The generation game

Mobile e-commerce is set to explode if third generation cellular services take off. Danny Bradbury wades through the acronyms

Mobile e-commerce is set to explode if third generation cellular services take off. Danny Bradbury wades through the acronyms

What does 3G stand for?

The term 3G stands for third generation network. It is the umbrella term for a set of new technologies that companies hope will revolutionise the cellular communications market.

What is the difference between 2G and 3G technology?

Cellular communications technology has evolved since it was first introduced in the 1980s. The first generation technology was generally analogue, meaning that voice-based data was transmitted via radio in the form of an analogue wavelength. When second generation technology emerged in the mid 1990s, it became possible to transmit voice digitally over radio, meaning that audio signals were encoded as a stream of binary data. This enhanced the quality of the signal, bringing voice-based communications more in line with traditional land lines. It also enabled companies to begin offering basic data services.

A good example was the Short Message Service (SMS). This enabled callers to send very short text-based messages that would appear on the screens of mobile phones. At this point, basic mobile e-commerce developed, with companies offering services such as horoscopes, stock quotes etc. However, unlike 3G technology, 2G services were designed primarily for voice transmissions, and data was just an afterthought. Most services could only offer transfer rates of 9,600 bauds.

What benefits will 3G offer?

There are two main benefits associated with 3G services. Firstly, some offer a permanent Internet connection. This makes users easier to reach with data services as it eliminates dial-up time. Secondly, data throughput will be much higher, certainly matching today's 56kbps modems, for example.

Which standards are available?

Some 3G standards have developed from 2G predecessors. Code Division Multiple Access (CDMA), for example, which is a 2G standard, is developing into Wideband CDMA (W-CDMA), which is likely to form the basis of many European 3G services. It has also been adopted in Japan.

In the US, CDMA has given birth to CDMA 2000. Many of the standards have been grouped together by the International Telecommunications Union (ITU) under an umbrella standard called the Universal Mobile Telecommunications System (UMTS).

There are also at least three technologies that straddle both the 2G and 3G worlds. These are known as 2.5G standards and, although they are datacentric, are not quite as functional as 3G technologies.

General Packet Radio Service (GPRS) will offer high data rates and always-on access. High Speed Circuit Switched Data (HSCSD) will provide high data rates but no always-on functionality. Enhanced Data Rates for Global Evolution (Edge) has been ratified as a standard by the GSM (General Standard for Mobile Communications) Alliance (GSM, a 2G technology, is based on the same foundation technology as Edge, called TDMA). There is currently little if any Edge deployment in the UK but it is likely to take off in the US.

Who is offering it?

BT Cellnet has vowed to implement both GPRS and 3G networks, while Orange has promised to offer both GPRS and HSCSD services. Orange acquired a UMTS license back in April, and has been trialling UMTS services since 1998. UMTS technology will be introduced commercially in the UK in 2002.

What does it mean for e-commerce?

This represents the start of sophisticated mobile commerce. Companies will be able to offer services and products to consumers via their mobile handsets in much the same way as they are offered over the conventional Internet today.

A particularly attractive opportunity is location-based services, which is where many mobile commerce companies will make their money. One advantage of the emerging technologies is that service providers will be able to tell where mobile phone users are, allowing them to offer services tailored to a particular location. One example could be the ability to order a taxi from your mobile phone and have it turn up in your vicinity without telling it where you are. Or perhaps searching for a hotel room and restaurant and making a reservation from your handset as you drive into a town on a business trip.

It could also serve as a more effective interface between business and the customer. Being able to provide a videoconference session with a sales representative, or perhaps sending banking data directly to the phone and enabling customers to make transfers in real-time, could give a firm the edge over the competition.

What are the greatest challenges for 3G-based e-commerce?

The road to mobile nirvana will be rocky. For one thing, service providers paid so much for 3G licenses - Orange shelled out over £4bn for its UMTS license - that the costs are likely to be passed on to the end-user at some point. This will doubtless hinder the take-up of such services. Secondly, the incredibly high data rates that some companies have been predicting are theoretical, and you would need to be standing directly under a base station to achieve them. Telephone interfaces will also be a problem. Wireless Application Protocol (Wap) interfaces are clunky and unintuitive, and they will need to develop if more customers are to take advantage of their services.

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