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3G: The next generation
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June 8, 2000: 10:10 a.m. ET
Industry leaders keep eye on demand for wireless' next wave
By Tatiana D. Helenius
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NEW YORK (CNNfn) - Get ready for m-commerce and video-conferencing by cell phone. Third-generation - 3G - wireless makes both scenarios distinct possibilities.
Analog networks defined the first generation of cellular and the second generation was defined by the move to digital networks. 'Third generation' wireless will be defined by the migration to packet-switched networks at high-speed data rates.
Mobile's third act
Third generation technology will handle information at a clip that roars past current data delivery speeds, delivering information at a blazing 144Kbps. Basic voice service currently plods along at 14.4 to 19.2Kbps, Dataquest mobile communications analyst Tole Hart says.
 "Obviously," Hart says, "this opens up the possibility of far faster applications for mobile users. There is some rudimentary content being delivered now - driving directions, limited web browsing capabilities, stock quotes and the like, but 3G will allow for faster delivery of information. A greater bulk of information can be delivered with greater efficiency."
3G's appeal lies in its ability to deliver "data at broadband speeds," says Glen Frey, Information & Technology Fund portfolio manager for Orbitex Management. "This means video mail, video news clips, video conferencing functionality is possible, if that is what the consumer or business market demands. Stock quotes and limited Web site information can be delivered through cell phones right now. 3G opens up the ability to deliver a much richer range of services."
M-commerce: Shopping on the run
M-commerce (mobile commerce), for one, might become much more common for shoppers pressed for time. With the introduction of 3G, "M-commerce will become a viable option for B2B and B2C solutions," says Heather Henyon, senior analyst, wireless practice at The Strategis Group.
 "Retail merchants, financial service institutions, entertainment companies - they'll all be more actively involved in m-commerce. Since wireless Internet services require such low capital costs, these companies are looking to attract customers to this kind of wireless transaction environment," Henyon says. "We'll start to see less and less of a need for call centers at banks, for one. Aside from the strong pure e-commerce players like Amazon (AMZN: Research, Estimates) and CDNow.com (CDNW: Research, Estimates), brick-and-mortar shops will also begin to have a stronger Web presence through the wireless Internet."
The 'killer app' follies
Despite 3G's obvious benefits, fans of the technology are quick to point out that consumer application preferences will play a large part in fueling demand. The problem, says Henyon, is that at this early stage no one is really quite sure just what the killer app will be.
 "I think that the 'killer app' for 3G will be different for everyone because preferences - by individual, by country -- are different," Henyon says. "For example, when Telia Sweden offered WAP (wireless application protocol) services, they thought that CNN.com would be the content that people would most desire on their handsets. They quickly realized that Swedes wanted real-time tram schedules. Telia then had to go back to the tram operator and automate the tram schedules. Initially, real-time information will be the most valuable service to end-users, but once we move into the free browsing environment with larger LCD screens, this will all change."
Most initial applications, Frey says, are likely to be retail related. "Let's say a customer is shopping for clothing; they might be able to download video information about what certain items look like. Or companies might offer special coupons downloadable to user cell phones, giving the customer a special code that can be redeemed for specific items."
 Other applications might target users tooling along in their automobiles. "With 3G, the increased capacity for handling large amounts of data will facilitate the delivery of graphics-rich information," Frey says, "so one application here might be downloading detailed, scaleable maps and other driver information."
Seattle start-up Infomove, for example, already is working on products and services directly related to the four-wheeled wireless Internet user, such as real-time traffic advisories, text-to-speech e-mail, audible driving directions, and personalized Internet content sorted by user location. For instance, a user would be able to scan for the nearest restaurant, hotel or service station.
Wired about wireless
Despite some dubious crystal-balling among wireless application developers, there is little doubt that demand for wireless products is on the upsurge.
A recent study by Cahners In-Stat Group forecast that the number of wireless subscribers will reach one billion by September 2002. Additionally, says Cahners In-Stat analyst Ray Jodoin, that number is expected to hit 1.87 billion by 2004, as 3G demand catches fire.
Alex Cena, wireless communications analyst at Salomon Smith Barney, notes that equipment providers will be the first to benefit from the 3G roll-out, regardless of which telecom carriers or application developers come out on top. "Ericsson (ERICY: Research, Estimates) is the most obvious beneficiary of 3G," says Cena, "with Nokia (NOK: Research, Estimates) a close second. Motorola (MOT: Research, Estimates), as well as Nortel (NT: Research, Estimates) and Lucent, are already gaining mind share among European operators."
 Heavy hitters aside, says Cena, there will plenty of room on the 3G playing field for smaller players; "niche players such as AirNet (ANCC: Research, Estimates) and interWAVE (IWAV: Research, Estimates) should also benefit from the migration to wireless from wireline, as well as the growth in mobile data applications."
Japan is scheduled to roll out 3G in 2001, with Western Europe following in 2002 and 2003. "The U.S. is about a year behind Europe," says Henyon, "primarily because Europe's regulatory environment has mandated one standard. As a result, the GSM (GSM is the dominant wireless standard in Europe and in China) operators will deploy UMTS, or W-CDMA, while the coexistence of several different standards in the U.S. makes it a little more difficult."
*Time Warner is the parent company of CNN.com and CNNfn.com 
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