3G Wireless Services

Before WiFi (wiki) became a house-hold name and available in public spaces and homes across the world, the wireless technology that was expected to make “the Internet go mobile” was known as third-generation cellular telephones: “3G“, or broadband on your cell phone.

European governments, particularly the UK and Germany, excited in the late 90’s by dot-com mania and the euphoria of all things Internet, headily auctioned-off 3G spectrum licences — pieces of paper which gave telco’s the right to use a certain space in the atmosphere – so that they could make use of that space to beam the new 3G technology into the air for everyone to use.   The UK Treasury netted £22.5bn (about US$44 billion at today’s exchange rate) from selling these bits of paper; Germany’s goverment netted nearly double that amount.   The prices were based on the supposed market value of the new ‘3G services’ in those countries.  One commentator at the time described the auctions as ‘the biggest single transfer of value from shareholders to government in corporate history’.

The strategy to charge telephone-number prices for spectrum licences back-fired.  Soon after the auctions (the telco’s had to pay the entire sum of the licences up-front in cash), the dot-com boom became the dot-com bomb.  Telco shareprices, inflated by new-economy promises, nose-dived as it became clear that the assets they lauded were, in good part, thin-air pipe dreams, and the debt bonds they issued to fund the over-priced 3G licenses, as well as a plethora of other buy-outs and activities, turned out to be the only material thing on the balance sheet besides their healthy historical cash-flows which, ironically, were generated by people making good-ol’ telephone calls to each other.

The high prices of the initial 3G licenses auctioned in Europe ultimately delayed the widespread introduction of 3G services to the market and it has taken some years for telcos to get the necessary infrastructure in place to begin delivering high-speed internet over their cellular networks.

Eight years after the the technology became technically available, 3G internet services are now being rolled-out by telcos world-wide and America Movil, Mexico’s dominant cellular telco, is making a multi-billion dollar investment in its 3G platform across Latin America.

The services promise to allow users of 3G cell phones to access internet services at high speed while they are traveling even where there are no WiFi hotspots available.  Users will also be able to receive video programs direct to their phones and hand-helds, and send high resolution pictures and video to each other on the fly.   A plethora of business applications could also be developed including, for example, the ability for engineers to beam back pictures and video of field situations for remote analysis and storage at their company’s offices.

Although 3G services offer potentially wider coverage and more flexibility than WiFi, even that value may now be somewhat diluted in urban areas by WiMax (wiki), which promises to deliver WiFi operability across towns and cities enabling people to browse the web, check email and make telephone calls world-wide for a small monthly fee.  Telmex, Axtel and other telco operators in Mexico are also investing heavily in WiMax.