Cellphone revival

By Chris Keall

Sunday 1st September 2002

William Holtzman, vice-president international for PDA-maker Handspring, is fuming. He is demonstrating his company's latest Treo webphone during a flying visit to Auckland, but has put his otherwise good-humoured demo on hold for a moment. He's sounding off about a pet hate: stupid western governments that had a spectrum auction fling in 2000 and 2001, and even more stupid telephone company executives who borrowed billions and bid crazy sums for the airspace needed to build third-generation (3G) networks.

The spectrum was bought, and the necessary technology invented, for super-fast wireless internet access. But, crippled by debt and free-falling shares, telcos put their 3G dreams on hold and turned to the less Jetsons-style tasks of trimming costs, cutting staff and squeezing more money from their existing networks. The whizz-bang 3G devices produced by companies like Handspring, Nokia, Sony-Ericsson and Kyocera were largely confined to the showroom.

In New Zealand we are luckier than most. The government might have been lambasted by the New Zealand Herald and others for raising only modest sums in its initial spectrum auction, but it means that while 3G calls will still be expensive, our telcos have less cost to pass onto the customer. Result: New Zealand is one of the first countries in the world, behind only Japan and Korea, to get a nationwide 3G network.

It all happened on July 22, when Telecom introduced its new, turbocharged 3G cellphone network, dubbed Mobile JetStream. It's a slightly disjointed piece of branding given that it's based on the CDMA 2000 1x standard (see "Those acronyms in full"). It should be seen as the successor to the plain vanilla CDMA network rather than the digital subscriber line (DSL) technology that powers Telecom's terrestrial JetStream.

Is this full-blown 3G? At the launch, Telecom said the standards-governing International Telecommunications Union (ITU) defines a 3G network as one that can hit 144kbit/s (or three times the speed of the 56kbit/s modem used by most PC users on dial-up accounts). That's for mobile; not added is the fact that the ITU sets the benchmark at 384kbit/s for a pedestrian on the move. Mobile JetStream just sneaks in under the definition, being capable of bursts of 144kbit/s, although it averages not much more than a 56kbit/s modem.

Of course, Mobile JetStream isn't the only higher-speed cellphone game in town, 3G or otherwise. Vodaphone's GPRS network has been around for some time and both are viable, reliable networks. The old-fangled CDMA and GSM networks (see table for speeds) allowed for simple email connectivity and limited text-based surfing, but the newcomers let you receive email with attachments, thumb your way around full-service web pages (not just the cut-down WAP variety) and remotely connect to your office network.

Just don't expect to hit the theoretical top speeds all the time, or even most of the time. Even Vodafone executives allow that GPRS averages only 33kbit/s to 56kbit/s, and Telecom accepts Mobile JetStream is usually in the 50kbit/s to 80kbit/s zone. This means your connection to unlimited.co.nz through GPRS via your mobile phone will be a little slower than your average PC dial-up speed. And through CDMA 1x it'll be a little faster.

Speed-clocking either service is a bit of a black art due to the large number of variables. Your connection speed depends on how close you are to the nearest transmitter, how busy Telecom's or Vodafone's network is at the time, how clogged the internet happens to be and the server bandwidth of the service or website you're trying to connect to.

Talk to Telecom and Vodafone and each will energetically bag the other's services. But overall - on price, features, handset availability and connectivity to the internet or a Windows network - neither CDMA 1x or GPRS has a killer advantage.

In fact, Vodafone business marketing manager Steve Aschebrock rounds off his Mobile JetStream slag by saying it's a bit of a cheek to call it 3G, as CDMA 1x only just scrapes over the 144kbit/s threshold in small, infrequent bursts. "For us, 3G means video," he says. "That means a network that can hit 384kbit/s."

That's the kind of speed that more advanced CDMA and GPRS networks will hit in New Zealand in perhaps three to five years. Currently only Japan can boast that kind of aerial bandwidth.

To nullify its slight speed disadvantage, Aschebrock steers the conversation into other areas such as GPRS's superior global roaming - and gleefully points out that although Telecom's Australian wing deploys CDMA in rural areas, its urban mobile network runs on GSM/GPRS. Aschebrock also claims most carriers will lean toward GPRS because it's an open standard, whereas those rolling out CDMA and CDMA 1x must pay a royalty fee to its inventor, US company Qualcomm.

Aschebrock also claims Mobile JetStream's high speed is easy to achieve "when you've got an empty network". Will its speed decline as punters sign up en masse, as has happened with the increasingly log-jammed landline JetStream iteration?

CDMA 1x and GPRS will give you the same level of coverage as your standard cellphone. Better, in fact, says Telecom's head of mobile business and corporate, Warwick Beban. A 3G signal gives you superior reception in tricky areas like underground carparks, thanks to more powerful transmitters and handsets - both of which produce much higher levels of emissions than their predecessors. They're still well within official international safety guidelines, but this is an element of 3G that schools, Green Party members and hands-free talk-and-walkers are going to twig to at some point. Expect fun.

On security issues, it's tit for tat. Telecom's Beban says CDMA 1x is inherently secure. Aschebrock says, so what? "GPRS has never been hacked."

Body count

So will the punters want 3G? If you have an 027 number, like 160,000 others, you're on Telecom's data-capable CDMA network. Its million or so other mobile subscribers still live in 025-land. But how many CDMA subscribers will make the move to CDMA 2000 1x? Beban says Telecom is aiming to have 15,000 businesspeople - plus an unspecified number of consumers - on Mobile JetStream within 12 months.

Vodafone isn't saying how many have signed on to GPRS, though Aschebrock says the company is aiming for all its 1.1 million GSM subscribers to have a GPRS-capable phone within two years.

Does 15,000 people on Mobile JetStream sound modest? Here's why there won't be more. Avoiding spectrum auction excess meant our 2.5G and 3G networks could actually be built - but it's still an expensive process, reflected in several jaw-dropping price plans.

At the top end, for $100 a month (excluding your regular voice plan), a Mobile JetStream subscriber gets a 70-megabyte (MB) account. A 10-kilobyte (KB) email under this plan works out to around 2 cents and a 1MB download to around $2. You're likely to get through 70MB faster than you may think and once you've used your allowance, you are charged 2 cents per 10KB, or $2 per megabyte, for any additional data transmitted. At the other end of the scale, the casual plan for occasional, low-volume use charges 8 cents per 10KB, or $8 per megabyte.

As a price comparison, the landline JetStream Home500 for your home PC gives you a 500MB allowance for $99 a month (and a $99 connection fee). Each megabyte you use over that allowance will set you back only 20 cents.

Vodafone's sweet-spot plan hits you with a higher $80 for 50MB monthly plan, although its per-call charges are lower on most plans.

On top of all of this, you have to pay for your regular Vodafone or Telecom voice plan - and your 2.5G- or 3G-capable cellphone or PDA probably won't leave you with much change from $2000 once you're fully kitted out (see "The gear" for more).

Can this be called affordable? Yes, says Beban: the salesperson on the move will save money by being able to check stock and place an order in front of a customer in real time (Green Acres, Quotable Value, Turners Auctions and MasterPet were among those on Telecom's pre-launch trial). "Compare it to what hotels charge for internet access and you'll find it's a lot cheaper."

But back to Handspring's Holtzman. He's back in good cheer, picking up on a theme that Beban and Aschebrock will later repeat. Already, carriers like Vodafone that sell the Treo are seeing a 20% boost in average revenue per user, or ARPU. ARPU is the key metric for wireless carriers, and lately it's been in decline. Any new technology that can boost it is in for a big push. And it will get bigger. Beban talks of a potential 70% ARPU boost from Mobile JetStream users and an attendant surge in data traffic-related revenue for Telecom.

It only takes a glance at Telecom's share price (hovering under $5 as Unlimited went to press, as against over $9 at its height in early 2001) - or, come to that, Vodafone's, Nokia's or Handspring's - to know that jaded investors will believe it when they see it. Still, wireless is back, in full starry-eyed dreaming mode. And, if nothing else, it's making tech fun again.

Those acronyms in full

First-generation cellphone networks were voice-only analogue.

Second-generation (2G) phones were digital, with a little text-only data thrown in. Now we move into a brave new era of more speed, features and, inevitably, nerdy acronyms.

CDMA

Code-division multiple access. Used by those with Telecom 027 phones. Capable of connecting to the internet at 14.4kbit/s (kilobits per second), or about a quarter the speed of the 56kbit/s dial-up modem used by most PC and notebook users. Fast enough for email without attachments, and text-based or WAP web pages.

CDMA 2000 1x (Mobile JetStream)

The successor to CDMA, launched by Telecom on July 22. Supports burst speeds of up to 144kbit/s, thereby just scraping into the ITU's minimum definition of 3G speed, though in practice, average speeds are only the same or slightly faster than a 56kbit/s modem. That's fast enough for web surfing, email attachments or remotely connecting to a PC network.

GSM

Global system for mobile communications. The world's dominant cellphone standard. Used by Vodafone and others (including Telecom in Australian urban areas). Limited to 9.6kbit/s for text-only web surfing and email.

GPRS

General packet radio services. A turbocharged version of GSM, capable of bursting up to 114kbit/s, giving it the bandwidth juice for web surfing, email attachments or remotely connecting to a PC network. In everyday use, it's slightly slower than a 56kbit/s modem (in line with Vodafone's claims).

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