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INNOVATIONS OF MOBILE COMMUNICATION STANDARDS AND THEIR APPLICATIONS FOR TELECOM

COMPANIES

Fonville, Cosmas, Erasmus University Rotterdam, The Netherlands, 281530cf@student.eur.nl

Van de Heuvel, Eveline,, Erasmus University Rotterdam, The Netherlands, 291472eh@student.eur.nl

ABSTRACT There have been many different generations of data communication standards in the telecom industry throughout the years. Nowadays we are in the third generation. With the introduction of 2G, the second generation, digital phone calls could be made and that was the beginning of mobile internet. In this generation an extra generation has come up, called 2.5G. GPRS and EDGE are mobile data standards in this generation. In the third generation we are using Internet services like UMTS and HSDPA. The fourth generation is coming up and it is estimated that it will start in 2010. In this generation mobile users will be using new standards, like WiMAX or UMTS revision 8.

The mobile internet speed has already reached 2 mbps, a speed which is enough for viewing web pages and running most applications on a mobile device. Why is the bandwidth being improved? New applications are being developed to add more functionality to a device. However, most new applications require more bandwidth. We discuss whether the applications drive the innovation of new technologies or vice versa. We found out that most of the available bandwidth is far from being fully used. It is hard for telecom companies to come up with a killer application which uses enough bandwidth and is used by many people. A killer application is an application that is ingeniously coded or unexpectedly useful. When the bandwidth was not fast enough, the applications were a driver for the technology but now the technology meets the application demands with ease. We can conclude that in the beginning (2G) the application was the driver but with the evolvement of 3G and the speculation of 4G it is something else driving the innovation.

We have also found that fixed networks are driving the innovation of mobile networks. This might sound a bit confusing because fixed networks and mobile networks seem to be very different. However, there is a constant comparison of mobile and fixed network capabilities. The fixed networks exist longer than the wireless networks and have always been faster. Some factors can slow down the innovation of mobile networks. The factors found in this paper are: device limitations, investments in hypes by telecom companies and the lack of good applications.

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1 INTRODUCTION

1.1 Research question

The research question that we are going to answer in this paper is:

What are innovations of mobile communication standards and their applications for telecom companies?

We have also formulated two sub questions, namely: • What is the past, present and future of different mobile communication standards? • Why does innovation of mobile communication standards take place?

For answering these questions we have searched for a lot of information on the Internet and asked questions at Vodafone and Ammeon, two telecom companies. There are many definitions of the word innovation. We will use Schilling’s definition: ”The practical implementation of an idea into a new device or process”.

1.2 Structure

Chapter 2 gives an overview of different mobile communication standards in the past, the present and in the future. These standards give an appropriate perspective from which to view the innovations and help to understand how they will be developed. Chapter 3 gives a view of factors driving and limiting innovation of mobile communication standards. The effect of applications and fixed networks on the innovation of mobile networks will be discussed. Finally, in Chapter 4 conclusions will be drawn and an answer is given to the research question and the sub questions.

2 MOBILE DATA STANDARDS

Although this paper is about innovations for telecom companies, it is important to give an overview of different communication standards in the past, next to the standards in the present and the future. The overview of these standards gives an appropriate perspective from which to view the innovations and help to understand how they will be developed. It will be easier to understand where we are going if we understand where we have been. To help in that understanding, this chapter will give an overview of mobile data standards and different generations. Because there has been, and still is a large amount of different standards all over the world, only the standards that we think are relevant will be discussed. We have also tried not to focus too much on the technical details of the mobile standards, otherwise it would become too extensive. For extra information it is possible to take a look at the sources in the last chapter of this paper.

Before we had cellular phones there used to be mobile radio telephones like MTS (Mobile Telephone System), launched in 1946, and IMTS (Improved Mobile Telephone System), launched in 1962. Contrary to normal closed radio telephones, like radio telephones used by the police or emergency services, these phones were connected to the public switched telephone network and had their own telephone number[1]. Using this system was very exclusive. IMTS had waiting lists of three years for those who wanted to make use of this service. These potential users were literally waiting for other users to disconnect their subscription in order to get a mobile telephone number and mobile phone service. This resulted in low sales of IMTS phones and therefore they were very expensive: 2000 to 4000 dollars. The price of phone calls varied from 0.70 to 1.20 dollar and the monthly subscription charge started at 100 dollars[2]. These phones are

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typically called the zero generation (0G) of mobile telecommunication. The mobile radio telephones were mainly used by estate agents and celebrities.

In the early 1980s the first analog cellular phone made its entry, the beginning of the first generation (1G). It could only carry voice traffic. However, each country developed its own system. In America AMPS (Advanced Mobile Phone System) was developed, and in some European countries, such as the UK and Ireland, TACS (Total Access Communication System) was being used[3]. But in many countries the developed system was incompatible with the system abroad. Once European inhabitants realized this, they started the Conference of European Post and Telegraphs (CEPT) in 1982. During this conference they formed a study group called Groupe Spécial Mobile (GSM). This group had the mission to develop a mobile system that was compatible in Europe. Later on the acronym GSM would be changed in ‘Global System for Mobile communications’[4].

2.1 2G

As stated in the introduction of this chapter, GSM study group was formed to develop a pan-European mobile service. The system had to meet certain criteria such as support, compatibility, low costs, speech quality and more. The first public operation of GSM started in 1991 and this introduced the second generation (2G) or in full: ‘Second Generation Wireless Telephone Technology’. The main difference between 1G and 2G is that 1G uses analog networks and 2G uses digital networks. Because of the digital networks, voice data could be compressed in a much more effective way compared to analog networks. Also did the digital systems emit less power from the phones, which not only made it possible to create smaller cells, with antennas and electronic communications equipment, but made phones also use less energy and cause less health concerns. Some other advantages of digital networks are digital error checking and the possibility to send and receive SMS and e-mail[5].

Next to 2G also the terms 2.5G and 2.75G have come up, but these terms are not officially defined. 2.5G services enable data transfer over upgraded existing 2G networks because they use package switched domains, which is normally used in 3G services, in addition to the circuit switched domain. GPRS is an example of 2.5G. A protocol like EDGE is technically a 3G network technique, but referred to as 2.5G or sometimes even 2.75G[6] because it has a data rate of over 144 kbps but has slower network speed than usual 3G services.

2.1.1 GPRS

GPRS (General Packet Radio Service) is a mobile data service which improves wireless access to networks like the Internet. Data packages are efficiently being transferred between mobile phones and external data networks. GPRS data rates can go up to 128 kbps, so it is much faster than conventional GSM which has a rate for data transmission restricted to 14.4 kbps[7]. GPRS is a package switched service, so the data transfer is charged per kilobyte, contrary to the circuit switched services which is charged per second. This means that the user can be online for a long time and will only be billed for the transmitted data[8].

2.1.2 EDGE

EDGE (Enhanced Data GSM Evolution) has an increased data transmission rate and reliability. It provides up to three times the data capacity of GPRS, namely 384 kbps. It allows for example downloading video and music clips and e-mail on the move. Basically it is an add-on for GPRS networks, that is why it is sometimes called EGPRS (Enhanced GPRS). Each phone with GPRS can also use EDGE, but beyond GPRS, EDGE looks a bit more like UMTS. The difference

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between GPRS and EDGE is that EDGE has a new modulation technique and new channel coding which improves throughput and capacity, so higher data rates are possible[9].

2.2 3G

3G is the third generation of mobile phone standards and technology. The first 3G services were introduced in 2002 in Japan and in Europe in March 2003. Because in many countries the 3G network did not have the same frequency as the 2G network there were a lot of problems: many countries had to build new networks and license new frequencies. A user should now be able to have a wireless connection with the following rates: • 144 kbps for vehicular traffic (driving speed) • 384 kbps for pedestrian (walking speed) • 2048 kbps for fixed environment (indoors)[7]

The EV-DO, W-CDMA (including UMTS) and HSDPA are the major technologies in use. With the introduction of 3G also the IMT-2000 (International Mobile Telecommunications for the year 2000) has been set up by ITU (International Telecommunications Union). It provides a framework which makes worldwide wireless access available by linking different systems. It combines mobile technologies and fixed and mobile wireless systems.

W-CDMA (Wideband Code Division Multiple Access) is used in the UMTS system. It expands CDMA, but is faster and supports more users. These systems are also unified in the IMT-2000.

2.2.1 UMTS

UMTS (Universal Mobile Telecommunication Systems) is faster than previously mentioned services. UMTS enables Internet, e-mail, fax, e-commerce, music, video clips, and videoconferencing, although user demand for video calls does not seem to be very high. Due to the high speed rate this sometimes has a quality comparable to normal Internet. To enable worldwide coverage there is wireless telephone for at home, on the office and satellite communication. The 3GPP (third generation partnership project) has standardized different classes for four types of traffic, sometimes referred to as Quality of Service (QoS) classes: • Conversational class (voice, video telephony, video gaming) • Streaming class (multimedia, video on demand, webcast) • Interactive class (web browsing, network gaming, database access) • Background class (email, SMS, downloading)[10]

The 3GPP explains the operation of the classes as follows:

“The main distinguishing factor between these QoS classes is how delay sensitive the traffic is: Conversational class is meant for traffic which is very delay sensitive while Background class is the most delay insensitive traffic class.”

Conversational and Streaming classes are mainly intended to be used to carry real-time traffic flows. The main divider between them is how delay sensitive the traffic is. Conversational real-time services, like video telephony, are the most delay sensitive applications and those data streams should be carried in Conversational class.

Interactive class and Background are mainly meant to be used by traditional Internet applications like WWW, Email, Telnet, FTP and News. Due to looser delay requirements, compare to conversational and streaming classes, both provide better error rate by means of channel coding and retransmission. The main difference between Interactive and Background class is that Interactive class is mainly used by interactive applications, e.g. interactive Email or interactive

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Web browsing, while Background class is meant for background traffic, e.g. background download of Emails or background file downloading. Responsiveness of the interactive applications is ensured by separating interactive and

background applications. Traffic in the Interactive class has higher priority in scheduling than Background class traffic, so background applications use transmission resources only when interactive applications do not need them. This is very important in wireless environment where the bandwidth is low compared to fixed networks.”[11]

Table 1 shows an overview of the QoS classes.

Conversational class Streaming class Interactive class Background class voice, video telephony, video gaming

multimedia, streaming video, webcast

web browsing, interactive e-mail, database access

e-mail, SMS, downloading

most delay sensitive delay sensitive delay insensitive better error rate

most delay insensitive better error rate

- preserve time relation between data entities of the stream

- preserve time relation between data entities of the stream

- request response

pattern

- preserve payload

content

- arrival of data is not expected within a certain time - preserve payload content

Table 1. Overview of different UMTS classes and their properties.

2.2.2 HSDPA

HSDPA (High-Speed Downlink Packet Access) is a high-speed data service feature introduced in Release 5 of the UMTS standard, launched by 3GPP[12]. It is a technology which improves the downlink performance of W-CMDA networks. This will result in higher downlink speed and greater system capacity for GSM operators. HSDPA is a software based enhancement, it has a more efficient way of implementing the Interactive and Background QoS classes, mentioned above[13]. In April 2006, the first operator in The Netherlands started offering this service. Here, HSDPA can reach a download speed of 1.8 mbps, three times as fast as UMTS, and this year it is expected to double the download speed to 3.6 mbps. In a few years a speed of 14.4 mbps is expected[14]. These increased data rates make it possible for providers to launch media-rich applications and services. Consumers will be able to download high resolution digital images and advanced multi-player games, for example. HSDPA is actually an element of HSPA (High Speed Packet Access), alongside with HSUPA (High Speed Uplink Packet Access). Downlink and uplink refers to the link from a satellite down to a ground station or receiver, or from a ground station up to a satellite. In the future networks might be upgraded to Evolved HSPA, which provides 42 mbps downlink speed[15].

2.3 Pre-4G

4G, an acronym for Fourth Generation Communications System denotes the next generation of wireless communications. 4G will be the generation of wireless networks that will replace 3G networks some time in the future. Although there is no formal definition of 4G, it is clear that it

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will provide voice, data and streamed multimedia at any place and any time with higher data rates than before. One of the terms used to describe 4G is MAGIC: Mobile multimedia, Anytime anywhere, Global mobility support, Integrated wireless solution, and Customized personal service. Because 3G is having some trouble getting deployed and meeting its promised performance, 4G is developed by academic R&D labs to move beyond the limitations of 3G. 4G will consist of various networks using IP as common protocol. It will have broader bandwidth, higher data rate and the main concept is integration with all of the existing mobile technologies. Adaptability of the applications and being highly dynamic are the main features for users. Some of the pre-4G technologies are: UMTS revision 8, with LTE and HSOPA being part of it, and WiMAX[16].

2.3.1 WiMAX

WiMAX (Worldwide Interoperability for Microwave Access), a radio technology, is a new standard, based on IEEE 802.16. It has recently (19 October 2007) been approved as an IMT-2000 technology by ITU. The decision to approve WiMax as an IMT-2000 technology creates opportunities for global implementation, to deliver mobile Internet. There are two different versions: D and E. The D version is the fixed version, and is used to connect UMTS masts and Wi-Fi hotspots wireless to a fixed network. In ideal circumstances it can reach a distance of 10 to 15 kilometers. The E version, also called mobile WiMAX, has a reach of only a few kilometers, but if more consumers are living in one area, more masts are installed to offer good quality. It also creates the possibility to travel more freely than with the fixed version, receiving it on a phone, PDA or computer without losing the connection. Just like with phone calls it is possible to enjoy uninterrupted communication in a moving car or train[17].

WiMAX is not yet applied on a large scale. There are some experiments running but there are no large scale networks yet. On the countryside in Knegsel, between Eindhoven and the Belgian border the first public network has been launched in May 2007. Earlier on the Kop van Zuid in Rotterdam a commercial system was being used. Once the WiMAX market matures, WiMAX and UMTS will be direct competitors. Consumers will have a wide range of broadband services that offer an unlimited reach, such as mobile internet, VoIP and mobile television. The first product that uses WiMAX has been made available. This is the Venture Fetish by Venturi Automobile from Monaco[18].

2.3.2 UMTS revision Eight

3GPP LTE (Long Term Evolution) is a new project which improves the UMTS standard so that it will achieve its future requirements. This includes improved efficiency, lower costs, improved services and better integration with other standards which are being used at that moment. LTE is not a standard but will result in a new version of the UMTS standard: UMTS revision 8. It has mainly got extensions and adaptations of the UMTS system. Some targets of LTE are download rates of 100 mbps, and upload rates of 50 mbps for every 20 MHz of spectrum. Another target is co-existence with other standards, so a user can start a phone call or data transfer using an LTE standard and when the coverage is unavailable continue on another standard, for example GSM, GPRS, an older version of UMTS or other non-UMTS networks. The focus of LTE project is on simplifying the architecture of the system, and making the transition from the existing UMTS, which is a circuit and packet switched combined network, to an all-IP system[19]. It also improves efficiency in using frequencies, so the system capacity will increase[20].

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2.4 Standards in use

Nowadays we are still in the third generation, but it probably will not take long until we are going to reach the fourth generation. Today, services like UMTS and HSDPA are the most common standards for mobile Internet. Unfortunately it can never be sure if a technology will really be a success, since some services, like UMTS do not have the results that were expected. The chance of success is probably to a large extent determined by the number of applications which can apply the technology, the price of the service and the applications, the brand awareness of the service, user-friendliness, quality, ease of use and ease of switching to the new technology. Above this, the desirable standards are sometimes hard to put into practice due to external factors, such as legal, environmental, economical, social or technological circumstances. Even when these factors are eliminated and the service has launched, it may not have optimal operation because it is infeasible to gain perfect circumstances. E.g. the Line-of-Sight problem: electro-magnetic radiation can only travel in straight lines, otherwise it leads to deviation or dispersion of the rays. As it is possible for different mobile devices to receive Wi-Fi some users might not be interested in these services.

Because WiMAX has recently been approved as IMT-2000 technology, it may not take long until telecom companies will adopt this technology and apply it on a large scale.

2.5 Outline

There have been many different generations in the telecom industry throughout the years. The mobile industry has started around 1946, when the first mobile radio telephone was launched. In the early 80s the first analog cell phone made its entry. These periods are retrospectively being called 0G and 1G. With the introduction of 2G digital phone calls could be made and that was the beginning of mobile internet. In this generation there has been defined an extra generation called 2.5G. In this extra generation GPRS and EDGE came up. Nowadays we are in the third generation in which we use internet services like UMTS and HSDPA. The fourth generation is coming up and it is estimated that it will start in 2010. In this generation mobile users will be using WiMAX or HSOPA as Internet standards. Table 2 is showing the evolution of the generations.

Technology 1G 2G 2.5G 3G 4G First design 1970 1980 1985 1990 2000 Implementation 1982 1991 1999 2002 2010? Service Analog

voice Digital voice, SMS

Packaged data

Broadband data up to 2 Mbps

IP-oriented unlimited multimedia data

Standards AMPS, TACS

TDMA, CDMA, GSM

GPRS, EDGE

EV-DO,

W-CDMA, HSDPA

WiMAX, HSOPA

Data bandwidth

1.9 kbps 14.4 kbps 384 kbps 2 mbps 200 mbps

Table 2. Overview of different generations and their characteristics.

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3 INNOVATION

This part of the paper discusses why innovation takes place. The sub question answered here is: “Why is there innovation of the mobile communication standards?” Considering the previous chapter answers like ‘higher internet speeds’ and ‘higher application demands’ seem obvious. However, the mobile internet speed is already at 2 mbps, a speed which is more than enough for viewing webpages on a mobile telephone. What about the higher demands of applications? Are there really applications demanding that much bandwidth?

During our stay in Dublin we visited two telephone companies who have knowledge of mobile communication standards and they gave interesting views on why the standards are being improved. This chapter discusses these answers and finally we give our view on this. Now follow a short description of the two companies visited in Ireland.

Vodafone is the biggest supplier of mobile telecom world wide. Vodafone is derived from Voice data fone. The company was founded in 1982 and yet in 1985 the first mobile phone calls were made in England. In 2006 the company announced a big reorganization and defined three divisions: upcoming markets, Europe, and new technology.

Ammeon, one of Europe's fastest growing technology companies, is a privately held consultancy company headquartered in Dublin, Ireland. The company was formed in 2003 by a group of telecommunication industry experts who held senior management roles within LogicaCMG, Ericsson, Siemens, Nortel, PA Consulting Group and other leading companies. Ammeon is a preferred supplier of services to a number of operators and has offices in the UK and US.

The first answer discussed is: “The applications drive the innovation of new mobile communication standards”. New applications are developed to provide new functions to mobile devices. A possible reason for this is to meet the demands of the customer or to add more functionality to a device and see if the customer likes it. Most of the new applications require more bandwidth. We research whether the applications drive the innovation of new standards or vice versa.

The second answer discussed is: “The comparison of fixed networks to mobile networks drive the innovation of mobile communication standards”. This can be a bit confusing because what do mobile networks have to do with fixed networks? There is a constant comparison of mobile and fixed network capabilities. Fixed networks have always been faster but the mobile networks are developing at a high rate.

At Vodafone Ireland, we found out that the application of the innovation, like new mobile communication standards, can be restricted. Higher speeds are good but most mobile phones, even the new ones, cannot handle the maximum speed of the network. Also, most new standards are not backwards compatible, meaning that you have to buy a new device to make effective use of the new standard. So the mobile device itself can be to be a limiting factor. In this chapter the limiting factors will also be discussed.

3.1 Applications

New applications are developed to provide new functions for mobile devices. The reason for these functionalities to be added is because of a creative idea of developers or to meet demands of customers. Most new applications have higher requirements of the phone and the bandwidth. The phone has to be faster and there has to be more bandwidth. For the main topic it is useful to know whether the demands of the applications drive the innovation of the mobile communication standards.

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In order to answer that question, first the applications made possible by the mobile communication standards are. The vision is limited to the common applications only. The following items show the common applications per standard.

3.1.1 2G: GSM

As mentioned in the previous chapter, the first digital network for mobile communication is GSM. At the time it was launched, there were not many applications for mobile devices. The first non-voice application made possible through this network is SMS. It offers the possibility to send short text messages from one phone to another. SMS did not require a lot of bandwidth, its maximum of 12.2 kbps was enough to send and receive text messages. A different application of the GSM network is to use the mobile phone as a modem for a pc, making it possible to dial the number of a server. This is exactly like the ‘old’ dial-in network for home personal computers. However, direct access to the internet with the telecom provider acting as an Internet Service Provider (ISP) was not available until GPRS.

3.1.2 2G: GPRS

With the arrival of GPRS direct internet access via the telecom company became possible. The telecom company acted like an Internet Service Provider. GPRS is a technique developed only for data transfer, not for voice traffic. As stated earlier, GPRS was a lot faster. The increase in speed made Internet access possible on mobile devices through WAP (Wireless Access Protocol). WAP is not the Internet as experienced on a personal computer. A description of WAP[21]:

“WAP is an open international standard for applications that use wireless communication. Its principal application is to enable access to the Internet from a mobile phone or PDA. A WAP browser provides all of the basic services of a computer based web browser but simplified to operate within the restrictions of a mobile phone.”

WAP was the first step to Internet access on mobile devices. However, a WAP browser could only show the webpages which were converted to the WAP standard. Thus, there was a restriction in the pages that could be visited. This was necessary regarding the limitations of mobile phones. They were incapable of viewing large webpages with a lot of pictures. The phones were not fast enough and the screens were too small. Although the bandwidth of GPRS is much better than the GSM network, it was not fast enough for the full content on most web pages.

SMS is also possible via GPRS and at that time another message service was introduced: MMS (Multimedia Messaging Service). MMS provides the possibility to send pictures, sounds or even a movie from one mobile phone to another.

Despite the fact that regular cell phones could not handle the Internet, other mobile devices like laptops could. As mentioned in the previous sub-paragraph, it was possible to use the Internet on a laptop by using a phone as a modem. The GPRS network is connected to the Internet. The advantage of this, is that dialing-in is not necessary anymore. The telecom company is the Internet Service Provider. There even were GRPS modems for direct connection for computers and laptops. GPRS was not very fast, but Internet and e-mailing was possible through it.

GPRS has created a lot of possibilities. It met the minimum requirements in terms of speed to use the Internet. A lot of other applications on mobile phones were introduced.

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3.1.3 2G: EDGE

The annotation EDGE stands for Enhanced Data GSM Evolution, also called EGPRS (Enhanced GPRS). As the EGPRS term suggests, it is an improvement of the existing GRPS network increasing the transmission speed and reliability. EDGE tripled the speed of GPRS and hereby making mobile data transfer faster. There are no specific applications that came with EDGE, but it made the mobile Internet easier to use because it downloaded files faster. The pages still had to be converted to WAP.

3.1.4 3G standards

The previous chapter mentioned that 3G offers several techniques providing higher speed and reliability. HSDPA can reach a theoretical maximum download speed of 14.4 mbps and the uploading speed has a maximum of 5.76 mbps. The practical speeds are lower but it gives an indication of the capabilities. This is an important milestone, because it is now fast enough for almost every Internet related application. These speeds are fast enough to surf the Internet, watch streaming video, run applications like video calling, mobile TV and music downloading. The list of applications is growing, and so is the data rate of the 3G network. The applications of 2G were discussed per technique, but the applications of 3G standards are combined in this paragraph. The bandwidth that 3G offers is fast enough for most mobile applications so there is no need to discuss the applications per standards.

A successful application of the 3G speed is the mobile version of the YouTube website. YouTube is a video sharing website where users can upload, view and share video clips. Vodafone Ireland uses a link to YouTube mobile on the Vodafone mobile portal, this is the start page of the internet browser of Vodafone mobile phones.

Mobile TV broadcasts are also popular. Football matches and soaps are broadcast most viewed by the users.

Google recently announced they will launch a software package for mobile phones. It is a package similar to an operator package. For example, a phone form Vodafone has several applications installed for browsing the web or making video calls. The package from Google includes several Google applications from maps to social-networking features to video-sharing [22].

The speed that 3G offers is not only fast enough for mobile Internet, it is fast enough for Internet on a computer or a laptop. Vodafone Ireland recently launched a 3G USB broadband modem [23]. USB stands for Universal Serial Bus, meaning that it is possible to connect this device to any personal computer or laptop having an USB-port. It has a competing price and has the advantage of being wireless. Using the Internet is possible wherever there is a mobile signal and Internet is possible in areas without a good cable connection. Big cities in Ireland are well-connected but on the countryside there is not always a good connection. A 3G USB broadband modem can offer a solution for this. This application is very useful Africa, where there are poor quality fixed line connections.

3.1.5 Pre-4G

Although it is a technology in development, it is worth mentioning the pre-4G technology because it says something about where the technology is going to be. UMTS revision 8 is a pre-4G technique and offers amazing data rates. However, 3G part already offers high speed internet access so why should there be a further improvement?

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The goal of 4G is to provide mobile internet access at high speeds without worrying about the costs. 3G does offer high speed mobile internet access but it is, in most cases, expensive and the consumer gets charged for the data use. 4G offers flat rate internet access, meaning the payment is once every month and the use of the service does not influence that rate.

There is no killer application for 4G yet. A killer application is an application that is ingeniously coded or unexpectedly useful. Applications that were not possible with the previous technology due bandwidth usage will be possible now. There is a big increase in bandwidth that 4G offers. An application for these high speeds is HDTV streaming and high speed file downloading or sharing.

The previous sub-paragraph mentioned Vodafone is acting as ISP, offering 3G internet access for home and mobile use through a 3G broadband modem. A 4G broadband modem can be a good application of the 4G technique.

3.1.6 Overview

Table 3 is showing an overview of the generations. This table is similar to table 2 but the ‘Service’-row has been replaced by the ‘Application’-row. As the bandwidth gets higher, there are more possibilities in advanced applications.

Technology 1G 2G 2.5G 3G 4G First design 1970 1980 1985 1990 2000 Implementation 1982 1991 1999 2002 2010? Application Analog

voice Digital voice, SMS

MMS, WAP True internet, video calling, mobile TV, high speed downloading

HD-TV streaming?

Standards AMPS, TACS

TDMA, CDMA, GSM

GPRS, EDGE

EV-DO,

W-CDMA, HSDPA

WiMAX, HSOPA

Data bandwidth

1.9 kbps 14.4 kbps 384 kbps 2 mbps 200 mbps

Table 3. Overview of different generations, their characteristics and applications.

The bandwidth use of the applications differ. The following figure shows an overview of the bandwidth usage per application.

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Figure 1. Comparison of downlink data consumption of cellphone applications. [24]

The figure shows an example of the usage of the applications and their bandwidth use per month. Mobile TV uses the most bandwidth and has the potential of being a killer application.

3.1.7 Conclusion

Now that the development in speed and possibilities are discussed, it is possible to answer the question of the paragraph: Are the bandwidth demands of new applications a motive for innovation of mobile communication standards?

The answer of Vodafone Ireland answer to this question is that there first will be an application demanding more than the current standards can offer. By the demands of the application, a new standard will be introduced meeting the demands. However, they recognize the difficulty of coming up with a killer application.

Ammeon answered that the technology leads the applications. The applications do not make use of the capabilities of the network. There is enough bandwidth but the available capacity is not used and this is an issue for telecom companies. The telecom companies want their users to use more data and less voice. Ammeon also recognizes the problem of coming up with a killer application. To make use of the available capacity the killer application should stimulate the user to use its bandwidth and a lot of users should use the application.

Our answer to the question is in between the previous answers. With the second generation we saw the mobile internet speed was not fast enough for unconverted pages. In that time there probably were already ideas about mobile TV but the bandwidth was just too low. Now we see a shift: the available bandwidth is very high but the applications do not use it. So at first application

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was the driver but with 3G standards and the speculation of 4G it is something else driving the innovation.

3.2 Fixed Networks

In Ireland, Ammeon pointed us at another possible reason why innovation of the mobile communication standards takes place. According to Ammeon, the comparison of the mobile and fixed networks capabilities cause the innovation of the mobile technologies. The mobile network is continuously being compared with the fixed network. The fixed network has always been faster, increasing its capabilities. To keep up with these capabilities, the mobile network has to continue innovating.

Fixed networks have always been faster than mobile networks. However, with the innovations of 3G and the speculation of 4G capabilities, the mobile network has reached a competitive speed.

At the beginning of mobile Internet, with GPRS, the speed of the mobile network in comparison with the fixed network was very low. A part of this is caused by the later development of the wireless network. Mobile data speeds were beginning to develop while fixed internet connections were already established and improving at a high rate. With GRPS there was a good technology to build on for a few years and after that UMTS came. UMTS made much higher speeds possible and is the most popular technology at the moment because of its speed and availability. As mentioned earlier, UMTS (with HSDPA) makes download speeds up 14 mbps possible. This is decent internet speed, regarding that most home internet connections are about 4 mbps.

3.3 Factors limiting innovation

So far we only talked about factors stimulating the innovation. There are also factors that can slow down innovation. The current networks have a lot of bandwidth available. The applications do not make enough use of the available bandwidth, which can be a limiting factor. If the network is not utilized enough right now, why should we come up with a new network? If the bandwidth gets higher, the mobile devices have to handle this. If they cannot, then the capabilities of the network cannot be used. In this paragraph we discuss those limiting factors.

3.3.1 Popularity of applications

The 3G network offers a lot of bandwidth. There is so much capability unused. Ammeon says that the current capabilities of the mobile network are not used because there are not enough good applications for the users that use the bandwidth. The problem is developing the right application to stimulate the use of this bandwidth. Telecom companies are facing that problem now. They want to reduce voice use and increase data use.

The problem is visible in the statistics. Here is a citation of an article of July 2006[25]:

“Across the continent, 3G take-up has been underwhelming. Of nearly 720 million cellphone connections in Eastern and Western Europe at the end of June, 38.6 million, or 5.4 percent, were 3G, according to Wireless Intelligence, a joint venture of the GSM Association and the market researcher Ovum in London.”

According to the same news article of last year Vodafone made just 3.8 percent of sales in the quarter ended March 31 2006 from 3G's supposed "killer application" - high-speed wireless data[25].

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3.3.2 Investments of telecom companies

When a new technology is invented, telecom companies can bid on licenses to use the technology. Besides this investment, the telecom company also has to deploy upgrade it’s existing network. The licenses are very expensive. Vodafone has spent $34 billion buying licenses and building networks for the 3G technology from 2000 up till 2006[25]. The license prices and the costs of deploying a new network are very high. If the high investment prices result in high prices for the customer, then this can be a limitation for customers to use the service. It is important for telecom companies to distinguish whether a new technology is a hype or not. If the wrong investment is made and the telecom company sticks with this technology, it can limit the opportunities of new technologies.

3.3.3 Device limitations

The current capabilities of the mobile network are not fully used. Vodafone gave a possible reason for this. Devices on the market cannot handle the full capacity of the data standards. For example, the phone requirements of watching mobile television. Vodafone UK set up a user test of Mobile TV in 2006. The device limitations were one of the key barriers to adoption. These are limitations in screen size and battery time[26]. Other limitations are computing capabilities and storage.

The users of mobile phones with a subscription usually get new phones from their telecom company once every two years. The more people having a new phone means that more people can use the new applications. In contrast to this, the techniques keep developing. If a user wants to get the maximum out of the network, he or she should always have a brand new phone which is compatible with the newest technology. This is an expensive thing and only few people will have a brand new device regarding the adoption curve of innovation.

3.4 Our vision

This chapter discussed two possible answers to the question: “Why is there innovation of the mobile communication standards?” We think that in the beginning the applications set the demands for the technology of mobile networks. When 2G was launched, the applications were still ahead of the technology. Internet could be a lot faster. At the moment, with 3G, the mobile speed is fast enough for internet and the applications don’t use all of the capabilities of the current mobile network. The higher speeds of fixed network are a motive to continue innovation.

4 CONCLUSION

The innovation of mobile communication standards has been a very active area over the last 10 years. The speed has increased rapidly and there was an increase in possibilities for applications. Up to 2G the increasing speed was necessary to meet the demands of applications. Now that the speed has reached levels of 2-14 mbps with 3G, the bandwidth is not an issue anymore. The capacity of the 3G network is not being used. There are not enough users using bandwidth. A possible reason is the limited number of applications that stimulate users to use their bandwidth. The speed of the 3G network makes internet connections in poor connected areas possible through 3G modem for pc’s and laptops. Even though the capacity of the 3G network is not used completely, the innovation goes on. The mobile network is being compared to the fixed network. The fixed network is increasing its speeds and so does the mobile network. The bandwidth expectations of the 4G network make applications like HDTV streaming possible. There is a shift

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from paying per minute (1G and 2G) to paying per MB (2.5G, 2.75G and 3G) to flat rate payment (4G).

Besides the factors that encourage the innovation of mobile communication standards, there also are factors restricting the innovation. The popularity limited use of the applications for cell phones that use bandwidth can cause telecom companies to not use a new technology and remaining with older technology. It if important for a telecom company to recognize a technology or a standard as hype. If the wrong investment is made and the telecom company sticks with this technology, it can limit the opportunities of new technologies. The devices can be a limiting factor. Small screen sizes and short battery operation times can cause a user to not use an application.

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REFERENCES [1] Wikipedia, Mobile Radio Telephone, http://en.wikipedia.org/wiki/Mobile_radio_telephone [2] Wikipedia, Improved Mobile Telephone Service,

http://en.wikipedia.org/wiki/Improved_Mobile_Telephone_Service [3] Wikipedia, AMPS, http://en.wikipedia.org/wiki/Advanced_Mobile_Phone_System [4] TU Berlin, History of GSM, http://kbs.cs.tu-berlin.de/~jutta/gsm/js-intro.html [5] Wikipedia, 2G, http://en.wikipedia.org/wiki/2G [6] Wikipedia, 2.5G, http://en.wikipedia.org/wiki/2.5G [7] Book: 3G wireless networks, Clint Smith, Daniel Collins [8] TU München, GPRS,

http://www.comsoc.org/livepubs/surveys/public/3q99issue/bettstetter.html [9] Ericsson, EDGE,

http://www.ericsson.com/solutions/tems/library/tech_papers/tech_related/edge_wp_technical.pdf

[10]Frequentieland, UMTS, http://www.frequentieland.nl/umts/umts_dienst.htm [11]3GPP, QoS model,

http://www.3gpp.org/ftp/tsg_sa/TSG_SA/TSGS_20/Docs/PDF/SP-030300.pdf [12]GSM World, HSDPA, http://www.gsmworld.com/technology/3g/evolution.shtml [13]Qualcomm, HSDPA,

http://www.cdmatech.com/download_library/pdf/hsdpa_downlink_wp_12-04.pdf [14]Telecomwereld, HSDPA, http://www.telecomwereld.nl/hsdpa.htm [15]Wikipedia, HSPA, http://en.wikipedia.org/wiki/High-Speed_Packet_Access [16]Mobile Info, 4G, http://www.mobileinfo.com/3G/4GVision&Technologies.htm [17]Freeband, WiMAX,

http://www.freeband.nl/freenovation/index.cfm?mag_id=1275&art_id=1273&language=nl [18]Wikipedia, WiMAX, http://nl.wikipedia.org/wiki/WiMAX [19]Wikipedia, 3GPP LTE, http://en.wikipedia.org/wiki/3GPP_Long_Term_Evolution [20]Telecom ABC, 3G LTE, http://www.telecomabc.nl/nummers/3g-lte.html [21]Wikipedia, WAP, http://en.wikipedia.org/wiki/Wireless_Application_Protocol [22]Wall Street Journal, Can Google-Powered Phones Connect With Carriers?,

http://online.wsj.com/article/SB119369951717475558.html?mod=hpp_us_whats_news [23]International Herald Tribune, 3G cost billions: Will it ever live up to its hype?,

http://www.iht.com/articles/2006/07/30/business/3G.php?page=3 [24]3g.co.uk, Vodafone Live! Best Mobile TV Service,

http://www.3g.co.uk/PR/July2006/3386.htm [25]The Base Station Conference, Mobile TV and video may be a future killer application, but

how will it be delivered?, http://www.openbasestation.org/Newsletters/November2005/SoundPartners/NewArticle1.htm

[26]3G Newsroom, Vodafone launches 3G broadband USB modem in the UK, http://www.3gnewsroom.com/3g_news/nov_06/news_7472.shtml

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INNOVATION & ICT

VRiSBI International Research Project Ireland 2007

Study Association VRiSBI Kamer H11-02

Postbus 1738

3000 DR ROTTERDAM

Email: info@vrisbi.nl

Internet: www.vrisbi.nl

Tel: +31-10-408 8846

Emiel Caron Assistant Professor

Room H10-19

P.O.Box 1738

3000 DR Rotterdam

The Netherlands

Email: caron@few.eur.nl

Tel. +31-10-4081342

Fax. +31-10-408 9162

VRiSBI is the study association for the study Economics & Informatics at the Erasmus University Rotterdam. We have over 350 members and there are around 100 students currently in their final year of the bachelor or master program.

One of our most important tasks is to connect students of Economics & Informatics with companies to give them an inside look how it is in the field. We try to do this by regularly organizing different kinds of activities in association with interested companies.

The development and the pleasure of learning for the student is important to us. We do this by organizing all kinds of activities like company visits, study trips, symposia, etc. etc.

This report in front of you is part of the VRiSBI International Research Project Ireland 2007. The CD-Rom contains all the reports and it also contains the presentations from the symposium ‘Innovation & ICT’.

ISBN of the complete report: 978-90-812660-1-7

VRiSBI International Research Project

“Innovation and ICT”

Comparing Ireland with The Netherlands

Please visit http://studiereis2007.vrisbi.nl for the complete paper of this presentation.

Other papers and presentations are also available.