Waiting For 3G

Sprint PCS will soon introduce the first nationwide third-generation wireless network in the United States, but can 3G live up to its billing?

by Brian Morrissey of internetnews.com [August 6, 2002]

Third-generation (3G) wireless networks promised to be the panacea of the telecom industry. 3G was billed as nothing short of a telecom revolution, with everyone winning out: governments would get billions in their coffers auctioning spectrum licenses; wireless carriers would have a lucrative new source of revenue; and users would enjoy the rich content of the Internet with the mobility and ubiquity of wireless devices.

So far, though, for the most part 3G has been a dud—at least outside of Japan and Europe, where it's seen some qualified success. For U.S. customers, waiting for 3G has been somewhat akin to what Vladimir and Estragon experience in "Waiting for Godot": They've waited so long, they've forgotten what they're waiting for.

"The early hype was you're going to get an experience similar to what you have on your desktop, and that's just not going to happen," says Frost & Sullivan analyst Brent Iadarola. "That's not going to happen even five years from now."

In the United States, 3G has arrived fitfully and later than promised, but that may start to change. A landmark will be the rollout of Sprint PCS' nationwide 3G network, which the company promises will happen by the end of the summer. Sprint's network will finally give the United States a national data network with burst speeds of up to 144 Kbps and average speeds from 50 to 70 Kbps.

While it will be far slower than the 2 Mbps speeds that the industry touted, Sprint's 3G network could heat up the market for wireless data services.

"What Sprint is going to be offering this summer is going to be close to 3G," says David Chamberlain, an analyst with Probe Research. "Sprint covers a lot of cities, if you're going to have voice coverage you're going to have data coverage."

Sprint's network rollout is the slowest of the major U.S. wireless carriers, but it will be the most complete. The other leading wireless carriers, Verizon Wireless, VoiceStream, Cingular, and AT&T Wireless, have chosen to construct their 3G networks piecemeal, which Sprint points out has left their networks with only scattered connectivity.

"There's the question of when nationwide is not nationwide," says Sprint spokesman Dan Wilinsky. "Some companies are claiming nationwide [service], but they're leaving out markets like Atlanta."

Industry watchers agree that Sprint's network reach is a huge selling point. In a recent poll of enterprise wireless customers by Gartner Group, 73.5 percent ranked complete coverage as the most important factor in choosing a wireless carrier.

"In the long run, one of the problems here is AT&T and Verizon are building out incrementally," says Giga Information Group analyst Lisa Pierce. "Until a good percentage of your network is up, customers aren't going to pay $100 for something they can use 30 percent of the time."

Still, Chamberlain and other analysts remain skeptical about near-term demand for the networks, particularly among the enterprise sector that's banked on to lead adoption.

"We were saying if you build it they will come since 1994, and nobody's come yet," he says. "I don't know if more speed or more bandwidth will change this."

Wilinsky disagrees, saying business customers have shown great interest in Sprint's 3G service. "We see less education needed on the business side," he says. "On the consumer side, one of the largest challenges is to educate [consumers] about the advantages."

Forecasts bear Wilinsky out, in the long term. According to Strategis Group, the mobile data market will increase from 5 million subscribers last year to 172 million in 2007. In-Stat/MDR expects the number of business wireless data users to grow from 6.6 million at the end of 2001, to more than 39 million in 2006.

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