Spinning down the 3G hype

For months the wireless industry has been backpedaling on promises of the speeds of third-generation wireless technologies. As the industry gathered in Cannes last week for the 3GSM World Congress, more indications surfaced that 3G - which will offer high-speed Web browsing and digital video - would arrive later and be slower and less compelling than previously promised.

More than one industry exec was heard trying to notch down the 3G rhetoric. In a widely quoted interview with the Financial Times, Qualcomm CEO Irwin Jacobs admitted that some of the company's 3G services probably won't be commercially viable until late 2004 or early 2005, extending previous estimates by more than two years.

Alcatel SA echoed the delays, announcing at the 3GSM Congress that its 3G handsets won't be available until early 2004, a year later than earlier forecasts. The French plan to have a standard GPRS, or general packet radio service, handset with "always on" data connectivity on the market by May, but with a data rate of only 14.4Kbps, analysts don't expect it to support a slew of new, revenue-producing services.

Doubts are rising over the potential of 3G when it does arrive. A new Gartner Group study found that while 82 percent of European companies see mobility as being important to their business, only 24 percent will pay more than they do now to use next-generation wireless services over the next three years. This isn't exactly music to the ears of carriers who have dished out hundreds of billions of dollars just for the rights to deploy 3G technology.

Intel joined the naysayers and warned the delegates at the Congress about inflated 3G expectations. Expressing concern over the telecom industry's massive investment in this unproven technology, Intel VP and general manager Hans Geyer warned, "We're facing a situation where an industry is heading for bankruptcy ... before even a 3G call is made." Geyer also chastised the industry for waiting for a killer 3G application to justify all of the recent spectrum and infrastructure spending.

Companies who rely on wireless technology are beginning to distance themselves from 3G as well. Palm (PALM) COO Alan Kessler recently warned, "I'm not going to bet our company's future ... on 3G." The company's CEO Carl Yankowski seems to agree, and stated what has become painfully obvious at a Boston software conference last Thursday: "3G is overhyped."

Not everyone in the industry is retreating from the promises of 3G, however. Japan's NTT DoCoMo , which can claim the most successful wireless Internet service to date, is still bullish on the technology. Kouji Ohboshi, NTT DoCoMo's chairman, has predicted his company will be the first to introduce 3G services - as soon as May.

Hoping to leverage DoCoMo's strong position in wireless data, Ohboshi acknowledges there is some risk in being the first to market with new technology, but believes the payoff will be there. "We won't know until it starts, but we made the decision to undertake this challenge [of launching 3G] as front-runners, not a second runner," Ohboshi recently stated.

Nokia , the perennial industry darling, also remains optimistic. A company representative noted that the Finnish handset-maker was not budging from its earlier 3G projections, which include producing next-generation handsets in volume by the late part of this year.

Add Carl-Johan Ivarsson, L.M. Ericsson Telephone Co.'s product manager to the list of those still optimistic about the promise of 3G. At IDC's European Telecoms Forum in Rome this week, Ivarsson stated, "We actually have consumers out in the streets who say they are waiting for UMTS [universal mobile telecommunications system]." Those phones could move data about 50 times faster than your laptop's modem, but how long will they have to wait for it?

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