Help finance WCDMA roll-out with EDGE

date: March 21, 2002

Operators will make money instantly if they add EDGE onto their existing GPRS networks and increase their capacity and number of users. This money can then be used to help finance expensive WCDMA roll-outs.

"It comes down to more users and more money for the operators," says Torsten Hunte, Ericsson's Strategic Product Manager, "And the extra income can be used for anything of course, but it would be useful to help a WCDMA roll-out."

A year ago there was a big question mark over whether EDGE would ever take off. It was a classic chicken and egg scenario with European operators saying there wouldn't be any terminals, while terminal manufacturers felt the operators were not interested so they didn't push the development of EDGE enabled sets.

The turning point came in the US where operators are now going for EDGE and vendors can't deliver EDGE enabled handsets to the US that won't work in Europe. "AT&T and Cingular are demanding the handsets that have European frequencies so manufacturers are rushing to meet the demand."

The problem now is how to position EDGE: in the US EDGE is seen as 3G, in Europe it is seen as an add-on to GPRS and operators, faced with huge costs for rolling out WCDMA don't see why they should bother with EDGE.

The answer is instant income in the short term. Operators need to upgrade their GSM networks to meet capacity demands and it is simple and not very expensive to install EDGE transceivers at the same time. Then they can 'go EDGE' as soon as the handsets are available. The market to aim for is not the small pioneer/ business user segment but the mass market in the urban areas.

EDGE will be available this year in the US and next year in Europe. Good value, attractive handsets will make users interested. The prime focus will be voice and SMS, but EDGE can offer speed and MMS and this will attract consumers. The money made from more consumers and increased usage goes to WCDMA.

So EDGE will give users a taste of WCDMA possibilities at very little cost to the operators and then, in the longer term, it takes up its role as a complement to WCDMA serving the rural areas where it will be expensive to offer full WCDMA coverage for a sparse population.

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