3G Mobile: A Status Report

ITU News 6/200312

Since mobile cellular became commercially

available in the early 1980s, it has ad-

vanced beyond imagination in terms of cover-

age, services, technology, handsets and regu-

lation. Perhaps the most revolutionary change

is that in the space of around 20 years, mobile

subscribers surpassed fixed-telephone line sub-

scribers in 2002, making mobile technology the

predominant means of voice communications

(see Figure 1, left chart).

First generation mobile cellular networks em-

ployed analogue technology. Developments in

digital technology led to second-generation (2G)

systems. By the end of the 1980s, 2G networks

had been developed to provide better quality

services, greater capacity and additional func-

tionality than analogue systems. At the end of

2002, the world had almost completed the tran-

sition to digital cellular networks, with analogue

users accounting for a mere three per cent of

total mobile subscribers. There are four 2G dig-

ital cellular radio technologies in use around the

world (see Figure 1, right chart): 1

�Global System for Mobile Communica-tions (GSM). This is the predominant technol-

ogy worldwide and the predominant system

in Europe. It is also used in many nations in

Africa, Asia, the Middle East and some coun-

tries in the Americas. At December 2002, there

were 788 million GSM subscribers on 467 net-

works 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 re-

gion and less than two per cent in Europe, the

Middle East and Africa.

� Personal Digital Cellular (PDC). This sys-

tem 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 dig-

ital 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.

THE EVOLUTION TO 3G MOBILE STATUS REPORT

Third-Generation (3G) Mobile

A status report

Evolutionof wireless technologies

ITU 030082/Siemens AG

A collection tracking the history of mobile com-

munications

ITU News 6/2003 13


2 See “GSM Statistics” on the GSM Association

website at www.gsmworld.com/news/statistics/

index.shtml

3 See the “Internet Provider Services (Mobile Tele-

phone)” 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 (pro-

vided by the NTT DoCoMo Group), Ezweb (provided

by the au Group and the Tu-Ka Group) and J-sky (pro-

vided by J-Phone). This is out of a total of 73.5 mobile

telephone subscribers (see www.tca.or.jp/eng/data-

base/daisu/yymm/0212matu.html).

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 ac-

cess 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 exist-

ing 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. ITU 030084/Philips


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

New generation

liquid-crystal

display (LCD)

mobile phone

ITU News 6/200314

4 See ITU Press releases: “ITU gives final approval toIMT-2000 radio interface specifications” (8 May 2000)at www.itu.int/newsarchive/press_releases/2000/10.html and: “Thumbs up for IMT-2000” (30 May2000) at www.itu.int/newsarchive/press_releases/2000/12.html


These technologies offer speeds that

are equivalent to, or even faster than,

conventional dial-up.

The development of 3G systemsThe need for faster speed, global com-

patibility and multimedia services has

led to the development of 3G systems.

In an effort to consolidate existing in-

compatible 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

International Mobile Telecommunica-

tions-2000 (IMT-2000), this global

standard was realized after years of col-

laborative work between ITU and the

global cellular community. At the end of May

2000, the World Radiocommunication Conference

(also held in Istanbul) identified additional fre-

quency bands for 3G (IMT-2000) use.4 IMT-2000

consists of five different radio access methods:

W-CDMA (Wideband Code Division Multiple

Access), CDMA20001X, TD-SCDMA, EDGE

(Enhanced Data Rates for GSM Evolution) and

DECT (Digitally Enhanced Cordless Telecom-

munications).

The evolutionary path from 2G to 3G has been

mapped out for existing networks (see Figure 2).

Migration differs depending on the existing 2G

network. In general, W-CDMA would require a

brand new network to be installed whereas

CDMA2000 1X requires less investment as an

upgrade from existing second-generation

CDMA networks. Among the five radio access

technologies approved as IMT-2000, W-CDMA

and CDMA2000 1X have gained the most sup-

port from regulators, mobile network operators

and equipment manufacturers.

ITU 030088/Samsung

An innovative mobile phone with a built-in rotating camera

and colour screen, to be released in the GSM market in 2003

ITU News 6/2003 15

YOUTH FORUMTHE EVOLUTION TO 3G MOBILE STATUS REPORT

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 speci-

fied. In other cases, there was no explicit re-

quirement for a specific radio interface as long

as it was one identified in the IMT-2000 stand-

ard. 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. Back-

ers 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 in-

stances, the licence fees revert to the govern-

ment budget.

AuctionIn this method of licence allocation, a fre-

quency range identified for the use of 3G net-

works 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 auc-

tioned. 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

high, as were the prices. It is possible that li-

cences 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 sim-

ply 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 contestIn a beauty contest, a fixed number of li-

cences are awarded to applicants that best meet

certain criteria. The regulator issues an invita-

tion to all interested parties with guidelines and

requirements. Successful applicants are chosen

based on specific pre-determined criteria pre-

sented 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 evalu-

ated 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 cov-

erage. Other aspects such as market concen-

tration and technological specifications are also

taken into consideration.

Like a real beauty pageant, applicants are

awarded points for satisfying the specific crite-

ria 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 analysisUniversal Mobile Telecommunications Sys-

tem (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

3G Licensing

ITU News 6/200316


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

Economy Auction dateNumber

ofwinners

Remarks

Table 1 — Outcome of 3G mobile licence auctions

April 2000

July 2000

August 2000

October 2000

November 2000

December 2000

January 2001

February 2001

March 2001

March 2001

April 2001

July 2001

September 2001

October 2001

November 2001

December 2001

December 2001

February 2002

October 2002

The four incumbents were awarded licences plusa new entrant

All five incumbents won the licences

Four incumbents won licences

Three of four incumbents won licences

All six bidders won licences, including the fourincumbents

Four bids for four licences

Four licences were awarded at auction and a fifthwas set aside for the Maori people

Five bidders won 52 regional licences

Three bids received for four licences on offer

Two national and various regional licences wereawarded to six bidders

Auction cancelled since there was the samenumber of bids as licences to be awarded.Each licence was awarded for the reserve price

Four licences had been on offer. The threeincumbents were awarded licences

Bidders had to pre-qualify. Only four bidders forfour licences. Amount equals bid plus minimumroyalty payments for 15 years

Sealed bid where licence price correspondedto the fourth highest bid in the auction

Licence awarded to only bidder (three licenceshad been offered)

Two incumbents won with the third not participating

Won by the three incumbents

Only three of six incumbents won licences

Two incumbents bid for three licences

Amount(USD

million)

35 411

2515

46 323

10 084

716

121

60

931

418

578

166

414

671

496

90

203

157

1397

19

100 771

United Kingdom

Netherlands

Germany

Italy

Austria

Switzerland

New Zealand

Canada

Belgium

Australia

Singapore

Greece

Hong Kong, China

Denmark

Slovenia

Czech Republic

Israel

Taiwan, China

Latvia

Total

5

5

6

5

6

4

5

5

3

6

3

3

4

4

1

2

3

5

2

77

Note: Amount converted to USD at exchange rate on day on which auction finished.

Source: ITU.

W-CDMA radio interface in the frequency bands

1900–1980 MHz, 2010–2025 MHz and 2110–

2170 MHz. In December 1998, the European Par-

liament 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 com-

pleted the 3G licensing process by May 2002.

Non-EU countries in Western Europe such as

Norway and Switzerland have also completed

Status at 31 December 2002

ITU News 6/2003 17


Source: ITU.

1

2

3

4

5

6

7

8

9

10

11

12

13

Country Date licenceawarded

Numberof

licences

Remarks

March 1999

March 2000

June 2000

December 2000

December 2000

December 2000

December 2000August 2001

December 2000

July 2001May 2002

May 2002

June 2002

June 2002

July 2002

Administrative fee of EUR 1000 per 25 kHz

Amount does not include yearly radio spectrumfees

Two W-CDMA and one CDMA2000 1X

In addition, each licensee is expected to pay USD2.2 million per year as frequency usage charge

Not including annual spectrum fee

Awarded to three incumbents

KTF and SK Telecom awarded W-CDMA licencesfollowed by LG Telecom (CDMA2000 1X)

Spectrum use fee and 0.15 per cent of turnover

Bouygues Telecom was awarded a 3G licence, ata lower price, after the two incumbents, FranceTelecom and SFR

Annual spectrum usage fee of 0.2 per cent ofturnover or a minimum of EUR 200 000

Two incumbents awarded licence plus new entrant

Three licences had been awarded but one waslater withdrawn

Additional maintenance fees based on the numberof transmitters set up in each licensee’s 3G network

Amount(USD

million)

-

444

-

45

360

1839

2886

-

1042

-

173

67

26

6882

Finland

Spain

Japan

Norway

Portugal

Poland

Korea (Republic of)

Sweden

France

Luxembourg

Ireland

Slovakia

Malaysia

Total

4

4

3

3

4

3

3

4

3

3

3

2

2

41


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 coun-

tries 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


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

ITU News 6/200318


Personal Communications Services (PCS) that

take up parts of the spectrum bands identified

for 3G services. There are several factors hold-

ing 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

5 See Ericsson’s Press release of 2 April 2003:

“Ericsson and Nigeria’s RelTel Sign CDMA2000 1X”

(www.ericsson.com/press/20030402-083853.html).

which operators are presently unable or unwill-

ing to make. Another factor is the plurality of

different systems in the region (i.e., TDMA,

GSM and CDMA), which complicates the mi-

gration 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 addi-

tional 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 re-

gion. While no formal IMT-2000 licensing has

taken place, it could be that operators in some

African countries may introduce 3G-like serv-

ices 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

RegionNumber

of countrylaunches

Africa

Americas

Asia

Europe

Oceania

Total

Numberof

countries

Numberof

licences

-

1

7

26

2

36

-

3

23

83

10

119

-

931

4310

100 588

673

106 502

Licencefees (USDmillion)

Number ofoperatorlaunches

Numberof countrylaunches

Number ofoperatorlaunches

Numberof

countries

Numberof

launches

3G licences1 CDMA2000 1X2

-

-

1

3

-

4

-

-

3

4

-

7

-

9

3

3

2

17

-

20

5

3

2

30

-

9

4

6

2

21

-

20

8

7

2

37

Table 3 — Regional distribution of 3G licences and deployments

1 Where there was a formal 3G licence process.2 Launched as an extension of existing networks.

Source: ITU.



Total

A 1992

mobile phone

— a model that

was especially

popular with

architects,

construction site

managers and

surveyors

ITU News 6/2003 19


Roll-out of 3G networks is in theory

guided by timetables stated in the licence

conditions such as required minimum

coverage by a specified date. However,

market demand and handset availability

have impacted deployment schedules and

many networks have been delayed.

In Asia, SK Telecom of the Republic of Korea

launched its CDMA 2000 1X network in October

2000. 6 Japan’s NTT DoCoMo pioneered the

deployment of W-CDMA, launching its 3G serv-

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 incum-

bent operator Sonera met licensing con-

ditions by having its network available

on 1 January 2002, commercial service

was not available until September due

to lack of handsets. Austria’s Mobilkom

launched its 3G network on 25 Septem-

ber 2002. In March 2003, Hutchison commercially

launched 3G services in the United Kingdom

and Italy, as well as in Australia in April and in

Sweden in May.

Overall, uptake of 3G services based on

W-CDMA has been slower than initially an-

nounced. Handset availability and network

interoperability have been cited as reasons for

the sluggish 3G market. Low market interest has

further exacerbated this scenario. The only other

W-CDMA launches have been in Japan, where

in addition to NTT DoCoMo, J-Phone launched

a W-CDMA network in December 2002. These

two operators had a combined 153 200 3G

subscribers at year-end 2002.

The use of CDMA2000 1X in

existing mobile frequencies as an

IMT-2000 standard has led to

more rapid launches. Except for

Japan, all CDMA2000 1X net-

works have been launched with-

out the need for a new licence as

they operate in existing licensed

radio frequencies. By the end of

December 2002, there had been

30 commercial CDMA2000 1X

launches in 17 countries.7 The number of

CDMA2000 1X subscribers at December 2002

was 32.6 million with the vast majority in the

Republic of Korea and Japan.

3G network deployment

6 See “SK Telecom Launches Commercial cdma

2000 1x Service”, Press release of 30 September 2000

(www.sktelecom.co.kr/english/news pr/news/2002/

06/01/219,1012,0,0,0.html). SK Telecom was awarded

a 3G licence but for a network using W-CDMA tech-

nology. Republic of Korea mobile operators consider

CDMA2000 1X to be a 2.5G network. For example,

LG Telecom, a Republic of Korea mobile operator

states on its website that “CDMA2000 1X is a 2.5

generation Mobile Communication Service” (see

www.lg019.co.kr/docs/eng/imt/imt cdma 01.jsp).

7 See the “Operators” section of the 3G Today website

for updated listings of commercial CDMA2000 1X

launches (www.3gtoday.com/operators flash.html).

ITU 030089/Nokia

Mobile phone production: The final testing of a handset

The rotating

camera phone

ITU 030091/Samsung

ITU News 6/200320


ConclusionThere 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 com-

mercial 3G services by 1 January 2002. In retro-

spect, 3G licensing can be questioned on two

grounds. One was the EU process that com-

pelled members to abide by a specific timeta-

ble. It is debatable whether this was practical

for a brand new service where infrastructure

availability and reliability was unknown and

market demand was at best, sketchy. This is

particularly relevant in the GSM world, where

at the time of licensing, few operators had ex-

perience with high-speed data networks. The

second issue relates to the fact that CDMA net-

works can be upgraded to CDMA2000 1X with-

out operators having to apply for a 3G licence.

This has given CDMA network

operators an advantage

over GSM operators. On

the other hand, there is

confusion about whether

CDMA2000 1X is truly 3G,

especially since operators

Contributed by Michael Minges and Pratikshya

Simkhada of the “Market, Economics and Finance

Unit” of the ITU Telecommunication Development

Bureau (BDT). This Unit was formerly called “Tele-

communication Data and Statistics Unit.”

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 con-

trast 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 re-

cently 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. In-

stead, countries might con-

sider 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

greater functionality for the

development of mobile data

services. If these upgrades do

not require changes to exist-

ing frequency allocations,

then it may be wise to encourage such en-

hancements without requiring a new licence.

If additional spectrum is required within the

same frequency, regulators should be encour-

aged to act favourably upon this request in the

light of the benefits such spectrum could bring.

If new 2G mobile licences are to be issued, then

the authorities may wish to encourage opera-

tors to install their networks as 2.5G-ready. �

ITU 026120/A. de Ferron

ITU 010541/Ericsson

Demonstrating location-based services at ITU TELECOM AsIA 2002

(Hong Kong, China). A number of these services are expected to

use IMT-2000 systems

3G Mobile: A Status Report

Documents

Transcript of 3G Mobile: A Status Report