Exploit 2Gplus to full potential before moving to 3G

date: 30th December 2000, source: thestar.com.my

THE Government should encourage local operators to exploit the full potential of 2Gplus systems before considering moving to 3G, a new standard which has yet to be proven, industry pundits said.

"There is no real hurry to allocate the 3G spectrum as yet. We should get a feel of what we can do with 2Gplus, learn from this new technology and gradually move to 3G,'' said a representative of a cellular company who requested anonymity.

The 3G is a two-way mobile broadband system which enables voice, images, data and Internet to be transmitted at very high speeds.

There is a shift from the current GSM standard to 2Gplus which is essentially GPRS.

GPRS trials are being conducted by most of the local operators and the service is expected to be available sometime next year.

With GPRS, data speeds will rise from the current 9.6 to 115 kilobits per second (kpbs).

3G permits speeds of up to 2 megabits per second for stationary subscribers, up to 384 kbps to pedestrian subscribers and up to 144 kbps to subscribers on the move.

The 3G or IMT-2000 spectrum bandwidth ranges from 1,885 to 2,200 megahertz (Mhz), while GSM is implemented in the 900Mhz, 1,800Mhz or 1,900Mhz frequency bands.

Trials are being conducted for 3G in various parts of the world, but Japan and South Korea are set to become the world leaders in introducing services on 3G sometime next year.

In Europe, there is so much hype about 3G with the auctions for 3G licences. It is reported that the European telcos could be paying a total of £200bil for 3G licences.

With 3G on the horizon, the local players want to be part of the action and some have written of their intention to the Malaysian Communications & Multimedia Commission (CMC).

The CMC, the industry's regulatory body, has yet to take a stand on the issue but wants feedback from the industry and public on how the 3G spectrum should be allocated.

In fact, early last month, the CMC posted on its website a discussion paper on the concepts and proposed principles on the implementation of IMT-2000 mobile cellular service in Malaysia. It expects responses on or before Dec 11.

The question a lot of people are asking: Is the Malaysian public ready for such high speed transmissions when less than 1% of the current 3.8 million cellular subscribers are users of WAP (wireless application protocol).

"Here, people are just getting comfortable with WAP and there may not be a huge market for 3G,'' an industry player said.

This is something the CMC has to look into before assigning the 3G spectrum.

But industry observer Dr M. Naim Yunus said: "In the initial stages, 2Gplus, preferably EDGE on GSM platform should be used for non-urban areas with 3G for more populous areas where users' service expectations are higher and more sophisticated.

"For instance, 3G should be deployed in city areas with 2Gplus for outlying areas,'' Naim said in his response to the CMC paper, a copy of which was made available to Star Business.

He added that for high bandwidth applications, areas not covered by 3G should have the option for satellite-based delivery services.

Spectrum assignment

As for 3G, the CMC is taking a holistic approach to the 3G implementation. To them, it is not just about mobile telephony but a two-way mobile broadband technology which opens new windows to reach customers, bypassing the existing competition.

Therefore 3G should involve spectrum assignment and not dishing of licences, whereas the rest of the world are still into offering licences.

"CMC is thinking in this way because it already has in place the Convergence Act, while the rest of the world is still trying to make sense of convergence,'' said a source close to the CMC.

The spectrum allocation can be done the same way as licences, which is via auctions, beauty contest and a fixed price plus recurring annual fees.

"I would suggest a fixed price with recurring annual fees. Also select spectrums which would guarantee the lowest consumer costs, as in the case of Israel,'' Naim said.

In the discussion paper, the CMC appears not keen that every existing mobile operator build a 3G network as it entails large outflows of funds for equipment purchases, and there is already duplication of infrastructure, another round would be wasteful when sharing should be the "order of the day.''

CMC suggested the setting up of a joint venture company (JVCo) for the purpose of providing wholesale airtime to operators for the IMT-2000 services at a price to be determined.

At least 80% of the existing operator's infrastructure can be used as a base for the shared infrastructure and the existing operators can be shareholders in the JVCo, sources close to CMC said.

"To implement this sharing concept, there is a need for a mindshift at the players level, from the old to new paradigm,'' the source said.

But will the industry players subscribe to this when they have invested billions of ringgit to set up a network?

"With technological changes where it becomes too costly to adopt a new technology, we cannot just sit here and not talk (among operators), otherwise we will miss out,'' said an industry player who requested anonymity.

Yet, every mobile operator is hoping to be allocated a 3G spectrum to enable them to offer services on the IMT-2000 standard.

Interestingly, the CMC officials met industry players on Oct 16 and toyed with the idea that there should be two spectrums assigned for 3G. However, that is not a final decision.

By limiting to two, it appears that the CMC is forcing mergers among the operators. Those who want to be part of the 3G action should merge and share infrastructure.

Not giving every mobile operator a 3G spectrum will stifle their growth, unless there is a firm guarantee that by sharing infrastructure, there would be a level playing field, otherwise the smaller players will be at the mercy of the bigger ones.

"The implementation is going to be a nightmare if there is one or two spectrums offered. Will the sharing concept work?'' asked a representative of a cellular company.

Naim, in his response to the discussion paper, suggested three licences be offered in stage one and the fourth, if necessary, in stage 2, which should be 18 to 24 months after the first three awards.

Naim felt that there should not be any regulator-mandated converged standard. It should be left to the market forces to decide and there also appears to be much uncertainty about the relative technical merits of the 3G standards.

"Without a converged standard, consumers should still be able to benefit from economics of scale in production and seamless roaming.

"Multiple standards can create more product/service variety, create stronger incentives for innovation and avoid 'thorny problems' created by regulation,'' Naim said.

The onus thus lies in the hands of the existing operators. They have a chance to state what they want and how the 3G spectrum allocation should be assigned. It has to be their commercial decision, and if they are unhappy about joint ventures or shared infrastructure, this is their chance to speak up by reverting to the CMC with their proposals on how best to deal with the 3G issue.

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