InterDigital Inc (IDCC)

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802.11 vs. 3G



RELATED SYMBOLS: (INTC)(NOK)

Jan 31, 2003 (Internet.com via COMTEX) -- Once upon a time, you could hardly
open a business magazine without finding a feature that praised third generation
(AKA 3G) wireless telephony as the answer to mobile Internet needs. That was
venture capital then . This is fiscally strapped now .

In theory, 3G wireless networks are capable of throughput up to 384Kbps, which
still puts them at the bottom end of 802.11b's range. In practice, though, 3G
isn't available in the United States at all except in experimental deployments.

Instead, we have telecomms using the "3G" name for what's actually, at best,
2.5G. This is a middle step between what we currently have, 2G, basic digital
service, and the science fiction speeds of 3G. With 2.5G networks, you can
transfer data at rates of up to 114Kbps generally using General Packet Radio
Service ( GPRS ) .

So how good is GPRS, really? David Ferris, CEO and analyst for Ferris Research ,
has "been testing out GPRS connections with mobile phones in major metropolitan
areas in the UK and US. These are now being brought on-stream by a wide variety
of mobile carriers. In a nutshell, GPRS provides an always-on connection to the
Internet. To be precise, GPRS enables per-handset data rates of 9.05-107.2
Kbit/sec depending upon the coding scheme employed and time slots (from 1-8)
allocated to a data packet. In practice, we're finding that transfer speeds of
400 to 1000 bytes/sec are the norm."

Translated, what this means is that 2.5G is is in no way competition for 802.11
for moving data. As Ferris explains, performance like this "means that
communications need to be kept short, and that, in turn, means most of them will
be text-based. E-mails with attachments will usually take much too long to
transfer."

Still, he thinks, that "applications like instant messaging, or distributing
appointment information, can be run successfully." However, instant messaging or
Web browsing on 2.5G or 3G phones isn't what 802.11-enabled laptops users think
of as IM or the Web.

On digital phones you must use Short Messaging Service (SMS) or Multimedia
Messaging Service (MMS) . Without a special gateway between the SMS/MMS servers
and consumer IM clients like AOL Instant Messenger (AIM), or business-class IM
clients such as Lotus Sametime or NetLert , you can't send messages from IM to
someone using MMS or SMS on a digital phone.

On the Web side, for a Web page to be viewed effectively on a digital phone, the
signal must be sent in Wireless Application Protocol (WAP) and the page should
be written, not in the usual HyperText Makrup Language (HTML) used for most Web
pages , but in Wireless Markup Language (WML) . In short, viewing Web pages with
on 2.5G and 3G is inherently more problematic.

3G is also much more troublesome for telecom carriers to install. To deploy it
you must overhaul your wireless infrastructure and replace it. Of course, you
must do the same thing with 802.11 hotspots, but while hotspots have far less
range, a business class hotspot with advanced antennas also can be deployed for
about $1500, while all but the smallest (pico range) 3G base stations start
around six figures and move up from there. Anyone can set up a hotspot; only a
telephone carrier or corporation can afford 3G base station. Expert Opinion

What do the analysts think? It depends. Everyone acknowledges that there was a
22% decline in wireless and mobile network infrastructure spending in 2002.
Research house IDC , for one, in its Worldwide Wireless and Mobile Network
Infrastructure Forecast and Analysis, 2002-2007 study, says that the demand for
2.5 and 3G remains strong. Indeed, IDC expects annual spending on 2.5 and 3G
network infrastructure to grow from $38.3 billion in 2002 to nearly $49 billion
in 2007. Wireless phone infrastructure providers like Ericsson , Nokia , and
Nortel no doubt hope that IDC is right.

"The essential rationale for deployment of 3G networks -- gaining spectrum
efficiencies, easing network capacity constraints, lowering operating costs, and
expanding revenue opportunities through provisioning of data services -- remains
intact," says Dr. Shiv K. Bakhshi, research manager for the IDC's Wireless and
Mobile Network Infrastructure program. He believes that the rising popularity of
MMS and picture messaging will "legitimize the culture of data consumption in a
mobile environment and spur deployment of network infrastructure." But, he
notes, it's not just 3G driving these developments; "public WLANs and hotspots"
will also help in this development.

"The WLAN industry will continue to experience stellar growth as deployments in
several key markets take place," predicts Allied Business Intelligence (ABI)
analyst John W. Chang, senior analyst, and some of that growth will come at 3G's
expense.

ABI reports in its Worldwide Deployments, Drivers, Players and Forecasts for
802.11x , that "Some of the leading wireless carriers worldwide, including
T-Mobile , AT&T , and Verizon , have made announcements of deploying WLAN
services as their 3G plans are delayed. WLAN is easier to install and costs far
less than setting up a 3G network. In addition, 3G's data rate of 144 kbps, a
portable data rate of 384 kbps, and an in-building fixed rate of 2 Mbps are
slow, compared to that of WLAN. As WLAN moves toward 54 Mbps, it is apparent
that 3G cannot compete with the data rate of WLAN. Though 3G will be deployed
worldwide due to its voice capacity benefits, telecom carriers are seeing WLAN
hotspots as the immediate revenue generator for data services."

This view is not just that of an analyst looking at plans. On January 29,
British Telecomm (BT) announced that it would be deploying 802.11b--and 802.11a
soon--hotspots with three business partners. BT plans to have 4,000 hotspots in
place by the summer of 2005.

According to David Hughes, BT director of mobility, its BT Openzone hotspot
customers will pay 10% of the price to download 1MB of data compared to a 3G
user at four times the speed. In short, he declares, "At the moment, it looks
like Wi-Fi is one-tenth of the price of 3G, and four times as fast." Even with
3G's much better range, which would you rather have?

Some analysts, like ABI's director of automotive electronics Frank Viquez, think
that, "802.11 promises to have the most potential, given its minimum raw
bandwidth of 10 Mbps and dramatic growth outside the vehicle industry," even
when a wireless data user is traveling at speed.

Can the two technologies get along? Some experts think they can , but given the
stalled economy and 802.11's lower price, deployment costs alone may cause 3G to
flounder. Who knows? Instead of 3G laptops in 2007, perhaps we'll have 802.11
mobile phones.


By Steven J. Vaughan-Nichols
URL: http://www.internet.com

Copyright 2001 INT Media Group, Inc. All rights reserved.
Republication and redistribution of INT Media Group content is
Expressly prohibited without the prior written consent of INT Media
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SUBJECT CODE: 2.5G
3G
802.11
802.11a

(Wall Street)





Daniel Nieves