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| The race for speed |
May 9, 2006 |
By Danny Bradbury
Take a look at the three major Canadian mobile operators and you could easily assume their main business is litigation, not communication.
Last November, Telus sued Bell in the B.C. Supreme Court for misleading advertising. That month, Bell advertised its new EVDO high-speed data mobile network as being five times faster than the competition. Telus, which had vowed not to offer EVDO until early this year, decided to get into the market early — a week before the Bell ad campaign started. When Bell failed to remove the advertising quickly enough, Telus asked for an injunction. Bell then accused Telus of doing the same thing with another ad. Eventually, no injunctions were issued at all.
Then Rogers Wireless sued Bell for abusing its image in an ad that showed a cheetah (Bell’s EVDO) chewing up and spitting out a rabbit (Rogers’ existing EDGE network). The message was that Bell’s network is five times faster than Rogers. That case is still pending.
These legal skirmishes tend to obscure the larger war that is being waged; a fight over speed — who’s got it, when, for how much, and do customers even want it.
Market speed
At issue is a share of the high-speed mobile data market, which providers hope will be a major growth area over the next few years. They are tempting customers with higher-speed data networks designed to encourage greater use of mobile data networking services.
The interesting side note in the court action between Bell and Telus is that the two networks are very similar; they share the same EVDO technology, a true third-generation infrastructure designed to offer much higher speeds than the incumbent CDMA 1x networks. Chris Langdon, vice-president of wireless solutions at Telus, said its 1x offering provides up to 144kbps, but as with all these networks, the average sustained speed per session is lower, around 60 to 80kbps. That’s just slightly faster than standard dial-up Internet.
EVDO theoretically offers peak download speeds of 2.4Mbps, but practical sustained download rates top out at 400 to 700kbps, said Bell Canada’s vice-president of wireless technology Adel Bazerghi. Uplink speeds are slower, at a respectable 160kbps.
Rogers Wireless might be suing Bell for maligning its trademarks, but it can’t sue the company for misleading advertising. Rogers’ fastest current network is based on EDGE technology, providing roughly the same class of service as CDMA 1x. So what is its response to the now-faster competition?
Rogers is planning to launch a High-Speed Downlink Packet Access ( HSDPA) service later this year. HSDPA is often classed as a 3.5G network, providing even faster speeds. How fast? “We couldn’t answer that one honestly, because we don’t know,” said chief marketing officer John Boynton. He cited download speeds at around 1.5 to 1.9Mbps. But Cingular, which has deployed HSDPA south of the border, gets sustained average download speeds of between 500and 700Kbps with the technology. Greg Speakman, director of marketing, PC Cards and mobile products at Sierra Wireless, which sells hardware that enables laptops to connect to these high-speed networks, said uplink speeds of 100Kbps are realistic with HSDPA.
Competitive edge
In the meantime, Telus and Bell are capitalizing on Rogers’ lack of a higher-speed offering. Their networks are available now, say executives, while Rogers’ is vapourware.
But then, Rogers can afford to wait. At its last earnings call it stated 9.4 per cent of its average revenue per user (ARPU) came from data services, according to Perry Hoffman, editor of Report on Wireless, a publication produced by research company Decima. What do Bell and Telus state? “They were around two to three per cent and that was two to three years ago, but they don’t release [those numbers] any more,” he said.
Bell’s management set the industry average at three to five per cent in its 2004 annual report.
So, where is Rogers’ healthy 9.4 per cent coming from? The largest chunk is e-mail, Boynton said, thanks largely to BlackBerry sales. “The next biggest chunk comes from consumer, with SMS being a large portion, and then all the downloads and browsing.”
E-mail is traditionally bandwidth-friendly, unless users download large attachments. SMS (short text messages) use almost no bandwidth, and downloading the occasional game isn’t particularly inconvenient over lower-speed networks.
Who needs high speed?
So the big question is, are users craving high-speed data networks? “With phones, I don’t think so. It’s about a laptop with the wireless card,” Hoffman said.
Given the relative maturity of voice and consumer data services, wireless cards for laptop use will be a focal point for all three network providers as they continue to push higher-speed services. Ask wireless carriers what business users will do with high-speed cellular data services and the answers tend to centre around “more of the same” as opposed to innovative new applications.
Telus’ Langdon said Web browsing on a corporate LAN becomes easier at higher speeds, while Sierra Wireless’ Speakman said higher-speed networks are a boost for office workers who want to replicate their desktop broadband experience on the move. “One thing that annoys me on a day-to-day basis is PowerPoint,” he said. “Often I’ll receive an 8MB to 10MB PowerPoint presentation but I can’t send changes back very easily.” A high-speed network would make that easier.
Bell’s Bazerghi said his company has already seen the impact of EVDO on data services. “To say that you don’t think there’s a productivity improvement here is like saying that you didn’t think there was a productivity improvement when you went to broadband high-speed Internet from dial-up,” he said.
Many industry watchers expect users will migrate to a blended wireless strategy in which devices make use of any available network. Telus, for example, launched a software tool that automatically finds and connects to the fastest available network, whether Wi-Fi, EVDO or 1x.
The other application that has operators excited about EVDO is mobile TV. Telus’ Langdon said EVDO will increase TV quality from around seven frames per second to 15. On the other hand, that’s still a long way from the standard 24 frames per second that a normal television delivers, and it is still not known if large numbers of people will pay to watch TV on a postage stamp-sized cellphone screen.
A potentially more lucrative application for EVDO and HSDPA is music downloads. New networks can download a song in seconds, and that could boost revenues from Rogers’ MusicStore, Bell’s music service and any future Telus music download service.
What’s next? After deploying HSDPA this fall, Rogers will turn its gaze toward High Speed Uplink Packet Access, an upgrade which will increase uplink speeds. Bell and Telus will do the same, using EVDO Rev A. Given the way over-aggressive marketing keeps moving into the courts, perhaps the biggest users of these services will be the lawyers. It’s surprising how much bandwidth an affidavit takes up.
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