The network effect

3 Nov 2005

Five years after the telecoms bubble burst and billions of euro of investors’ money were written off, the telecoms market is again ready to go forward and invest in exciting new technologies. This was the upbeat message from the Telecoms and Internet Federation (TIF), the IBEC body representing the telecoms sector in Ireland, during its annual conference, themed Telecommunications: Emerging Technologies and Services.

Danny McLaughlin, who replaced Bill Murphy as head of BT Ireland four months ago and is also managing director of BT Northern Ireland, announced BT was phasing out its old PSTN or traditional copper voice network in favour of new internet protocol-based technology that would allow its customers to create and run a plethora of sophisticated data services. He said this network – dubbed by BT as its 21st Century Network was coming to Ireland – and soon.

Keynote speaker Walt Mossberg, a Wall Street Journal technology columnist, set the scene on the mobile side by describing a dynamic and fast-growing US wireless market that had firmly shaken off its ‘second-best-to-Europe’ mantle.

Mossberg reported how Verizon Wireless was rolling out a 3G network based on EV-DO (evolution data only), a technology that delivers speeds of between 700Kbps and 800Kbps. “In Europe the 3G networks peak at 384Kbps and the real throughput is in the 200s – so in the US 3G is three to four times faster than Europe,” Mossberg pointed out. He also noted that rival mobile operator Cingular was getting ready to roll out another high-speed network technology, high-speed downlink packet access (HSDPA), in a dozen US cities as its answer to EV-DO.

While Mossberg had argued that Europe was struggling to catch up with the US, Andrew Wright, managing director of UK-based telecoms research house Analysis Consulting, pointed out that European telcos were once again investing in new telecoms infrastructure, particularly HSDPA. Calling this the European version of EV-DO, he said it promised to push up 3G speeds and improve the customer experience.

He added that while a number of other technologies were being positioned to compete with 3G networks, he doubted whether Wi-Max could successfully compete in the long run. “The problem with Wi-Max is that it is designed to work in the high-frequency band, which means you’ll have limited coverage. It needs to be low frequency to compete with HSDPA.”

Pointing to other trends working in favour of mobile operators, Wright noted that fixed-to-mobile substitution (FMS) provided a major growth opportunity. “There is a definite shift from fixed to mobile networks. Voice will be carried entirely or substantially over mobile networks and mobile operators are doing everything to stimulate this effect.”

However, while operators might be well positioned to gobble up increasingly more voice minutes, the issue of data services was more problematic, he felt. For example, the current experience of South Korea, where TV was being delivered over 3G mobile handsets, was that 3G networks were getting congested with media-rich content.

Unsurprisingly, Teresa Elder, newly appointed CEO of Vodafone Ireland, clearly didn’t agree with Wright’s poor prognosis for 3G networks. Offering a carrier’s perspective on the evolution of network technology, Elder argued that the “broadband-like speeds” of 3G was acting as a catalyst for the widespread adoption of broadband. She even ventured that the low uptake of broadband in Ireland generally might be partly explained by the availability of mobile broadband via 3G handsets. She also looked ahead to next year’s implementation of HSDPA on the Vodafone network, which would see broadband speeds increase fourfold.

The issue of fixed versus mobile broadband was further addressed by Tony Boyle, managing director of Sigma Wireless Group, a leading distributor and retailer of telecoms products. Boyle argued that Ireland’s broadband performance was being incorrectly cast as a fixed-line-only issue. Noting that mobile broadband speeds “were only going to get faster and faster”, Boyle called for an integrated vision that he summed up as “broadband anywhere”. It was an aspiration his entire audience would surely have shared.

Pictured: Walt Mossberg of ‘The Wall Street Journal’ and Communications Minister Noel Dempsey TD

By Brian Skelly