The Industry is Always Looking for the Next «G»

Verizon Wireless and part-owner Vodafone’s recent decision to move in lockstep towards 4G networks may surprise some and move others to believe that this foreshadows a global standard for the telecoms industry, but it’s really just business as usual in an industry that loves having multiple “standards” at the same time.  Many questions remain, namely what, if any, current operability will remain with other “standards,” what will happen to the mobile operators’ core networks, and what technology will consumers feel comfortable with and adopt.

Things in the telecoms industry move far more slowly than most people realize.  Just because new mobile phones are introduced every three months doesn’t mean that there are any new technologies hiding within them.

The industry has been down this road before, moving from analog (1G) to digital (2G), a point upgrade with 2.5G (not a defined standard but a legitimate stepping stone on the path to 3G), and finally to 3G.

We’ve heard the promise of the next generation of mobile services before, although not necessarily from these two players (Verizon Wireless and Vodafone).  2G, no, 2.5G, no, wait, it’s 3G, no, now it’s 4G that will be the great unifier.

What happened to 3G?  We had not one, but two standards, namely W-CDMA and CDMA EV-DO.  Japan’s NTT DoCoMo was the first to launch a 3G network in 2001 (WCDMA), followed later in the year by South Korea (CDMA EV-DO).  3G services in Europe started in 2003 but progress was slowed greatly thanks to the high cost of additional spectrum license fees (3G services in the U.S. use the same spectrum as 2G, so spectrum was not an issue in the U.S.).

One reason 3G caught on in Japan and Korea (both countries built out sufficient network infrastructure at the very beginning) was because there was no need to include roaming capabilities to older networks.  The devices were small and lightweight.  In Europe and the U.S., given limited network infrastructure, multi-mode devices were required, supporting 2G and 3G networks, making the devices themselves larger and heavier, hence less attractive to the consumer.

According to the GSM Association, there are ca. 200 million people using 3G worldwide, mostly in Europe and Asia.  Out of 3 billion subscribers, this is less than 7% of the total.

It makes sense, of course, for companies with as close a corporate relationship as Verizon Wireless and Vodafone to use the same high-speed 4G data network.  They now use the mutually incompatible CDMA (Verizon) and GSM (Vodafone) protocols although there was much speculation that their 4G platforms would also be different.

But 4G will not necessarily bring the industry closer together.  Sprint has already announced plans for its 4G-speed XOHM service, based on WiMAX, and trials are planned for later this year.  Sprint has hinted that this network will be open to any device that supports WiMAX, a wise decision in order to build network revenue.  One thing is certain: 4G will attract many players from outside the traditional mobile telephony industry, such as Google, a company that sees having its own network as a better way of getting new wireless applications to the masses.

As for me, I’m already looking forward to 5G as the platform that will (surely) unify the world.

Jonathan B. Spira is CEO and Chief Analyst at Basex.

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