Finally, 3G is closer to becoming a reality

Finally, 3G is closer to becoming a reality

Zatni Arbi, Contributor/zatni@cbn.net.id

"As we see it, between 2001 and the end of last year, the
cellular phone network industry experienced a recession," said
Mats H. Olsson. Speaking to a group of Indonesian journalists
during the recent CommunicAsia 2004 in Singapore, he recalled his
many years as Ericsson's country manager for Indonesia. He left
Indonesia early this year to head Ericsson China, so he still has
a very good grasp of the Indonesian market.

"For more than a decade, up to 2000, we were accustomed to a
CAGR (Compound Annual Growth Rate) of 30 percent and more
globally, but, during the recession, the industry was declining
by 15 percent," he explained. Media reports say that Ericsson was
in the red in the last two years. Today, the good news is that
the industry has picked up the pace once again -- in Indonesia,
and elsewhere in the world. Mats said his company had learned a
basic lesson from the experience as well: Know what your
customers need and want.

In Mats' opinion, one important factor has been responsible
for the upswing in Indonesia's telecom business, with
privatization starting to show the desired results.

Indonesia's telcos are now managed much more professionally
and transparently. This allows for more rapid and stronger
growth. On an international level, the global economy is also
showing stronger indicators, with Asia Pacific -- as expected --
leading the way.

Also, Ericsson has been a leading player in the 3G
infrastructure market. The Swedish company claims that it has a
30 percent share in the Asia-Pacific infrastructure market.
Currently, it is working with SingTel and Maxis (Malaysia) to
build their 3G WCDMA networks, and with state-owned
telecommunications company PT Telkom for its CDMA2000 network.

If you were in Singapore during CommunicAsia last week, you
could probably feel the 3G pulse starting to quicken, although
several big names in the industry were notably missing at what
was supposed to be the biggest annual telecom event in Asia.

Will WCDMA Work?

While the race between CDMA2000, from the Qualcomm side, and
WCDMA, from the GSM side, continues, analysts have one question:
Will the WCDMA work beyond the basic voice service?

As the WCDMA comes from the GSM alliance, which means that a
number of vendors have to work together to define the standards,
a lot of people may wonder whether interoperability will cause a
problem.

Ericsson provided an answer during the event. One of the
highlights at the company's exhibition was its demonstration of
the interoperability between WCDMA 3G handsets.

In a container set up just outside Hall 4 of the Singapore
Expo, it put together a working WCDMA network complete with a
couple of antennae. Eleven 3G handset models from eight handset
makers -- including Nokia, NEC, Sony-Ericsson and Motorola --
were used to show that live video calls could be made, regardless
of which handset the user was equipped with.

The frame rate was only around 15 frames per second, so the
images were not as smooth as one would like -- not yet -- but it
certainly worked.

However, as providing footage of your ear canal could hardly
be called good manners, it would be best to allow for face-to-
face communication by placing the camera in an agreeable
position. I guess when the service becomes widely available, the
use of a headset or earphones would be mandatory. Otherwise, can
you imagine a room full of people all trying to listen to calls
via speaker phones, with the volume set at its maximum?

Push to Talk

For the last two years, PTT has had a different meaning in
telecommunications. It also stands for Push to Talk, and is
taking the industry today by storm. It works like a Citizen Band
or ham radio. You listen to other people -- like a conference
call -- and if you want to talk, you just push a button. If you
are unlucky, someone may push their button before you -- and in
that case you will have to wait.

In the U.S., Push to Talk has been offered by Nextel for many
years. Nextel, however, uses a proprietary standard, and
therefore only those with Nextel devices can use the service. The
GSM people then got together and worked out a standard so that
the service could be used by people with different handsets from
different vendors.

They called it the open standard Packet over Cellular (POC),
and at the moment it is being brought to the Open Mobile
Architecture (OMA) alliance to be made the official standard. As
always, an open standard will ensure market acceptance, which is
very important for the success of a new service in the telco
industry.

Push to Talk has also been available on the CDMA front. Last
year, I saw it demonstrated during the CDMA World Congress in
Bangkok.

Push to Talk is not a store-and-forward service -- whereby
voice messages are saved on a server and then forwarded to a
number of recipients. Push to Talk is a real-time communication,
and that is why Ericsson also calls it "Instant Talk".

A number of different groups can be defined, and members
selected for each of those groups. When you want to talk to a
group, you just select it and push the button. The voice will
then be digitized, compressed and transmitted in packets of data.
So, Push to Talk actually requires a network that supports packet
transmission, such as GPRS, EDGE, and of course WCDMA.

The benefits of Push to Talk are plentiful. This service
should be much cheaper than conventional, voice-based conference
calls. To call a group of people, only one or two buttons must be
pressed. It is believed that users of this service will comprise
mainly of teenagers, families with a lot of children, as well as
companies that often need to talk to a lot of employees at the
same time for quick decision-making.

Outsourcing the Services

Ericsson's rebound this year is also attributable to the
success of its Managed Services business, which has gained more
customers in various countries, including Australia. Even multi-
vendor telcos can outsource tasks from network design to
maintenance to Ericsson.

This will bring cost-efficiency and the opportunity for telcos
to concentrate on their business. Ericsson says that its
management and consultancy business contributes around 15 percent
of its group turnover.

With such services becoming more and more outsourceable, in
addition to application hosting services, it can be envisioned
that the mobile telecom industry will evolve into something like
the airline industry, which has now become crowded with super
cheap airlines.

With the right deregulation, a broad range of non-voice,
value-added services may eventually be offered by small companies
without their own fully fledged infrastructure. All they need to
have is the creativity to find the right services -- that people
need and are willing to pay for.