T HE EVOLUTION TO 3G MOBILE
STATUS REPORT
Third-Generation (3G) Mobile A status report
Evolution of wireless technologies
S
ince mobile cellular became commercially available in the early 1980s, it has advanced beyond imagination in terms of coverage, services, technology, handsets and regulation. Perhaps the most revolutionary change is that in the space of around 20 years, mobile subscribers surpassed fixed-telephone line subscribers in 2002, making mobile technology the predominant means of voice communications (see Figure 1, left chart). First generation mobile cellular networks employed analogue technology. Developments in digital technology led to second-generation (2G) systems. By the end of the 1980s, 2G networks
ITU 030082/Siemens AG
A collection tracking the history of mobile communications
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ITU News 6/2003
had been developed to provide better quality services, greater capacity and additional functionality than analogue systems. At the end of 2002, the world had almost completed the transition to digital cellular networks, with analogue users accounting for a mere three per cent of total mobile subscribers. There are four 2G digital cellular radio technologies in use around the world (see Figure 1, right chart): 1 Global System for Mobile Communications (GSM). This is the predominant technology worldwide and the predominant system in Europe. It is also used in many nations in Africa, Asia, the Middle East and some countries in the Americas. At December 2002, there were 788 million GSM subscribers on 467 networks in 169 countries. Time Division Multiple Access (TDMA). This is the leading technology in the Americas with 109 million subscribers at December 2002. Code Division Multiple Access (CDMA). At December 2002, there were 147 million CDMA subscribers with 61 per cent in the Americas, 37 per cent in the Asia-Pacific region and less than two per cent in Europe, the Middle East and Africa. Personal Digital Cellular (PDC). This system is deployed only in Japan with 60 million subscribers at December 2002. A significant development with 2G systems has been the increasing utilization of data-like 1 The Personal Handyphone System (PHS) is a digital system launched in Japan in 1995. As a low-cost alternative to cellular, it has limited coverage area. There were 5.6 million PHS subscribers, all in Japan, at December 2002.
T HE EVOLUTION TO 3G MOBILE
STATUS REPORT
services, for example, the short message service (SMS), which allows text messages to be sent between mobile handsets. Some 360 billion SMS were sent over GSM networks in 2002.2 Mobile handsets are also increasingly being used to access the Internet. This has become successful in countries such as Japan, where 80 per cent of cellular users subscribe to a mobile Internet service provider.3 The growing use of mobile data has led to demand for faster speed than the initial transmission rate of 9.6 kbit/s for GSM. This is being accomplished by upgrading existing GSM networks with the deployment of General Packet Radio Service (GPRS) technology. In the case of cdmaOne networks, they are being enhanced with CDMA2000 1X technology.
A dual-band mobile phone of 1999. Its simple menu and large display appealed to first-timers, especially youth. With the young target group came music too
ITU 030084/Philips
New generation liquid-crystal display (LCD) mobile phone
2
See “GSM Statistics” on the GSM Association website at www.gsmworld.com/news/statistics/ index.shtml
3
ITU 030083/Siemens AG
See the “Internet Provider Services (Mobile Telephone)” section of the “Number of Subscribers” report issued monthly by the Telecommunication Carriers Association (TCA) of Japan. In December 2002, TCA reported that there were 59.5 million subscribers to the mobile Internet services known as i-mode (provided by the NTT DoCoMo Group), Ezweb (provided by the au Group and the Tu-Ka Group) and J-sky (provided by J-Phone). This is out of a total of 73.5 mobile telephone subscribers (see www.tca.or.jp/eng/database/daisu/yymm/0212matu.html). ITU News 6/2003
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T HE EVOLUTION TO 3G MOBILE
STATUS REPORT
These technologies offer speeds that are equivalent to, or even faster than, conventional dial-up.
The development of 3G systems The need for faster speed, global compatibility and multimedia services has led to the development of 3G systems. In an effort to consolidate existing incompatible mobile environments into a seamless global network, ITU adopted a family of radio access methods at its Radiocommunication Assembly in Istanbul in early May 2000. Known as ITU 030088/Samsung International Mobile Telecommunications-2000 (IMT-2000), this global An innovative mobile phone with a built-in rotating camera standard was realized after years of col- and colour screen, to be released in the GSM market in 2003 laborative work between ITU and the global cellular community. At the end of May brand new network to be installed whereas 2000, the World Radiocommunication Conference CDMA2000 1X requires less investment as an (also held in Istanbul) identified additional fre- upgrade from existing second-generation quency bands for 3G (IMT-2000) use.4 IMT-2000 CDMA networks. Among the five radio access consists of five different radio access methods: technologies approved as IMT-2000, W-CDMA W-CDMA (Wideband Code Division Multiple and CDMA2000 1X have gained the most supAccess), CDMA20001X, TD-SCDMA, EDGE port from regulators, mobile network operators (Enhanced Data Rates for GSM Evolution) and and equipment manufacturers. DECT (Digitally Enhanced Cordless Telecom4 See ITU Press releases: “ITU gives final approval to munications). IMT-2000 radio interface specifications” (8 May 2000) The evolutionary path from 2G to 3G has been at www.itu.int/newsarchive/press_releases/2000/ mapped out for existing networks (see Figure 2). 10.html and: “Thumbs up for IMT-2000” (30 May Migration differs depending on the existing 2G 2000) at www.itu.int/newsarchive/press_releases/ network. In general, W-CDMA would require a 2000/12.html
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ITU News 6/2003
T HE EVOLUTION TO 3G MOBILE
3G Licensing At the end of 2002, there were 119 licences that had been awarded to operators around the world for the use of IMT-2000 spectrum to offer 3G mobile services. An important consideration in the 3G licensing process is exactly what is being offered. In most countries, the licensing includes the needed spectrum, typically in the 2 GHz range. In some cases, particularly most of Europe, the 3G radio interface was also specified. In other cases, there was no explicit requirement for a specific radio interface as long as it was one identified in the IMT-2000 standard. While auctions and beauty contests have been the preferred licence allocation methods, some countries have automatically granted 3G licences to incumbents. For example in Europe, 3G licences were offered free of charge to the incumbent mobile operators in the Isle of Man, Liechtenstein and Monaco. The optimum method of allocating licences is subject to debate. Proponents of auctions will argue that frequency is a scarce resource and its pricing should be left to the market. Backers of beauty contests will argue that their method avoids high auction prices that will eventually be passed on to consumers. There are also political aspects since, in some instances, the licence fees revert to the government budget. Auction In this method of licence allocation, a frequency range identified for the use of 3G networks is auctioned. A number of licences are made available depending on spectrum and market conditions. Successful applicants are those that outbid others. There has been great variation in the relative price paid for 3G licences that have been auctioned. The average price per capita in Germany and the United Kingdom amounted to EUR 615 and 644 respectively. In contrast, Austria and Denmark collected an average licence price per capita of EUR 103 and 95. One reason is timing. Germany and the United Kingdom were among the first to auction 3G licences. Euphoria was
Y OUTH FORUM STATUS REPORT
high, as were the prices. It is possible that licences will be sold at or near their reserve price (i.e., minimum bid price) when the number of bidders is the same or less than the number of licences available. Such was the outcome when Switzerland conducted its auction in December 2000. Auctions can also be cancelled under such circumstances, as was the case in Singapore and Slovenia where the bidders simply paid the reserve price. In total, 77 licences for 3G have been granted in 19 economies via auctions, accounting for USD 101 billion (see Table 1).
Beauty contest In a beauty contest, a fixed number of licences are awarded to applicants that best meet certain criteria. The regulator issues an invitation to all interested parties with guidelines and requirements. Successful applicants are chosen based on specific pre-determined criteria presented in the application. The selection criteria differ from country to country, depending on the respective plans and objectives in establishing a 3G network. In general, applicants are evaluated based on their financial capacity, business plan and technical expertise. Criteria that are often used are commitments to rapid roll-out and with high levels of land and population coverage. Other aspects such as market concentration and technological specifications are also taken into consideration. Like a real beauty pageant, applicants are awarded points for satisfying the specific criteria stipulated. Applicants with the highest scores are awarded licences. Normally, licensees also pay a fixed licence fee, but some countries, like Japan and Finland, waived this fee. In this method, licence costs are significantly lower than the auctioned licences, yet France and Poland were noteworthy for having high fees. Some 41 3G licences have been issued in 13 countries via beauty contests accounting for USD 6.9 billion (see Table 2). Regional analysis Universal Mobile Telecommunications System (UMTS) is the term Europe uses to refer to 3G networks. It maps out the migration path for GSM networks to 3G. UMTS uses the IMT-2000 ITU News 6/2003
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T HE EVOLUTION TO 3G MOBILE
STATUS REPORT
W-CDMA radio interface in the frequency bands 1900–1980 MHz, 2010–2025 MHz and 2110– 2170 MHz. In December 1998, the European Parliament mandated that all European Union (EU) member countries adopt UMTS. The decision imposed a specific timetable for UMTS, includ-
ing a deadline for licensing by 1 January 2000 and introduction of commercial services by 1 January 2002. All EU members had completed the 3G licensing process by May 2002. Non-EU countries in Western Europe such as Norway and Switzerland have also completed
Table 1 — Outcome of 3G mobile licence auctions Status at 31 December 2002 Number of winners
Amount (USD million)
April 2000
5
35 411
Netherlands
July 2000
5
2515
3
Germany
August 2000
6
46 323
Four incumbents won licences
4
Italy
October 2000
5
10 084
Three of four incumbents won licences
5
Austria
November 2000
6
716
All six bidders won licences, including the four incumbents
6
Switzerland
December 2000
4
121
Four bids for four licences
7
New Zealand
January 2001
5
60
Four licences were awarded at auction and a fifth was set aside for the Maori people
8
Canada
February 2001
5
931
Five bidders won 52 regional licences
9
Belgium
March 2001
3
418
Three bids received for four licences on offer
10
Australia
March 2001
6
578
Two national and various regional licences were awarded to six bidders
11
Singapore
April 2001
3
166
Auction cancelled since there was the same number of bids as licences to be awarded. Each licence was awarded for the reserve price
12
Greece
July 2001
3
414
Four licences had been on offer. The three incumbents were awarded licences
13
Hong Kong, China
September 2001
4
671
Bidders had to pre-qualify. Only four bidders for four licences. Amount equals bid plus minimum royalty payments for 15 years
14
Denmark
October 2001
4
496
Sealed bid where licence price corresponded to the fourth highest bid in the auction
15
Slovenia
November 2001
1
90
Licence awarded to only bidder (three licences had been offered)
16
Czech Republic
December 2001
2
203
Two incumbents won with the third not participating
17
Israel
December 2001
3
157
Won by the three incumbents
18
Taiwan, China
February 2002
5
1397
Only three of six incumbents won licences
19
Latvia
October 2002
2
19
77
100 771
Economy
Auction date
1
United Kingdom
2
Total
Note: Amount converted to USD at exchange rate on day on which auction finished. Source: ITU.
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ITU News 6/2003
Remarks The four incumbents were awarded licences plus a new entrant All five incumbents won the licences
Two incumbents bid for three licences
T HE EVOLUTION TO 3G MOBILE
STATUS REPORT
the 3G licensing process. In Central and Eastern Europe, the Czech Republic, Latvia, Poland, the Slovak Republic and Slovenia have licensed 3G operators. By 31 December 2002, some 26 countries and territories in Europe had completed 3G licensing processes. In the Asia region, economies such as Hong Kong, China; Israel, Japan, the Republic of Korea, Malaysia, Singapore and Taiwan, China had issued 23 licences for 3G by December 2002. In the Oceania region, Australia and New Zealand have allocated spectrum and awarded licences for 3G. Canada is the only country from the Americas region that has auctioned 3G spectrum in the 2 GHz range. Several countries in the Americas have already allocated licences for so-called
ITU 030080/Siemens AG
A mobile handset using EDGE technology as an initial phase to launching further broadband applications in Malaysia
Table 2 — Outcome of 3G mobile licence beauty contests Status at 31 December 2002 Country
Date licence awarded
Number of licences
Amount (USD million)
1
Finland
March 1999
4
-
2
Spain
March 2000
4
444
3
Japan
June 2000
3
-
4
Norway
December 2000
3
45
In addition, each licensee is expected to pay USD 2.2 million per year as frequency usage charge
5
Portugal
December 2000
4
360
Not including annual spectrum fee
6
Poland
December 2000
3
1839
Awarded to three incumbents
7
Korea (Republic of)
December 2000 August 2001
3
2886
KTF and SK Telecom awarded W-CDMA licences followed by LG Telecom (CDMA2000 1X)
8
Sweden
December 2000
4
-
Spectrum use fee and 0.15 per cent of turnover
9
France
July 2001 May 2002
3
1042
10
Luxembourg
May 2002
3
-
11
Ireland
June 2002
3
173
Two incumbents awarded licence plus new entrant
12
Slovakia
June 2002
2
67
Three licences had been awarded but one was later withdrawn
13
Malaysia
July 2002
2
26
Additional maintenance fees based on the number of transmitters set up in each licensee’s 3G network
41
6882
Total
Remarks Administrative fee of EUR 1000 per 25 kHz Amount does not include yearly radio spectrum fees Two W-CDMA and one CDMA2000 1X
Bouygues Telecom was awarded a 3G licence, at a lower price, after the two incumbents, France Telecom and SFR Annual spectrum usage fee of 0.2 per cent of turnover or a minimum of EUR 200 000
Source: ITU.
ITU News 6/2003
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T HE EVOLUTION TO 3G MOBILE
STATUS REPORT
Table 3 — Regional distribution of 3G licences and deployments Status at 31 December 2002
3G licences1
Total
CDMA2000 1X2
Number Number of Number Number of Number of country operator of country operator of launches launches launches launches countries
Number of launches
Region
Number of countries
Number of licences
Licence fees (USD million)
Africa
-
-
-
-
-
-
-
-
-
Americas
1
3
931
-
-
9
20
9
20
Asia
7
23
4310
1
3
3
5
4
8
Europe
26
83
100 588
3
4
3
3
6
7
Oceania
2
10
673
-
-
2
2
2
2
Total
36
119
106 502
4
7
17
30
21
37
1
Where there was a formal 3G licence process. Launched as an extension of existing networks. Source: ITU. 2
Personal Communications Services (PCS) that take up parts of the spectrum bands identified for 3G services. There are several factors holding back the allocation of additional spectrum for 3G in the region. One is that local operators have already invested heavily in building their 2G networks (in the 1900 MHz band). Additional spectrum would require more investments
A 1992 mobile phone — a model that was especially popular with architects, construction site managers and surveyors
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which operators are presently unable or unwilling to make. Another factor is the plurality of different systems in the region (i.e., TDMA, GSM and CDMA), which complicates the migration path from 2G to 3G. In some countries, spectrum in the IMT-2000 bands cannot be made available as it is used for national security purposes. Finally, existing spectrum bands (1850–1990 MHz) can be used to provide 3G-type services and operators in the region with CDMA networks are choosing to evolve to CDMA2000 1X (recognized as an IMT-2000 standard) without the need for additional spectrum. No African country has issued licences for IMT-2000. In most African countries, there are already many more mobile than fixed telephone subscribers, so 3G could be a key technology for enhancing Internet penetration in the region. While no formal IMT-2000 licensing has taken place, it could be that operators in some African countries may introduce 3G-like services within existing frequency allocations. These include fixed wireless operators using CDMA that hope to introduce a mobility mode. For example, a Nigerian telecommunication operator has announced plans to launch a CDMA2000 1X network. 5 5
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ITU News 6/2003
See Ericsson’s Press release of 2 April 2003: “Ericsson and Nigeria’s RelTel Sign CDMA2000 1X” (www.ericsson.com/press/20030402-083853.html).
T HE EVOLUTION TO 3G MOBILE
STATUS REPORT
3G network deployment
The use of CDMA2000 1X in existing mobile frequencies as an IMT-2000 standard has led to more rapid launches. Except for R oll-out of 3G networks is in theory Japan, all CDMA2000 1X netguided by timetables stated in the licence works have been launched withconditions such as required minimum out the need for a new licence as ITU 030091/Samsung coverage by a specified date. However, they operate in existing licensed market demand and handset availability The rotating radio frequencies. By the end of have impacted deployment schedules and camera phone December 2002, there had been many networks have been delayed. 30 commercial CDMA2000 1X In Asia, SK Telecom of the Republic of Korea launches in 17 countries. 7 The number of launched its CDMA 2000 1X network in October CDMA2000 1X subscribers at December 2002 2000. 6 Japan’s NTT DoCoMo pioneered the was 32.6 million with the vast majority in the deployment of W-CDMA, launching its 3G serv- Republic of Korea and Japan. ice commercially in October 2001. In Europe, commercial 3G services based on W-CDMA were not available by 1 January 2002, as had been called for in the EU guidelines. Nascent 3G networks established in Austria, Finland, the Isle of Man and Monaco initially provided trial services. Manx Telecom, on the Isle of Man launched Europe’s first 3G network in December 2001, and services became commercially available in July 2002. Although Finland was the first country in the world to license 3G, and incumbent operator Sonera met licensing conITU 030089/Nokia ditions by having its network available on 1 January 2002, commercial service was not available until September due Mobile phone production: The final testing of a handset to lack of handsets. Austria’s Mobilkom launched its 3G network on 25 September 2002. In March 2003, Hutchison commercially launched 3G services in the United Kingdom 6 See “SK Telecom Launches Commercial cdma and Italy, as well as in Australia in April and in 2000 1x Service”, Press release of 30 September 2000 Sweden in May. (www.sktelecom.co.kr/english/news pr/news/2002/ Overall, uptake of 3G services based on 06/01/219,1012,0,0,0.html). SK Telecom was awarded W-CDMA has been slower than initially an- a 3G licence but for a network using W-CDMA technounced. Handset availability and network nology. Republic of Korea mobile operators consider interoperability have been cited as reasons for CDMA2000 1X to be a 2.5G network. For example, the sluggish 3G market. Low market interest has LG Telecom, a Republic of Korea mobile operator further exacerbated this scenario. The only other states on its website that “CDMA2000 1X is a 2.5 W-CDMA launches have been in Japan, where generation Mobile Communication Service” (see in addition to NTT DoCoMo, J-Phone launched www.lg019.co.kr/docs/eng/imt/imt cdma 01.jsp). a W-CDMA network in December 2002. These 7 See the “Operators” section of the 3G Today website two operators had a combined 153 200 3G for updated listings of commercial CDMA2000 1X subscribers at year-end 2002. launches (www.3gtoday.com/operators flash.html). ITU News 6/2003
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T HE EVOLUTION TO 3G MOBILE
Conclusion There have been considerable delays in the introduction of 3G and market penetration of licensed systems was less than 0.4 per cent of total worldwide mobile subscribers, some four years after the licence process began. Few EU countries met the directive of launching commercial 3G services by 1 January 2002. In retrospect, 3G licensing can be questioned on two grounds. One was the EU process that compelled members to abide by a specific timetable. It is debatable whether this was practical
STATUS REPORT
that have launched those networks refer to them as 2.5G. A CDMA2000 1X network offers data speeds of 144 kbit/s versus 384 kbit/s for W-CDMA. The majority of countries in the world have yet to license or deploy 3G networks. The contrast is even starker between developed and developing nations. Countries that have not yet licensed IMT-2000 networks have several options, based on the benefit of hindsight. One is that there may be no hurry to license 3G. The first W-CDMA 3G networks have only recently been deployed at great cost — and all in developed nations. At this point in time, it may prove difficult for many developing countries to find investors willing to invest in a brand new 3G network. Instead, countries might consider upgrades to existing networks, evolving them to 2.5G as a first step to 3G. For GSM networks, this means the deployment of GPRS while for cdmaOne networks it involves the installation of CDMA2000 1X. This would provide faster speeds and ITU 026120/A. de Ferron greater functionality for the Demonstrating location-based services at ITU TELECOM AsIA 2002 development of mobile data (Hong Kong, China). A number of these services are expected to services. If these upgrades do use IMT-2000 systems not require changes to existing frequency allocations, for a brand new service where infrastructure then it may be wise to encourage such enavailability and reliability was unknown and hancements without requiring a new licence. market demand was at best, sketchy. This is If additional spectrum is required within the particularly relevant in the GSM world, where same frequency, regulators should be encourat the time of licensing, few operators had ex- aged to act favourably upon this request in the perience with high-speed data networks. The light of the benefits such spectrum could bring. second issue relates to the fact that CDMA net- If new 2G mobile licences are to be issued, then works can be upgraded to CDMA2000 1X with- the authorities may wish to encourage operaout operators having to apply for a 3G licence. tors to install their networks as 2.5G-ready. This has given CDMA network operators an advantage Contributed by Michael Minges and Pratikshya over GSM operators. On Simkhada of the “Market, Economics and Finance the other hand, there is Unit” of the ITU Telecommunication Development confusion about whether Bureau (BDT). This Unit was formerly called “TeleCDMA2000 1X is truly 3G, communication Data and Statistics Unit.” ITU 010541/Ericsson especially since operators 20
ITU News 6/2003