,” he says. “They will be designed ergonomically, will be of an appropriate sized with a long battery life and priced appropriately for the high end of the market.”
Pricing of 3G services has yet to be decided, says Fahy. However, he accepts that many customers will use their phones for voice and text services, just as they use their 2.5G phones. While it would not make commercial sense to price such services differently, the company is working on developing new products that will take advantage of the capabilities of the new network.
The handsets will not be exclusively 3G as was the case when the service was launched in Japan. “I cannot foresee a situation where we would build 3G in remote areas,” says Fahy. “To get the same coverage as GSM in rural areas would require an unrealistic level of base stations.” Handsets will, therefore, require the ability to roam onto 2G networks and possibly have 2.5G capability.
O2: Power struggles
From the beginning, O2 has had to play catch up with Vodafone. However, with the awarding of a 3G type A licence, the company has the potential to start competing against its long-time rival from a position of equality. The company may have turned on its 3G network in December of last year some months after Vodafone but both networks must now await the availability of handsets.
“This is a problem that the whole industry is facing,” says Diego Cavezudo, strategy manager at O2. “At the moment we are using Nokia 6650 handsets that are still pre-commercial. We have a large number of customers who are using the network and trialling new services. They are using the Nokia handsets but are using them to connect laptops to the internet via Bluetooth and/or cable.”
Because the handsets are still in the prototype phase, there are a number of drawbacks. “The devices are big and while battery life is getting better, it is still not comparable to that of GSM handsets. Also the prices have to come down. The manufacturers are fully behind solving these problems but it will take a few months,” Cavezudo says.
O2 is also testing a number of PC cards that would allow laptop users to access the network directly. “Again, there are no cards commercially available yet,” says Cavezudo. “We are, however, working with a number of vendors and hope to have the first commercial samples in a few months time. This is a device that our customers are very interested in. They will support both 3G and 2.5G (GPRS). We would like to see wireless local area networks (WLAN) or Wi-Fi on the same care but there are now many laptops available with Wi-Fi built-in so this is not such an urgent issue.”
O2 is of course no stranger to WLAN cards. When the company launched its range of WLAN internet access points it also began selling the Nokia D2111, a combined GPRS/WLAN that fits in the PCMCIA slot of most laptops. Isn’t Cavezudo worried, however, that the growing popularity of WLAN may hinder the takeup of 3G?
“We see WLAN and 3G as complementary services,” he says. “To be honest, they serve very different purposes. What WLAN does in the data space is allow the customer to have a good networking experience when he or she is stationary. The get really high access speeds and from the point of view of the operator WLAN is a very effective way of delivery broadband services. But then what 3G gives is broadband experience outside the hotspot. It is more like WAN than local area networks and it is aimed at people on the go who need to be linked to the office or who need access data while they are moving,” he adds.
According to Cavezudo, O2 sees the role of WLAN as encouraging people to use their laptop computers outside of the office. Once they get used to the idea this will encourage them to sign up for 3G. “So in a way, both technologies are driving adoption. We are confident they will work together and we will be selling bundles,” he asserts.
At the moment, O2’s 3G network covers Dublin, Cork, Galway, Limerick, Kilkenny and Waterford. “In Dublin we cover the whole county as far north as Skerries and Rush and as far south as Bray. These locations mean we cover almost 36pc of the population which exceeds our license requirements,” he says.
Like Vodafone, O2 is working on developing new services to fully exploit 3G’s unique properties. “We are working with different universities and research centres to develop services for the mass market launch,” says Cavezudo. “For instance, we are working with the Telecommunications Software and Systems Group at the Waterford Institute of Technology.”
The question of pricing, however, has not yet been resolved. “That is one of the things that is part of our trials,” he says. “I’m not sure that the pricing structures we have for GPRS are fully understood by our customers. We are getting feedback from them as to how they want to be charged. Most of them want to see a clear charging mechanism and heavy users want to see a flat rate but most want to see value-based charging. For instance, when sending a video message users don’t want to have to ask how many kilobytes it is. They want a set price, so pricing will be based on value. For instance X euro for a video message,” Cavezudo concludes.
Hutchison 3G Ireland: No hurry for Hutch
In rushing to be the first network to market in the UK, 3, owned by Hutchison Whampoa, fell foul of some factors that were simply beyond its control. For a start the handsets that were available in the UK at the time (early 2003) were in short supply and those that were available tended to be large, ugly and have poor battery life. There was also the issue of what standards the phones supported. Users using the phones for internet access saw their data transmission rates drop to GSM-levels when they moved out of 3G areas because the phones did not support GPRS.
There was also the old problem of who do you call when you have the only phone, except in this case it was who do you call when you have the only video phone.
Hutchison is a partner in 3 Ireland, the holder of the country’s only A type 3G licence and whatever about the UK, the company is in no hurry to roll out services.
“The 3 network is live and is available to key corporate customers,” says Ed Brewster of 3 UK. “We expect, however, it will be some time before the service becomes available through retail outlets. At the moment we have over 100 people working on the project in Ireland and we are focused on rolling out the network in the Dundrum area of Dublin.”
Other than that the company is saying very little about its plans for Ireland. A national roaming agreement has been reached with Vodafone. This will allow 3 Ireland to offer nationwide voice services to customers outside its own network coverage.
All Brewster will say, for now, is that although 3 Ireland is a completely different company from 3 UK the products on offer in Ireland will be similar. “Group-wide products and services are being developed,” he says. Similarly, handsets for use on 3 Ireland will manufactured by Motorola and NEC. When asked about early problems, Brewster admits that there had been problems with early models but promised that issues such as GPRS support have since been addressed. “The handsets available now are much better than those available when the network launched in the UK.”
As to whether 3 Ireland would be pitching itself towards businesses or consumers, he declined to say. However, he pointed out that while in some areas 3G is seen as a business product, in the UK and Italy it has very much been aimed at consumers.
By David Stewart
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