3G: The great wireless mystery

It's supposedly the greatest thing since sliced bread, but no one - not even the industry cognoscenti - knows for certain when, or where, the next generation of wireless will arrive. Or maybe it's here already?
Written by Ben Charny, Contributor

Just two weeks ago, Qualcomm chief executive Irwin Jacobs held the elusive "3G" in his hands.

He was wandering the floor of the GSM World Congress in Cannes, France, using an experimental modem to patch his handheld into a nearby bay station, he told a group of investors at his company's annual meeting this week. Video streamed onto his device. He surfed the Web and patched into a private corporate network.

The billions of dollars spent so far in bandwidth licenses, infrastructure construction and research and development has so far allowed Jacobs to make the jump to the next generation of wireless devices. But when do the rest of us get a crack at playing with the future?

The answers are about as clear as the alphabet soup of standards and chipsets that many blame for the hype, as well as launch delays. Some industry analysts say 3G, or third generation, arrives in May, but only in a limited release in Japan. Others say it's already here, in South Korea. And some say US carriers Sprint and Verizon Wireless will introduce Americans to 3G services by the end of this year.

"The carriers have spent a lot of money on licenses; the manufacturers have spent a lot of money making handsets. Is there pressure to justify that? Absolutely," said Peter Friedland, senior analyst for W.R. Hambrecht.

When will 3G take hold? The question continues to nag, especially after Jacobs himself last week implied that he was worried about the launches of some of Qualcomm's and other companies' 3G products getting delayed.

Financial analysts, no longer dazzled by the latest technology darlings, have been wondering just how telecom companies will find a way to pay off the $100bn they paid for bandwidth licenses in Europe to operate 3G networks and another $18bn they paid in a recent auction in the United States. Although the arrival of the technology seems just around the corner, nearly every level of the wireless food chain is under increasing pressure to deliver -- or delay at their own peril.

But there have been so many bumps to absorb to get to this point that the market may have already taken out its pound of flesh in the form of pummeling the stock values of the wireless players. "To a certain degree, we may be near bottom," Friedland said.

US carrier Verizon Communications is conducting trials of a 3G network in Boston, and its chief executive has said in the past that the company expects to launch the service for American consumers in 2002. But don't hold him to that, say some industry insiders. "It's tough to say for America in general," one network equipment spokesman said.

"There's tremendous pressure to have 3G come to market," said Perry LaForge, executive director of the CDMA Development Group. Qualcomm's CDMA is one of a number of technology standards that have been developed to power the next generation of handheld devices.

"There's always been pressure there, " said Joe Barrett, a spokesman for Nokia, the largest maker of wireless phones.

So where is 3G? Qualcomm claims it's already here, in all its video streaming, short messaging glory. The makers of the CDMA2000 chip, which some standards bodies say is worthy enough to be considered third generation, point out that South Korea Telecomm began offering service to Samsung handsets outfitted with the Qualcomm chip last year.

NTT DoCoMo is nearing its release of next-generation technology. The Japanese telecommunications giant last week, amid concerns of 3G delays, reiterated its stance that it will launch its first next-generation service to its customers in May.

But don't expect a huge launch, LaForge said.

"They'll stick a flag in the ground," he said. "It'll be more of a declaration that we're here; we hit our deadline."

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