It didn’t seem likely, but vendors are now claiming that every European operator is considering EDGE and even going so far as to declare the discussions over. Keith Dyer reviews how the race was run.
The old Irish line about giving directions — “I wouldn’t start from here”— is perhaps apposite to the story of how the mobile industry got to where it is with EDGE today. But is it the arriving, not the travelling, that counts? Or is the journey itself important? That would depend on how much time and money you thought you had wasted to get to where you wanted to be…
There’s not exactly a re-writing of history going on about EDGE at the moment, but there is perhaps a little bit of revision, a few nips and tucks around the eyes to ease out a few creases. You don’t have to be overly blessed with memory to recall, that in the late 1990s EDGE was sold as a definite intermediary stage between GPRS and W-CDMA. There were many powerpoint slides around showing a an arrow moving up and to the right from 9.6kbps GSM through GPRS (or HSCSD first in some presentations) then EDGE and into a 3G future in about, oh, early to mid 2002, at the latest. You also don’t have to be blessed with more than a healthy dose of cynicism to think that perhaps the vendors themselves thought that this was a fine idea because operators could pay for GPRS (an upgrade to GSM) and then EDGE (as its name suggests an evolution, and enhancement) before making the jump into full W-CMDA itself.
But then the road got a little more twisty. GPRS proved not to be a mere software upgrade. There were handset and interoperability issues and it took years for GPRS handsets and services to be widespread. Meantime the markets had gone very sour, and the operators slightly queasy about the debts they were saddled with as a result of spectrum licence fees. Even those who got spectrum on the cheap were looking down the barrel of perhaps a billion dollar programme to roll out UMTS across a larger European country. So the view on EDGE changed, and operators started to question whether it was strictly necessary to have GPRS and EDGE and WCDMA. For a long while there were a host of “EDGE is dead” declarations and indeed whole market reports from the usual suspects predicting that while EDGE would be useful in new territories, and in the USA, it was worthless to European operators.
But now, listen to this. Alan Hadden, president of the Global mobile Suppliers Association (GSA), says that pretty much every European operator is likely to make some commitment to EDGE. “We don’t make announcements for them but our real belief is that most will go [for EDGE],” he says.
Peter Reinisch, vp marcomms for Siemens ICM Mobile and also a GSA executive committee member, says, “One operator ceo recently said that there is now no European operator who can afford not to go to EDGE. Behind the scenes there is a lot of discussion. “
To try to get behind some of these scenes, Mobile Europe spoke to a strategist at one UK operator who did not want to talk about his own plans, but he did agree with Reinisch that it was back on the agenda.
“I think there has been a change of perception about EDGE, but a lot of that has been that some people thought that GPRS would be able to do the job that perhaps we will now need EDGE to do. That doesn’t mean there is anything wrong with GPRS, but that perhaps there was an underestimate of the severity of the degradation of the service levels between UMTS and GPRS.”
One French operator had a slightly different take on it. “It’s not the case that we are now using EDGE where we previously thought GPRS would do. It’s more that we need to be able to offer different levels of service to customers. GPRS has a role, for certain, EDGE has another and UMTS will be on top of that.
That is quite a turnaround, so how did we get there? The GSA’s Alan Hadden has seen, through his organisation’s EDGE Operator Forums, attitudes change over the last two years. “EDGE was an example of needing to explain to operators how it could help their business. In the last two years we have been running the EDGE Operator Forums which brought together operators. In the beginning it was vendors who at that time were committed to EDGE, and who showed operators they could do a lot with the enhancement. In rolling that out they could address new market segments, start earning new revenues, influence the market and help pave the way for WCDMA.
“It was never a case of EDGE or WCDMA, which in a way was the perception. Both are 3G technologies. We began to see in 2003 a much stronger acceptance of EDGE, and now we see that job as more or less complete.”
Torsten Hunte, business development director for radio access at Ericsson, says the vendors were at least in part responsible for the earlier perception. “The biggest problem we’ve had was in 1999 we made the mistake in calling it EDGE and not GPRS Release 99. And that started the problem of operators perceiving EDGE as a new technology —which it isn’t. We had to make operators understand it is not anew technology, it is just an improvement in standard allowing higher data rates in the GSM network. It’s great for data rate and capacity with very, very low investment cost.
“Vendors do not want to sell a crappy solution to make a few bucks. They want operators to make money, be successful so they can come back and buy again,”
That EDGE was not in fact an expensive additional cost was one of the key messages vendors were keen to get out at the forums.
Reinisch points out, “EDGE is in existing spectrum and allows 3G services to be rolled out immediately, whereas GPRS was intermediate.” Hadden says that the incremental cost of migrating to EDGE from GPRS is about $1-2 per customer covered. This helped make operators understand it was affordable, he says. “It’s certainly the argument they use,” says the UK operator, “and I have heard that number before. But when you’ve got millions of subscribers that’s still not a small sum and operators need to know that their return on investment from that incremental cost is secure.”
Reinisch says that getting ROI from the investment is as much about operators changing their own mindset as they move to more advanced services. “Operators always fought a price war, not a services war. This was the main problem they had.
In Europe we saw more and more operators look at how they will complete their WCDMA rollout, and at how EDGE can in fact help them reduce time to market and capex.
“TIM was a significant point in April 2003. [When Telecom Italia Mobile announced it was proceeding with an EDGE network with Ericsson]. They acquired spectrum for UMTS but it was not either/ or. They are using EDGE to get there quicker, de-risk the investment and earn revenues earlier. The TIM statement was, ‘We will have PCMCIA cards to offer businesses instant access to their networks.’ That’s a major point. The whole thing is marketing, not a technological issue. Operators have to start to segment the market.”
“The vendors are keen to make out that it is about operators being more savvy, and to extent that is true. But it’s worth remembering that there were and still are technical issues with the equipment as well. For instance, it will be interesting to see how EDGE-compatible handsets hit the market, and how the developers cope with dual-mode EDGE/ WCDMA requirements as well,” counters the UK operator strategist. Hadden is confident it is something the market will address as demand increases. “We are seeing that more and more operators will take the step to enhance to EDGE. Then we will see devices coming through to the market that are WCDMA and EDGE capable.”
For Reinisch the important thing about EDGE is that it will not be a visible “layer” of technology to the end user. “Operators who have launched EDGE don’t necessarily talk about it, it is just there, delivered as services.” Which, for a technology obsessed industry, is perhaps the biggest step of all.