A small island in the Irish Sea and the island country of Japan are vying to become the first to host 3G wireless services, which bring multimedia applications to mobile phones.

Teams of engineers on the Isle of Man, a self-governing British territory, are working round-the-clock to roll out 3G commercially by late summer. Manx Telecom, the British Telecom subsidiary that serves the island, was originally slated to launch 3G in May, but that date slipped due to technical problems.

Japan's NTT DoCoMo was also scheduled to introduce 3G in May in Tokyo, Yokohama and Kawasaki, but postponed its full-scale commercial rollout to October to iron out problems with the handsets and with the network.

On May 15, Manx Telecom tested handsets and made its first 3G voice test call on the Isle of Man, and the project team made its first public 3G video call in late June. While there have been some reports about handset problems, Manx Telecom insists that the test call worked fine and the only remaining issue is the radio network controller (RNC), which affects network stability. The RNC synchronizes traffic from all the wireless base stations.

"That's what's concentrating most of our efforts. Once [the RNC] is cracked, the core technology is not that much different than current wireless networks," says Mark Briers, 3G project leader for Manx Telecom.

Similarly, DoCoMo is working out the bugs in a small pilot project in Tokyo that's limited to 4,500 customers. DoCoMo scaled back its May 30 launch after early users reported the handsets froze and had to be reset, that only 50%_of attempts to connect to the network were successful and that batteries lasted less than a day.

Isle of Man pushes for 3G

The Isle of Man has gone to great lengths to become a 3G mecca because business leaders there believe that offering 3G will increase economic development.

"3G has provided us with a tremendous profile boost. It's really put the Isle of Man on the map," says Tim Craine, director of e-commerce for the island's chief secretary. Craine's job is luring companies to the island by promoting a state-of-the-art telecommunications infrastructure; a high-bandwidth, self-healing fiber ring; a legal and political climate favoring e-commerce; and the world's first 3G wireless service.

Late last year, the government began paying to install asymmetric DSL (ADSL) and ISDN in homes and businesses. Flat-rate Internet access using those services costs less than $11 per month.

The government has an even more generous policy toward license fees for 3G. Five bidders each paid more than $6 billion to win the right to offer 3G services in the U.K., but the Isle of Man handed Manx Telecom a license for free. "It was a deliberate government policy to keep the cost of the 3G rollout down by not charging for the license," Craine says.

Manx Telecom's 3G game plan Click for a larger image

Manx Telecom plans to offer businesses and home users a host of 3G services over mobile phones, including uploading and downloading data, viewing still images, viewing video clips and videoconferencing.

Like ADSL, Manx Telecom's 3G service is asymmetrical, meaning the download speed is greater than the upload. Users can get a maximum bandwidth of 384K bit/sec to the handset and 64K bit/sec upstream. This is optimized for most data transmissions. However, videoconferencing typically requires the same bandwidth in each direction. Therefore, the bandwidth will drop to the lowest common denominator of 64K bit/sec in each direction for real-time video.

Videoconferencing will require that users connect their 3G phones to a separate video device about the size of a PDA that features a 2 1/2-inch color screen and a camera. The video unit will plug into the 3G handset via a universal serial bus (USB) port. Eventually, Manx Telecom will switch from USB to Bluetooth, the specification for wireless peripheral connection.

Apps are everything

Manx is working with a host of companies that are designing 3G services, including stock trading, gambling and police surveillance. "We are bringing some real applications to the party to try to stimulate use," says Phil Taylor, marketing director for ImageCom in the U.K. The company is providing the videoconferencing technology used in the Isle of Man 3G project. The video codec is based on the H.323 international standard for videoconferencing over packet-switched networks.

Nationwide Building Society, a U.K. financial services company, is banking on 3G as an extension of e-business and a corporate productivity booster. "For any field-based role, you could certainly see the application for 3G," says Jim Willens, Nationwide's e-commerce director. "It provides a way that mobile workers could be connected into [the] LAN without going into the office."

Willens believes 3G could help Nationwide create "virtual call centers" in which customer service representatives could answer calls from anywhere while reviewing customer account records on screen. "We sometimes have difficulty with recruitment. Being able to locate virtual call centers would be very attractive to us," Willens says.

Nationwide may also use 3G to enhance the experience of potential mortgage customers. "3G allows you to do these things: 'Here's the house, here are the people who can move you into the house.' "_Willens says. "The presentation holds our interest. We are very visual."

Another potential use of 3G for Nationwide is in providing a more robust help function for online transactions. Customers with questions could connect via video to a customer service representative who could walk them through a transaction.

"Video could improve the quality and depth of help, marketing and personalization," Willens says.

Nationwide also views 3G as a way to save IT dollars. "If you look at what people now have on their desks, the power of the equipment and the use of it, it's probably 85% underutilized . . . whether it's hardware or software," Willens says.

3G could also eliminate redundancy in mobile devices. "I'm guilty. I carry a mobile phone, a pager, a PocketPC and a laptop. Is all this really necessary?" he wonders. Nationwide believes 3G could ultimately deliver "massively attractive" savings in IT spending.

While IT planners are evaluating corporate uses for 3G, "the volume will eventually become the consumer user. 'Look at the beach I'm on. . . . Look at this tie I'm looking to buy,' " insists Taylor of ImageCom. In the consumer realm, Manx Telecom is banking on so-called location-based services. This involves pushing offers and inducements to consumers based on where they are. For example, if a consumer approaches a fast food restaurant, a 3G device might display an offer for a discounted meal. Virtual tour guide services will let people examine hotel rooms, golf courses and tourist attractions from their devices before booking accommodations or buying tickets.

Wagering on 3G

One company hoping to capitalize on 3G is Bet Internet of Isle of Man. Through its Web site, the company lets users gamble on global sporting events, such as horse racing, cricket, soccer and basketball. "The ability to provide pictures makes an order of magnitude difference in people's habits. They are more likely to wager," insists Bill Mummery, technical director of Bet Internet.

A joint venture of Bet Internet and the Greyhound Channel, of Portland, Ore., owns the rights to distribute video from 28 greyhound and thoroughbred tracks in the U.S. 3G will let fans view races and bet from trains, cars and street corners. Mummery says people in the stands will use 3G. "They don't have to get out of their seats and fight their way to the betting window," he says.

Supply strategies differ Mobisphere, a joint venture of NEC and Siemens, is supplying all the components for the Isle of Man's 3G network. This single-source approach differs from DoCoMo's strategy in that the Japanese carrier is using multiple hardware and software suppliers, according to Manx Telecom officials.

A key to success with 3G is billing simplicity. That's why Manx Telecom is partnering with London's Cerillion Technologies to create an integrated 3G billing system. For example, rather than using a credit card for each service, the consumer would pay once monthly for 3G connectivity plus services such as playing video games or downloading audio and video clips. Users could view their transaction details on their 3G mobile devices. They could also use their 3G phones to pay their Manx Telecom bills.

DoCoMo draws close

In Japan, NTT DoCoMo is dealing with the disappointment of delaying the commercial launch of its 3G service, marketed as FOMA (freedom of mobile multimedia access). Nevertheless, the company has selected "monitors" who are evaluating the service this summer before the rollout. DoCoMo is providing free handsets and is waiving monthly fees for the monitors. It has received nearly 150,000 requests from prospective monitors but is distributing only 4,500 3G handsets:_2,000 to individuals and 2,500 to corporate subscribers.

DoCoMo is offering three models of 3G phones: an upgraded model of its current mobile phone featuring higher-quality audio, a "visual" model with a video screen and a "data-card" version for high-speed data transmission. Sixty percent of those applying for handsets want the visual model. But that version's debut is running a month behind the others because of debugging delays.

Shiro Tsuda, DoCoMo's executive vice president in charge of networks, recently announced that the network is becoming more stable and that DoCoMo plans to meet its October target date for a full-scale rollout.

Tsuda says the two major problem areas with the network are the switching system that controls the connections, and the "handovers" that occur when a user moves from one base station area to another.

As the race to be first in 3G enters its last lap, the British and the Japanese carriers are being cautious. "We don't want to be the world's first operator to discover all of the problems," Briers says.

He says while Manx Telecom is vying to be first, it is more important that the British Telecom subsidiary create a viable 3G showcase for its parent company. British Telecom plans to launch 3G in the U.K., Germany, Ireland and Holland by the end of next year.

However, being first in 3G tops the agendas of Isle of Man government officials, who hope to use the distinction to attract more industry to the island. "In any race, whether it's the first man to the moon or the Indianapolis 500, everyone remembers who was first, but nobody remembers who was second," Craine says. "From that point of view, being first is very important to us."

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Rosen is chief strategist with Impact Video Communication in San Francisco and the author of Personal Videoconferencing. He can be reached at erosen@impactvid.com.

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