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Cellular data: What enterprises should expect in 2005

GSM operators are rolling out UMTS and a new version of EDGE Release 4(R4) whose lower latency should improve VPN compatibility.

Bob Egan's weekly column
October 1, 2004 issue

What's happening

Verizon Wireless has expanded its CDMA2000 1xEV-DO service to 14 cities and 24 airports. Meanwhile, GSM operators are rolling out UMTS and a new version of EDGE – Release 4(R4) – whose lower latency should improve VPN compatibility.

Our Conclusions

EDGE R4 will likely be the best option for general enterprise laptop access through at least 3Q05. 1xEV-DO (Verizon/Sprint) and UMTS (Cingular/AT&T Wireless) will remain works in progress through YE05 because we believe they won't meet our two requirements for enterprise-class service: Coverage in 90 percent of the licensed subscriber areas, and that real world services and data rates that are at least 90 percent of the technology's promised capability are available to subscribers. Through at least YE05 we believe 1xRTT (Sprint/Verizon) and GPRS (AT&T/Cingular/T-Mobile) will remain the most competitive and attractive options for applications that use PDAs, smartphones and appliances such as Blackberry devices. We believe in these scenarios, that the requirements for coverage, latency and battery life are premiums to raw speed


Enterprises considering the use of DO or UMTS when (re)negotiating contracts should proceed carefully and are well advised to seek concrete timelines and service level agreements from operators on DO/UMTS in their critical use areas. DO suppliers are Verizon and Sprint (planned). EDGE and UMTS suppliers are AT&T, Cingular and T-Mobile (predicted 4Q04).

Enterprises currently using EDGE should prepare now to upgrade to R4 because network latency is reduced by 50 percent. Those considering EDGE should require R4 before commercializing any initiative. We believe this is a critical element for VPN use.


In North America, 3G will remain very much a work in progress. In September 2003, we wrote that Verizon's DO service is nice – if you can get it. That's still the case. The "DO" carrot, with speeds averaging 500 kbps+, has been dangling for a year.

Key observations that we believe will impact enterprises through 2005

  1. DO is fast, but slow in terms of roll-out. Verizon's DO coverage is still limited to major cities, and Sprint won't have DO in more than a handful of cities until late 2004 – if then. Enterprises in DO markets should ensure that service is available throughout the entire metro. For example, although Verizon's coverage map shows DO coverage throughout Kansas City, media reports indicate that it's available in only half of the city. The message: Don't trust coverage maps alone.

  2. EDGE is improving in terms of performance and competition. AT&T has begun deploying R4, which cuts EDGE's latency in half, to 300-500 milliseconds, the same as 1xRTT. We predict that T-Mobile will finally venture into EDGE before YE04.

  3. DO appears to be emerging as a viable alternative to Wi-Fi hot spots. Case in point: Verizon's DO is now available in two dozen major airports.

  4. UMTS will roll out in fits and starts, just like DO. AT&T currently offers UMTS in only six cities, although its pending new owner, Cingular, is pressuring vendors to deliver UMTS infrastructure for more deployments n 2005. However, we expect coverage to remain spotty throughout 2005, due primarily to the challenges of Cingular's spectrum requirements. With average rates of 220-320 kbps, UMTS will be like DO: Nice, if you can get it.

  5. Upgradeability remains key. We reiterate our advice from one year ago: Although we remain skeptical about DO becoming enterprise grade by even YE05, CIOs and IT managers planning to use 1xRTT are well advised to buy DO modems – which are backward-compatible with 1xRTT – to save future capital and support expenses when migrating to DO. Then exploit DO where it's available subject to our guidelines noted above. We now apply the same advice to EDGE: Enterprises should ensure that all new EDGE devices support or are upgradeable to R4.

Mobile Competency
Bob Egan is president and CEO of , a Providence, R.I.-based market analyst and consultancy. He can be contacted at or via phone at 401-241-4000.

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