The US asks "3G or Not to Be?"

date: April 15, 2002

US telecoms companies are spending up to $30 billion to upgrade their networks for high speed-data communications although voice is currently the driving factor, according to a report in the Washington Post.

The chairman of VoiceStream Wireless, John Stanton, says he has no doubt that consumers will eventually want and need high-speed Internet access on their wireless device. "When people get addicted to and used to the convenience wireless provides…demand will take care of itself." In the meantime service providers must stop the increasing volumes of calls from straining the networks, which can only carry a restricted amount on the limited available spectrum.

Executives at the major US wireless companies sense that the real benefit of 3G is that it allows more phone calls to be made over the same network, rather than speeding up data traffic. The fourth-largest wireless service provider, Sprint PCS, estimates that an average customer spends 550 minutes a month on a cell phone and this figure is increasing rapidly. President of Sprint PCS, Charles Levine, says that the payoff for the company's $1.5 billion investment in network upgrades is that the number of phone calls that it can carry on the network at one time has doubled.

"It depends who you are," Levine says, "Some people are never going to use data."

The number of e-mail and short messages sent over cell phones has doubled every year for the past three years, according to the Washington Post. Now nearly 20 percent of subscribers use their mobile phones to send and receive data. But cell-phone companies say that only one-five percent of their revenue comes from data traffic

All the major carriers are planning to invest $26 billion to $30 billion to upgrade their networks nationwide, according to the Yankee Group. That estimate does not include the cost of spectrum licences that could cost the industry almost $16 billion. They are all convinced that their investments will pay off in the future although, as Bill Stone, executive director of network strategy for Verizon Communications Inc., the largest cell-phone service provider in the US, says: "I'll be honest: I don't know what the market demand will be for the products and services offered with 3G."

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