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Research Note no. 13 2005–06
3G, or not 2G: that is the question––of mobile telephone futures
Matthew James
Science, Technology, Environment and Resources Section
10 October 2005
Introduction
Third Generation (3G) mobile telephone systems represent
a huge investment in technology. The telecommunications industry has visions
of consumer-driven access to mobile multimedia services. However, 3G challenges
regulatory policy as it represents a convergence of content, devices and
networks, with many companies involved. This Note examines matters of
industry development, appropriate content protection and misuse, regulatory
controls and future network trends.
What is 3G?
3G uses a different range, in the radiofrequency spectrum,
to second generation (2G) mobile telephones, to provide a wider range
of services. Australian 3G networks operate in the 2100 Mega Hertz (MHz)
frequency band; 2G networks operate at 825~845 MHz (CDMA) and 935~960
MHz (GSM). 3G offers scope to provide television, radio, music, telephony,
Internet, games, etc to handheld devices, albeit in changed forms. For
example, only short duration media streaming seems suited to mobile devices,
not normal programming. 3G aims for high-speed data capacities and may
be used for applications like:
- full video, videoconferencing and calls
- Internet access, email and news links
- high resolution camera links
- music storage and playback, as well as
- pornography, gambling and games.
3G in Australia
3G network trials started in Japan in 2001 and in Europe
in 2003. 3G began rolling out in Australia in 2003/2004 with the launch
of the Hutchison brand ‘3’ in Sydney and Melbourne
in mid April 2003, and in Brisbane, Adelaide and Perth in early July 2003.
In August 2004, Telstra announced
that a network-sharing agreement had been struck with Hutchison for Telstra
to launch its 3G services in September 2005. In 2004 Vodafone announced
that Nokia was to build its 3G network for Australia and New Zealand.
In July 2005, Vodafone unveiled its first 3G handsets ahead of their launch
in October 2005. In 2005, Optus
conducted trials on a 3G network and pooled its resources with Vodafone.
Australian 3G operators are offering online soap operas,
music videos, exercise programs, various ring-tones, short films, news
and sport, to encourage user take-up. Users face a bewildering array of
fees, charges and usage plans. On the business side, content acquisition
and programming are big issues for telecommunications and content providers.
Satellite service providers are also positioning to offer digital multimedia
broadcasting and Internet network services into handheld devices and mobile
phone alternatives.
3G: commercial profitability?
While 3G appears to be more advanced overseas, observers
are not convinced of its profitability there or here. A global handset
shortage and a lack of content drivers are affecting take-up, while various
formats and operating systems thwart interoperability. Operators here
have to recover their investment of over $1.17 billion on spectrum purchases
in 2001. While the 3G industry promotes mobile telephone usage growth,
with only half a million 3G users so far, the survival of all services
is uncertain, as is the future of current 2G use. Operators risk cannibalising
their existing 2G subscriber base of 20 million units as users upgrade
handsets to access 3G.
At this early stage of deployment, it is not clear
whether 3G will survive as a technology platform winner. Operators will
vary pricing structures and content formats to win over more customers.
However, critics such as industry commentator Paul Budde predict that
companies will be unable to recoup their 3G investment in spectrum and
technology.(1) He sees the key issues as high speed versus
cost tradeoffs with current systems unable to offer both, while under
threat by rivals such as wireless broadband.(2) The marketing
of ‘cool’ handsets as trendy accessories may be a key factor affecting
3G take-up. Other issues affecting take-up are alternative systems and
content rights.
3G: barriers to expansion
A new trial of digital video mobile broadcasting handheld
technology (DVB-H) is underway that may provide an alternative to 3G.
The Sydney trial, conducted by Bridge Networks, focuses on reliability,
using a video mobile telephone with a special attachment. Since 3G is
a one-to-one service, single reception is subject to signal drop-outs
when service is congested. As DVB-H is a digital television broadcast
service, its signal goes from one point to many phones at once without
drop-outs.(3)
The issue of Intellectual Property rights clearance
thwarts open sharing of content among the 3G service providers. They also
need to apply firm content management, often at a global scale. The costs
of deals for 3G sporting and music rights also threaten viability. Some
companies reap large revenues from mobile telephone downloads. Now they
work with software and hardware providers to ensure that digital rights
management systems and file formats can integrate as smoothly as possible.
Demand for 3G will not be driven by the technology
platform as such, unless 3G is seen to offer new, easy to use, innovative
and useful personal services to now ‘unaware’ consumers. Drivers might
be GPS location functions, photo taking, stereo sound and music. Cheaper
alternatives such as free Internet, for real time or deferred content
downloads, may challenge the use of 3G by consumers.
Managing contentious content
A baffling plethora of regulations generated by different
government agencies confronts 3G developers. The same content is subject
to different rules according to the media involved e.g. for computer games,
with censorship over the Internet, or not on mobile phones or handheld
units. A ‘delivery diversity dilemma’ confronts policy makers such that
the issues may be left to industry self regulation.(4) For
example, when is a game a film, or when is consumer content public or
private, given the huge, ubiquitous scales of use? The effective regulation
of content services may have to consider customer age verification, content
assessment, complaint handling, privacy and enforcement issues.
In industry slang, 3G can also mean ‘Girls, Gambling
and Games’ raising the spectre of increased availability of pornography
and gambling. Given the popularity of mobile telephones among youth, people
concerned with community standards have recognised a need to protect those
at risk from online pornography, gambling and criminal activities which
are available on mobile systems. On 13 May 2004, the Minister for Communications,
Information Technology and the Arts directed the Australian Communications (and Media) Authority
(now ACMA) to establish a Service Provider Determination to require premium
adult message services to have specific prefixes and prohibit the supply
of banned content to such services. The resulting draft service provider
determination(5) sets out the restrictions on content and obligations
on carriage service providers regarding mobile chat rooms and ancillary
matters.(6)
On 26 May 2004, the Australian Broadcasting Authority
(now ACMA) released a code of practice(7) to ensure that mobile
content providers do not supply any material classified in the X18+ or
RC classifications. As well, the code provides for users wishing to access
content in the R18+ or MA15+ classifications ‘to opt-in to receive’. The
code aims to ensure consistent treatment of content across the fixed and
mobile entertainment platforms. Note that no age restrictions apply to
3G usage.(8)
The separate online content co-regulatory scheme provides
for the development and operation of industry codes of practice for the
Internet industry, and requires Internet service providers and Internet
content hosts to inform users about content filtering tools. The Minister
for Communications, Information Technology and the Arts reports to the
Parliament every six months on the online content scheme.
The Telephone
Information Services Standards Council handles consumer complaints
about content at www.190complaints.com.au.
The ‘190 services’ provide the convenience of value-added information
and entertainment via telephone, fax, SMS and the Internet, not just on
2G or 3G.
Anti-competition and privacy
The Australian Competition
and Consumer Commission (ACCC) has expressed concerns about the possible
exclusive sporting deals on 3G services being anticompetitive.(9)
The ACCC has been involved in various fora discussing next generation
networks (NGNs) and interconnection between them.
The Privacy Commissioner’s
new report into privacy and new technologies notes the impact of mobile
phone cameras and new mobile phone technologies such as 3G on the collection
and use of personal information.(10)
Next Generation Networks
The above considerations also extend to NGN successors
to 3G. The current regulatory regime may therefore not be appropriate
in an NGN environment. Building on 3G, NGNs are future ubiquitous networks,
able to support fixed and mobile users and able to carry voice, data and
multimedia services anywhere. NGNs will be packet based, with the use
of the Internet Protocol transmission standard. One of the major innovations
emerging from NGN activity is the introduction of network design based
on ‘layers’ with open, standardised interfaces between each layer. This
approach plays an important part in both the standards-based NGN and transitional
services. Applications can be provided over these service layers, using
their underlying facilities, and could be accessible from a range of networks
and over a variety of access arrangements. In the near future, new wireless
broadband services, as a form of NGNs, may push out 3G.
Australian government regulation and/or policy will
have to take into account the layered architecture likely in future networks,
with different and new service provider types possible for different layers.
In addition, there is the prospect that the layered model may change over
time, according to the Australian Communications Industry Forum, as a
result of further technology change or other influences on the market.
Others though might argue that NGNs are more a case of a continuing dominant
mantra for choice, competition and consumerism.
Coping with change
If 3G succeeds, 2G users may find they have no further
use for their old handsets. The Mobile Phone Industry Recycling Program
aims to ensure that potentially toxic components in mobile phones are
recycled rather than dumped. The scheme operates under the Australian Mobile Telecommunications Association,
a national body for the mobile telecommunications industry.
- Christopher Zinn, ‘Why 3G is ready to rumble’, The Bulletin with
Newsweek, 24 May 2005, p. 44+.
- Matthew James, ‘The Internet telephone: Voice over Internet Protocol
(VoIP)’, Research Note, no. 29, 2004–05, Parliamentary Library,
8 February 2005.
- Jane Schulze, ‘Enhanced mobile television technology to be tested’,
The Australian, 14 July 2005, p. 17.
- Simone Brandon, ‘The State of Play in Games Regulation’, Communications
Law Bulletin, Volume 24, Number 1, June 2005, pp. 6–8.
- Telecommunications Service Provider (Mobile
Premium Services) Determination 2005 (No.1).
- Allison Manwell 2005, ‘Mobile premium services – another layer of
content regulation’, Internet Law Bulletin, Volume 8, Number
2, May, pp. 27–8.
- Internet Industry Association, Codes for industry co-regulation
in areas of internet and mobile content (pursuant to the requirements
of the Broadcasting Services Act 1992), Version 10.4, 2005.
- ACMA has power to make technical standards in relation to specified
customer equipment. The installation of all mobile phone telecommunications
facilities are subject to additional requirements.
- James Riley, ‘Big hitters thrash out net, mobile’, The Australian,
1 February 2005.
- Anne Trimmer, ‘Privacy Commissioner reviews new technologies’, Minter
Ellison Connect, 16 August 2005.
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