# Presentation: 106504

## Third-generation Cellular: Technical and Economic Challenges

- Dr. Ray W. Nettleton
- Telecommunications Consultant
- Denver, CO
- r_nettleton@msn.com

## Agenda

- Third Generation Cellular
- Technical Challenges: Range, Coverage, Capacity, & Spectrum
- Economic Challenges: Market Share & 3G Spectrum Auctions
- A Modest Proposal

- ISART Boulder CO March 2002

## 3G in the “Big Picture”

**ETSI has created a hierarchy of personal communications modalities **
**that provide the maximum data rate possible given where the customer **
**is at a given time.  In the US this is complemented by CDMA2000.**

- Source: ETSI & ANSI Standards

- ISART Boulder CO March 2002

## IMTS – 2000: 5 Standards

**These are the terrestrial standards only.  There will be satellite standards also.**
**The GSM “camp” sponsors UTRAN;  the CDMA camp sponsors IMT-MC (CDMA2000).**
**The US TDMA camp sponsors EDGE (IMT-SC) and will migrate to W-CDMA.**

- ISART Boulder CO March 2002

## What’s Special About 3G?

- It’s not just phones.  It’s PDAs, videophones, Internet browsing, location-based services, interactive games, and a whole lot more.

- ISART Boulder CO March 2002

## Evolution of 3G Systems

- Eventual Target:
- One 4G Stanndard

- 2001

- 2002

- 2003

- Source: ITU

- Phase-in periods only are shown.  Each technology will continue in parallel  with the others for a time.

- ?

- Dual Standard GSM/TDMA Phones

- “Pre-Edge”
- 2.5G

- Timeline may be delayed due to economic technical and standards issues

- ISART Boulder CO March 2002

## 3G Status

- CDMA2000 is operating in Korea with about a million customers. World availability expected mid – late 2002.
- W-CDMA is operating in Tokyo using Ericsson equipment.  World availability expected late 2002 – first half 2003
- Cingular is rolling out GPRS (precursor to EDGE) nationwide in the US – a $3B exercise

- ISART Boulder CO March 2002

## Range / Coverage

**GSM operators are expected to build more base stations for EDGE – that they won’t need for W-CDMA!**

**CDMA2000 operators will need to build more, smaller coverage cells to make this work**

- Source: JMS Worldwide
- Reproduced by permission

- ISART Boulder CO March 2002

## Capacity

**W-CDMA achieves its high data rates with QPSK – 2Mbit/s is not a stretch for a 5MHz signal**

**CDMA2000 achieves its high data rates by going to 16-QAM, losing link budget and capacity along the way**

**W-CDMA has 2.5 times the capacity of CDMA2000**

- ISART Boulder CO March 2002

## Market Share

- Source: www.cellular.co.za

- ISART Boulder CO March 2002

## Spectrum Confusion

**Once again the US is isolated by the FCC’s prior actions**

- Sources: ITU, ERO, FCC

**US PCS/UL**

- ISART Boulder CO March 2002

## Spectrum Auctions Worldwide

**Hundreds of spectrum auctions have already been run.  The proceeds so far - $182B - are shown as “current”.  The “projected” numbers are based on demographics and announcements of future auctions.**

- ISART Boulder CO March 2002

## The Big Spenders

- These “Top Five” 3G auctions, held in the last 18 months, account for more than 58% of the total $182B proceeds collected from auctions worldwide over the past 15 years.

- 3G

- Altogether 3G auctions alone have accounted for $142B of the total, or 78%

- ISART Boulder CO March 2002

## How Much is $330B?

- It is the Gross Domestic Product of Switzerland.
- It is the combined annual revenue of Exxon-Mobil and General Electric
- It is $1,172 for every man, woman and child living in the United States
**“****If you can count your money, you don’t have a billion dollars”**

**... *****J Paul Getty***

- ISART Boulder CO March 2002

## Air vs. Hardware

- ISART Boulder CO March 2002

## Air vs. Revenues

- $330B
- 46%

- 22%

- ISART Boulder CO March 2002

## Air vs. Cellular 10

**Including projections**

**Current proceeds**

- The Auctions are already level with the top 10 cellcos combined.  If the projections are correct, it would be much larger than the top 20!

- Source: ITU

**$B**

- ISART Boulder CO March 2002

## Mark Anderson’s “Modest Proposal”

- The debt burden of 3G operators is as oppressive as that of some third world countries
- The wireless industry cannot recover this outlay, which was due to “extortion bidding”
- Governments should return the 3G money as an interest-free loan
- The EU has started hearings on the question
- The FCC has been forced to give up part of its anticipated revenue (NextWave case)

**Source: http://www.tapsns.com/newsitem.shtml?7-25-2001**

- ISART Boulder CO March 2002

## Conclusions

- 3G is late but provides a rich array of services that will likely stimulate the market
- CDMA2000 will have the toughest time – small market share, licensees often not receiving new spectrum
- W-CDMA won’t be easy either – huge spectrum auction costs, later entry than CDMA2000

- ISART Boulder CO March 2002

## Thank You!