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Broadband wireless threatens 3G voice ambitions

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Calculations of the threat to 3G revenues from broadband wireless have focused mainly on data, but as some 3G carriers put voice in a more central position in their strategies, they could find that route roadblocked too. The third generation UMTS and CDMA technologies may have been the first to promise both voice and broadband-class data on one network and device, but the emergence of usable VoIP over wireless has moved formerly data-only approaches into this space too. Roadmaps for data networks such as CDMA EVDO and 802.16e now feature VoIP, and now so does the plan for UMTS’ dataonly strand, TDD.

Chipmaker Atmel has worked with IPWireless, the main supplier of UMTS TDD equipment, to produce a TDD mobile handset offering VoIP as well as the usual broadband packetbased services. The two companies have completed the first successful transmission of a call from a mobile VoIP handset over UMTS TDD, and claim the network is ideal for voice because it features high capacity, low latency, and low power requirements. The prototype, which has an unnamed OEM manufacturer, is based on Atmel’s AT76C902 VoIP system on a chip with the IPWireless TDD Module. Phones should be commercially available in mid-2005.

While IPWireless lacks the market weight or the OEM support to take on the mobile operators as WiMAX and Flarion Flash OFDM aim to do, it is certainly making its technology more appealing to its traditional base of independent operators, which include the UK’s PCCW. Their services will be more compelling if they can offer voice and they will, therefore, be less likely to opt for a pure IP solution such as 802.16 instead of TDD.

The move shows that any technology hoping to take its place in the next generation of networking needs to support voice, and associated requirements like quality of service, effectively. This then shifts the competitive landscape for the technologies that previously claimed control of the voice delivery market.

The shift is already clearly visible in the CDMA market, even without taking challenges from broadband wireless into account. Last month, Verizon Wireless’ CTO Dick Lynch said the next upgrade of EV-DO equipment, called Rev A, which promises peak data rates of 3.1Mbps, would also carry voice over IP, and so could make a further upgrade to the next CDMA generation, EV-DV (Evolution – Data and Voice) unnecessary (see Wireless Watch September 30 2004). Rev A equipment will start shipping next year and, although EV-DO with VoIP will take advantage of the spectral efficiencies of CDMA less well than EV-DV, this will be outweighed by early availability and lower prices.

In UMTS, while TDD with VoIP will not have the same effect on its bigger brother that EV-DO could on EV-DV, 3G can no longer expect to take all the voice revenue for itself.

3G can deliver voice for a quarter of the cost per minute compared to 2G and so operators are looking to cut their overall delivery costs as users move from 2G to 3G and to displace wireline voice revenues. The promise of this business model could be severely disrupted by VoIP over WiMAX, especially for operators like 3 that are now relying primarily on low cost voice minutes for growth. In the IP world, users will become increasingly accustomed to having cheap voice bundled into an overall flat rate package, and operator delivery costs will be even lower than for 3G.

Their current ARPU hopes from voice could be severely threatened by broadband wireless options as these become more seamless and quality assured than the current voice over Wi-Fi options.

Copyright © 2004, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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PCCW opens kimono (a little) on UK broadband wireless plans
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Wireline operators flock to WiMAX

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