Data speeds slump for 3G

Telcos have lowered their third-generation (3G) financial expectations because data rates are too slow to recoup the huge costs of licence fees, and a lack of handsets will delay the roll out of the network, insiders have told Network News.

An insider at one telco's 3G development team said that as the launch date gets closer, operators are being forced to drop their expectations for data throughput.

"I understand that BT now accepts that its maximum rate will be 384Kbps," he claimed. "This means that the on-demand movies on 3G phones, which were touted to pay for the licences, are going to be a pathetically low resolution compared to the 2Mbps we were expecting."

Nigel Deighton, a research director at Gartner, said that even 384Kbps would be difficult. "I am sceptical about seeing more than 64Kbps to 128Kbps," he said. "The reason is economic - high-speed data needs more base stations and that is an expensive proposition."

Deighton argued that high-speed users require more spectrum, so to cover the same area operators need to 'reuse' a frequency through many base stations covering small cells.

Another reason for small cells is to keep handsets close to a base station; if they are too far away, their data rate suffers from the strain of distinguishing signal from disturbance.

In the absence of "killer applications", Deighton said that operators needed a "killer attitude" to get return on investment from licence fees by making income from the network as soon as possible.

"Some will never get their investment back, especially those in the UK and Germany which were caught up in hype," he said. "Operators have to use the network quickly, but this depends on the availability of 3G handsets, which are so complicated that this will delay roll out for another year."

BT admitted that data rates would initially be 384Kbps, but said it would increase this over time. The company used prototype handsets for a 3G trial, but could not say how many would be available to support its 3G rollout on the Isle of Man in June this year.

"We believe we will get return for the cost of the licence," said a BT spokesman, adding that he could not say how, as he was restricted by a planned IPO of BT Wireless.

See also:

3G data costs to stifle uptake

Initial prices will be kept high for fear of capacity problems  26 Sep 2001

3G: Beyond the hype

The third-generation (3G) licence frenzy has left mobile operators with empty pockets and a head full of hype, wondering whether they can find a killer app to justify the billions spent on the licences.  01 May 2001

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