By Jay Boynton
In Jack Kerouac’s seminal On The Road he references “the endless procession of youth” as one of his characters philosophizes on 1950’s beatnik America. We could say the same thing in the world of wireless telecom: there’s an endless procession of new technologies and strange buzzwords. The latest to hit the pavement? Meet “4G” (for Fourth Generation) which could define the next version of worldwide wireless networks.
What is 4G and why should anyone pay attention? 4G is the next version of worldwide wireless standards. Taking over where 3G leaves off, 4G promises to offer wireless broadband and rich multimedia content at a level that 3G never delivered. It hopes to leave Wi-Fi in the dust and offer a quicker return on investment than 3G.
Like most new technologies, the hype and promise frequently exceed the bonds of reality. 4G has been around since 2000 and has been muttered under people’s breath for years as the architecture that 3G networks should have been.
It could enable free ranging wireless broadband, a development that could energize consumer interest in new devices to take advantage of everything from online gaming, video on demand and music. But wait you say, we’ve heard all this before with the promises of 3G. What happened?
“3G” was the generation of wireless networks that were supposed to take cell phones and PDA’s to the next level of functionality and, according to the press releases, drive massive new subscriber growth. Chasing that hype, operators spent nearly $100 billion buying spectrum licenses to run these 3G networks. But the technology proved tougher to implement than was expected. And 3G was unable to carry compelling multimedia content. As a result, many carriers are using the 3G upgrade as an enhancement to overloaded parts of their networks but not to deliver rich multimedia content.
4G, because it is a fully “packet-switched” network (based on Internet Protocol standards) rather than a mix of circuits and packets that 3G is, may be able to jump the problem. Firms are developing software applications that use each PDA as a node to build the 4G network rather than having to rely on cells. This would enable wireless broadband and could threaten Wi-Fi, a popular application but one whose business case has yet to be proven. This “Nomadic Broadband” could also pose a threat to DSL and cable service providers. 4G is clearly a disruptive technology. In this Insights, we will look at the main players in the new 4G space, an historical overview of the “G” network system and some interesting 4G applications. Finally, some thoughts on the developing battle between 4G technology and existing 3G will wrap up the issue. Here’s to tearing apart the latest technology buzzwords!
| The “G” Primer First Generation (1G). This is the first cellular network architecture that was introduced. An analog system, it relied on the spoke and hub system and is still in use by many wireless providers. Installed in the early 1990’s. Second Generation (2G). 2G supported more users in a wireless cell through use of digital technology. Data, like SMS services, could be exchanged at low rates. Installed in the late 1990’s. Third Generation (3G). This version was slated to provide massive data pipes and deliver rich multimedia content. Carriers spent millions on spectrum auctions and infrastructure investments only to find that the technology wasn’t as robust as the hype surrounding it. When 3G comes fully online it will provide improved data transmission rates, but not enough to let the carriers see much of a return on their investments. Will be complete by 2005. Fourth Generation (4G). This version will offer all the things that 3G never managed. This would include enhanced multimedia content, music, video on demand, and portability across all types of devices. Worldwide roaming is also a possibility, as is the idea of wireless broadband. 4G systems are slated to account for 14% of total mobile wireless data revenues in 2007, with carriers seeing 50 million subscribers by 2007. |
4G Applications
Gaming. Research firm Frost and Sullivan recently reported that the mobile game industry made $436.4 million in 2001 and that it will hit $9.3 million by 2008. The wide appeal of gaming makes it an obvious target for wireless broadband applications. 4G would enable gamers to engage in multiplayer scenarios away from their DSL or Wi-Fi connection. According to UK consultancy BWCS, there will be more than 200 million mobile gaming subscribers by 2007.
Video. The market for video-on-demand is expected to balloon once the data pipes are big enough to support it. It was what drove the desire to bring DSL into suburban America in the first place. By increasing the number of users and places they can watch their movies, 4G could eventually crowd out video stores. Once the common MPEG-4 format is adopted it will likely grow in popularity even faster.
Books/Reading Material. eBooks and other recreational reading sources will account for a portion of the content available to 4G subscribers. While a PDA may not be as satisfying to hold and read as a good old hard cover book, the availability of its content will represent another source of multimedia to drive subscriber growth.
The Last Word on the 4G vs. 3G Battle.
So what are 4G’s advantages over 3G? It can be built on top of existing networks and doesn’t require operators to totally retool their systems. 4G also won’t require carriers to purchase costly extra spectrum, as was the case with 3G, because the spectrum 4G uses is public and doesn’t require a license. Because of these cost considerations, 4G would let investors recover their money much faster than with 3G. Many carriers are trying to decide when to stop the bleeding and start putting money toward 4G applications rather than pour more into the 3G hole of higher risk and questionable future returns.
Some European operators have actually asked their governments to refund the money they spent buying 3G wireless spectrum licenses. Other European 3G auctions have collapsed. And British Telecom and Japan’s NTT Docomo have both postponed 3G offerings after encountering technical problems. While the news about 3G isn’t stellar, when it is up and running it will provide more services and content and ultimately will drive new subscriber growth. Too many carriers have poured too much money into 3G licenses and infrastructure to simply abandon it. But as the wireless broadband startups begin to sell their 4G offerings into the carrier market, we may pass an unspoken milestone where firms begin writing down their 3G investments and start looking toward the 4G future.
Jay Boynton publishes Cascade Insights, an analysis of business and technology in the Northwest. For archived issues and the companion international affairs newsletter Global Insights, go to www.boyntonweb.net/insights.htm.
