A combination of advances in fixed-wireless and
high-speed-data capabilities over personal-communications-services networks is fueling the
development of a new force to be reckoned with on cable's advanced-services horizon.
Today, PCS operators are highly focused on delivering
low-priced mobile-voice services in competition with cellular. But many are also looking
beyond this foundation-building phase to the long-term benefits of adding high-speed data
as a fixed -- as well as a mobile -- service component to their offerings.
Several alliances of vendors and operators around the globe
are working on various approaches to what is known as "third-generation" PCS,
for deployments starting as early as 2000. And some players operating over the CDMA
(code-division multiple access) platform are pursuing "pre-3G" approaches that
include much higher data rates than previously reported.
"We're not ready to talk about specific data
rates, but we're looking at something much faster than 64 kilobits per second that
will be simple and less costly to implement than 3G systems," said Perry LaForge,
executive director of the CDMA Development Group, which is working with vendors and
operators to create a standardized approach to third-generation systems.
The 64-kbps data rate, which is well beyond anything
currently available over mobile networks, has been under development as a standardized,
software-only upgrade option over CDMA that will be ready for deployment later this year.
But rapid advances in base-station chips known as
digital-signal processors have raised the bar on what can be done within the 1.25
megahertz that is allocated to each CDMA channel. This is making it possible to implement
data rates of more than 100 kbps with simple line-card upgrades in existing base stations.
Further out, the 3G options -- requiring base-station
upgrades to 5-MHz channelization -- will offer bidirectional data rates of 2 megabits per
second over fixed links and 384 kbps for mobile users. The timing of availability of all
these options heavily depends on demand from PCS providers. They remain divided over which
approaches represent the best strategy for moving beyond current data capabilities, which
now top out at 14.4 kbps in the few instances where such services are even available.
Some players, such as AirTouch Communications Inc., the
provider of cellular and PCS services that was spun off from Pacific Bell two years ago,
are leaning toward moving rapidly to pre-3G data rates, while others, such as Sprint PCS,
are content to wait for full-3G implementation.
Because the line-card-upgrade option of 100-plus kbps has
yet to be publicly announced, it remains to be seen what level of carrier support that
approach will elicit.
Whichever approaches they're taking, it is clear that
PCS providers (and cellular providers that are converting to PCS-like digital technology)
will soon have to make more advanced features available. These include data, which must be
a part of their offerings if they are to avoid the consequences of cutthroat price wars in
the voice-only service arena, noted David Berndt, a telecommunications analyst for The
Yankee Group.
In its latest analysis of price trends, the consulting
concern found that prices in North America for the average user of mobile-cellular and PCS
services had dropped 16 percent during 1997, while in the largest markets -- New York and
Los Angeles -- competition led to declines of 63 percent and 64 percent, respectively.
"The PCS carriers have spent billions of dollars to
obtain spectrum and to put their infrastructures in place to get to the point where they
can offer voice service to the mass-consumer market," Berndt said. "They talk
about serving the needs of corporate customers with specialized services, adding data
services and the like, but the bottom line is that their sales forces are focused on
signing up as many voice customers as they can find."
This voice-only focus is about to change, Berndt and others
said. The Yankee Group anticipated that feature enhancements -- such as call-waiting and
forwarding, caller ID, voice-activated dialing and personal-number service -- will
contribute $773 million in revenues by 2002, compared with $98 million a year ago. And
these numbers don't include data revenues, which will surge, as well, The Yankee
Group said.
In the case of CDMA providers, rapid growth -- which, by
industry estimates, has brought the customer base to more than 1.4 million from fewer than
200,000 a year ago -- has vindicated a marketing strategy based on price and quality,
LaForge said.
But, he added, "at some point, everybody copies
everybody else, and you're dealing with a kind of commodity situation. Starting
around July, we're going to see a lot more pressure on providers to come up with
additional ways to differentiate their services, and that's where data will begin to
play an important role."
While data over mobile networks has been a nonstarter to
this point, there are plenty of reasons to assume that the market is ready to embrace
services that can be easily used at low cost, said Stuart Taylor, senior manager in the
communications-strategy group at Andersen Consulting Inc.
"One of the major trends that we see is that
businesses are trying to integrate wireless communications more into their overall
operations," Taylor said. "Data will be a big part of that integration, given
what we're seeing in corporate use of Intranets and other forms of data
communications."
As wireless, like the laptop personal computer, moves from
being an individual user's purchasing choice to becoming a requirement of the
workplace, the purchasing decision will move to the company, just as it has with the
laptop, Taylor noted.
"Carriers will have a strong incentive to provide the
features that the industry is looking for, because these purchases will greatly reduce the
churn that comes with individual purchases," he said.
The business need for wireless data is definitely
intensifying, agreed Michael Reene, general manager for IBM Corp.'s
telecommunications and media-industries group in North America.
"Just as everyone was getting used to the idea that
data was overhyped as a wireless application, wireless data is getting ready to take
off," he said. "We're adjusting our strategies accordingly."
For IBM, that means getting around the current
low-data-rate environment by offering a highly compressed connection that requires a
proprietary dialer to be installed in customers' modems. This allows users to connect
at what appear to be higher data rates to the firm's points of presence over a
variety of air interfaces.
The service, dubbed "IBM To Go.data," with
prospective price tags in the range of $50 to $100 per month, was in trial most of last
year, and it is close to commercial availability over most carriers' networks, said
Randall McComas, a manager within Reene's group.
"We've been charging $100 [per month] in the
trials to make sure that we only get people who really need the service, and no one in the
pilot projects is willing to give it back to us," McComas said.
Demand for high-speed-data solutions has pushed
telecommunications-equipment suppliers into action, after a long period of laconic support
for next-generation ideas, said Bo Piekarski, vice president for business development and
strategic marketing in the wireless-communications division of Ericsson Inc.
"Access to the Internet has become a mass-market
phenomenon, which changes how wireless operators perceive the importance of data in their
ability to compete," Piekarski said. "We're all working on ways to improve
the data rates within all air-interface categories, one step at a time."
Sprint PCS recently committed to begin trials of
third-generation facilities supporting data transport all the way into the multimegabit
range "no later than 2000," with commercial deployment to follow
"quickly."
At the same time, the carrier -- a partnership between
Sprint Corp., Tele-Communications Inc., Comcast Corp. and Cox Communications Inc. -- is
continuing with preparations to use a portion of its 30 MHz of spectrum to provide fixed
services in direct competition with wireline carriers, officials said.
Sprint PCS, with the largest CDMA footprint in North
America, could have a big impact on the pace of 3G development, LaForge noted.
"Its initiative [with Lucent Technologies, Nortel,
Motorola Inc. and Qualcomm Inc.] says that people are serious about wideband CDMA,"
he said.
Prospects for reaching agreement on a next-generation
standard improved considerably in late February, with a decision by the CDG and the GSM
(global system for mobile communications) community to work together on developing a
platform that will work with both types of air interfaces. LaForge said the Sprint PCS
initiative should expedite, rather than conflict with, these efforts, even though tests of
the Sprint system are likely to begin before a standard is completed.
The first instance of implementation of the wideband-CDMA
capability in a pre-standard iteration can be found in Japan. There, wireless-service
provider NTT DoCoMo is working with Lucent, Ericsson, Motorola and other vendors to bring
multimedia services to market by next year.
Ericsson last month became the first vendor to deliver an
experimental next-generation system, which DoCoMo officials said will be used to test
delivery of two-way 384-kbps data services starting this month.
AirTouch, not content to wait for 3G capabilities, is
pushing vendors to deliver the software that will enable 64-kbps data service over
existing base stations, said Craig Farrill, vice president for strategic technology at
AirTouch, which is partnered with Bell Atlantic Corp. and U S West Inc. in PrimeCo
Personal Communications L.P.
"We've been driving the standard pretty
hard," Farrill said, suggesting that the company will start out offering 14.4-kbps
service around the end of the year, before moving to 64 kbps sometime in mid 1999.
"We're looking at providing a range of service
categories, such as Internet access, Intranet for businesses, multimedia entertainment,
business transactions and telemetry," Farrill said. "People don't ask for
data access: They ask for specific services."
As far as challenging cable's high-speed-data thrust
is concerned, the trend to watch is the application of the next-generation wireless-data
capabilities over fixed links, such as what Sprint PCS is working on in a quiet initiative
that has largely gone unnoticed in its pursuit of nationwide mobile-service rollouts.
More than one year ago, Sprint PCS CEO Andrew Sukawaty
indicated that his firm intended to make use of some of its spectrum for delivering fixed
service as a complement to the mobile offering. While WLL (wireless local loop)
didn't get off the ground in 1997, as Sukawaty anticipated, the idea is still very
much alive, said Sprint PCS spokesman Tom Murphy.
"I can't give you a lot of detail, but WLL
remains part of the opportunity that we see for use of our spectrum," Murphy said.
"We have a team of people devoted to pursuing it."
Nor has WLL disappeared off the agenda of the other major
player to be identified with it over the past year: AT&T Wireless, despite a late
start in testing the proprietary system known as "Project Angel," has now run
through a first phase of testing in Chicago, and it is tweaking the system in preparation
for phase two, spokesman Ken Woo said.
"We're encouraged by what we've seen so far,
but there's more work to do," Woo said. "We didn't get the extremely
cold winter that we expected in Chicago, and we haven't tested the system under hot
summer conditions."
Woo made it clear that WLL is but one of many technologies
that AT&T is looking at as a means of local access, and that nothing has changed since
the project was announced -- which is to say, no final commitments to deployment have been
made. But if tests go well, the system is likely to find a use, Woo added.
