The future in 3G

Early in June 2003, the Coalition Provisional Authority in Iraq made a little-noticed concession. Bringing Iraq a mobile phone network was something that could no longer be postponed until after an indigenous government took office. Instead, the Americans put out requests to tender not just to America’s Motorola, but also to Alcatel, Ericsson and other European providers of second-generation (2G) phones (1).

By contrast with 2G phones, 3G phones offer a modest version of broadband over mobile networks. That means they handle voice calls and SMS messages, colour snapshots, email and web access, as well as video clips, locational services and payment services. With 3G networks, as with broadband, there is no dial-up – they are ‘always on’. In potential, at least, they offer not just the fast visual and aural delights of broadband, but the reliability of professional equipment. They won’t just be a fun toy to play with, but a powerful tool for organisation and endeavour.

So Iraq may have to wait for 3G. After all, Western capitalism is prepared to wait an unconscionable amount of time for it. First, British mobile network operators spent most of their tiny 2002 budgets for new infrastructure on 2G rather than 3G networks. Worse, British firms are not even demanding mobile intranets to aid the productivity of their more and more peripatetic workers. They don’t – or perhaps can’t or won’t – see the point. Last, even the mighty Nokia, which gets 50 per cent of its revenues from business customers for mobiles, will not sell European businesses 3G handsets equipped with industry-by-industry business applications until 2005 or 2006 (2).

Given the indifference Western business shows to 3G networks, Iraq looks like getting them only when it regains its sovereignty. Nevertheless, when the Americans opened the Iraqi 2G market to Global System for Mobile Communications (GSM) – the 10 kilobits per second (kpbs) system that Europe developed – the move was significant. In business, as in the war against terror, the US showed itself forced to play a multilateralist card. And that card was surely noticed in what will be the world’s largest market for 3G phones: China.

In China politicians have already led both America and Europe a merry dance around the standards that the country will adopt for 3G. Will it go for America’s CDMA 2000 phones, which build simply on its old Code Division Multiple Access networks and run at around 100kbps? Or should the Middle Kingdom instead plump for Europe’s Wideband CDMA phones? They are based upon GSM but, since they handle a hefty two megabits per second, represent a tough and expensive technological leap up from it. Or should Beijing rather adopt its own flavour of 3G?

Conflicting standards partly explain why 3G has been such a long time coming. But a more important impediment has been the politically motivated ridicule that has attached to 3G. In the wake of the dot.bomb and ‘WAP is crap’ episodes, both stock market analysts and IT funksters have united in condemning 3G as a grand, top-down, Technology Push solution – all the more risible for being advanced in a world where the only good innovations are modest and based on Market Pull: on popular needs, sexy handset designs, and delightfully usable interfaces.

In 3G, therefore, we have a vital symptom of the hostility to technological innovation that so often dogs the West nowadays. On both sides of the Atlantic, the feeling is growing among management buffs that innovations are best developed not simply as Big Lab corporate efforts to reach radical goals, but as a mix of existing technologies brought about by ‘open’ networking with savvy users, entrepreneurs, small R&D houses and universities (3).

In this kind of climate, an innovation like 3G is regarded as hubris, as the wrong and old-fashioned way to go – in a word, as Republican and top-down in inspiration, rather than Democratic and peer-to-peer in flavour. As ever, the international IT community generally, if implicitly, holds the democratic approach to be the correct one.

So 3G is uncool because it is too ambitious and not bottom-up enough. Instead of suppliers building it and hoping that consumers and businesses will flock to it, suppliers wait. They wait for consumers to develop new consumer applications; they wait for businesses to get round to wanting to make investments in organising their internal data so that their workers can have mobile access to company information. Meanwhile, everyone likes to worry about all the security problems that corporate use of 3G will bring.

As it happens, Asia’s richest man, Li Ka-shing, has already won half a million British and Italian consumer subscribers to 3G through his company Hutchison Whampoa. But despite that achievement, the City still pokes fun at his hopes of boosting his base to a total of two million subscribers by year end. Indeed, his order of three million 3G handsets from Motorola and NEC has been derided as ‘misplaced confidence’ (4). 3G is, the Financial Times observed, Li Ka-shing’s ‘boldest bet to date’: a write-down on it ‘could be seen as an admission of defeat and dent his image as the shrewdest of investors’ (5).

Wherever you look, the market’s short-termist aversion to risk disguises itself as sage, humanistic, user-led criticism of 3G. With their cheap and cheerful CDMA 2000, Americans congratulate themselves that they are ‘second movers’, behind the Europeans and their over-ambitious and glitch-prone wideband technology. For their part, Europeans inveigh against Microsoft. How dare its Cold War-style giant laboratories in America dare to offer a powerful, proprietary 3G handset operating system! How dare it ignore users, and instead focus on competing against Symbian – the laid-back, Euro-Asian, multilateral OS that is committed, unlike Microsoft, to open standards in software development!

In fact, in 3G operating systems, as elsewhere, Microsoft itself has recently made customer satisfaction its mantra. Seeing off big rivals through acute competitive strategy, the path long recommended to American business by Harvard’s Michael Porter, is no longer the governing principle it was. Instead, we have entered a therapeutic, small-is-beautiful world where it’s the man in the street who can and should, somehow, determine the course of technological development. For proof, take the much-touted rivals to 3G.

So-called ‘2.5G’, a dial-up service known as GPRS, runs under 50kpbs, and is currently enjoying a critical revival. But the biggest eulogies are reserved for Wi-Fi, which has now acquired the status of a political cause.

Of course, I too want ‘wireless fidelity’ Local Area Networks (LANs), or WiFi hotspots, in every bar and airport. But know-all boosters of Wi-Fi don’t just err in seeing 3G as pride before a fall. For them, it is enough to connect up cheap wireless base stations to isolated bits of the telephone network and so provide people places to drop in on, stay put in, and do a burst of telecommunications from.

Yet that is a philosophy that makes a virtue out of intermittent access. Indeed, there is a parallel here in the world of UK energy, where the government supports intermittent windmills. Altogether, WiFi drop-in centres cannot be a substitute for the location-independent, always-on access afforded by 3G.

In today’s climate of straitened means and cramped ideas, it is a sign of the times that telecommunications firms seriously ask consumers to round up their neighbours, pubs and coffeehouses to ask for broadband. Fearful of the risks involved, they refuse to underwrite investments in really high-bandwidth broadband and 3G networks, or in the new WiMAX technology (IEEE 802.16) that will eventually supplant WiFi (6).

Instead, it is hoped that Wi-Fi hotspots could revitalise urban spaces. 3G, by contrast, is felt to be only about technological engineering, not the social sort. No wonder hipper-than-thou Wired magazine also has a friendly word for the ‘spontaneous, temporary wireless cooperative’ approach offered by mesh networks, another rival to 3G, or the ‘nimble, open systems’ philosophy of software-defined radio, which is yet another competitor (7).

China will bother with little of this. Despite the bureaucracy there, it will plunge ahead with 3G. As in the West, 3G will be a conduit for girls, games and gaming – and for relations with government. But perhaps faster than the West, China will apply 3G to the real, tool-based world of production, not just the playful idyll of consumption.

James Woudhuysen is professor of forecasting and innovation at De Montfort University, Leicester. He is coauthor of Why is Construction so Backward?, Wiley-Academy, 2004 (buy this book from Amazon (UK) or Amazon (USA))

(1) ‘Tender out soon to run Iraq mobile network’, Gareth Smyth and Maija Pesola, Financial Times, 13 June 2003

(2) Mobile data in doldrums, Martin Courtney, IT Week, 28 July 2003

(3) See Open Innovation: the New Imperative for Creating and Profiting from Technology, Henry Chesbrough, Harvard Business School Press, 2003; How Breakthroughs Happen: the Surprising Truth about How Companies Innovate, Andres Hargadon, Harvard Business School Press, 2003

(4) ‘Hutchison Whampoa’, the Lex column, Financial Times, 22 August 2003

(5) ‘Reputation on the line for “Superman”’, Francesco Guerrera and Ray Marcelo, Financial Times, 1 September 2003, p24

(6) Broadband anywhere: the extended broadband home, Broadband Home Report, 21 August 2003

(7) Beyond Wi-Fi, Xeni Jardin, Wired, May 2003