3G for mobile broadband? Think again

Cellular operators want to go into data market, but pricing is an issue

SINGAPORE -- The GSM Association, an industry group comprising mobile operators, wants to see third-generation cellular technologies used for wireless broadband in notebook PCs, but operators will have to change their way of doing business to make that happen.

3G technologies like W-CDMA (Wideband Code Division Multiple Access) provide data at downlink speeds up to 384Kbit/sec., but advances in 3G technology like HSDPA (High-Speed Data Packet Access) offer speeds of 3.6Mbit/sec. or more.

Cellular operators have pinned their hopes on these new high-speed technologies to boost their mobile data business. "We're not simply providing voice; we're all going after the data market in a very significant way," said Craig Ehrlich, chairman of the GSMA's board of directors and a director at Hutchison Mobile Communications Ltd., speaking at the 3GSM World Congress Asia conference here last week.

As part of these efforts, the GSMA is working with Intel Corp. to make HSDPA support a standard component of notebook computers, alongside existing Wi-Fi access and planned support for WiMax.

"Mobile broadband -- HSDPA -- is becoming and will become a standard feature of notebook PCs," said Rob Conway, the GSMA's chief executive.

Others are not so sure HSDPA will be widely used for mobile access.

"Irrespective of what people say, 3G is about voice. There's no question about that," said Ray Owen, the Asia-Pacific director of wireless broadband at Motorola Inc., noting that WiMax and Wi-Fi have important roles to play. "It's not necessarily that cellular technologies will do everything," he said.

The principal problem with 3G and HSDPA is cost. Rates for 3G data services are high in most countries, making the technology ill-suited for heavy data access, with the exception of wealthy customers and some business users.

In Japan, which was the first country to get commercial 3G services, users pay a flat rate for sending e-mails or surfing the Web from their handsets. However, PC users who access the Web over 3G networks pay much more.

As a result, when notebook users in Japan can't access a Wi-Fi connection, they often rely on Personal Handyphone System cards rather than 3G cards for mobile data access. PHS services are charged at a flat rate of $108 per month for 256Kbit/sec. access or $82 for 128Kbit/sec.

3G data plans are often cheaper in other countries, but these services are not intended for mass adoption. In Singapore, MobileOne Ltd. offers unlimited access with a 3G data card for $43 per month. That service is geared to business users, who are more willing to pay for premium services, rather than the average consumer.

While the GSMA is working with handset makers to bring down the cost of 3G phones, the group has no intention of pushing operators to lower the costs of 3G services, Ehrlich said. "The one thing GSMA does not get involved in, for antitrust reasons, is pricing," he said.

There is plenty of incentive for operators to keep cellular data costs high. "If you were to calculate the bandwidth you are consuming on the cell site, compared to voice, you should be charged a phenomenal amount for that access," Motorola's Owen said, citing the profitability of voice calls to mobile operators.

If operators want to make cellular more competitive for data, they will have to rethink their business model. "The voice charging model works very well for voice, but translating that into the data world isn't necessarily going to be as successful," Owen said.

Martyn Williams in Tokyo contributed to this report. 

Copyright © 2006 IDG Communications, Inc.

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