INTRODUCTION

The explosive parallel growth of internet and mobile telephony had a great impact on

telecommunication over the past decade. Now, these two entirely different worlds are

converging. The union of these two offers the benefit of the internet multimedia with the

flexibility and mobility of wireless. To provide high speed internet connection without the

restriction of boundaries is the main idea. Third generation mobile technology was developed

to achieve this goal. There is another wireless technology which was designed to provide

connectivity to the portable devices for local area network which is known as Wi-Fi, had

emerged in the last decade.

The goal of this report is to compare 3G and Wi-Fi technologies which are likely to

play a role in this convergence. This report will focus on 3G which is IMT-2000 standard versus

most popular and widely used wireless LAN standard IEEE 802.11b/g or Wi-Fi. These

technologies which have an entirely different philosophy are used by this report as a reference

to focus on how wireless internet access might evolve. Billions of pounds of investment have

been made to obtain licenses and to purchase expensive equipment to support high speed data

rates. Equipment manufacturers are developing base stations and handsets for large scale

deployments for 3G services. On the other hand, Wi-Fi operates in the unlicensed ISM band

which does not require huge amount of investment, at least to acquire licenses. Equipment is

cheap as compared to 3G base stations. What it does require, is the deployment over a large

scale.

This report will not discuss other technologies which are considered to important to

provide wireless internet such as WiMAX, Satellite, DVB-S/DVB-RCS or other fixed wireless

alternatives. However, this report will provide a brief introduction of mobile generations in the

initial sections but detailed comparison of these generations such as 2.5G GPRS or EDGE is

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beyond the scope of this report. The focus will be on 3G and Wi-Fi (802.11b/g) as a point of

discussion that have distinct origins and entirely different histories.

In focusing on 3G and WiFi, we are ignoring many other technologies that are likely to

be important in the wireless Internet such as satellite services, LMDS, MMDS, or other fixed

wireless alternatives. We also ignore technologies such as BlueTooth or HomeRF, which have

at times been touted as potential rivals to WiFi, at least in home networking environments.

Moreover, we will not discuss the relationship between various transitional, or ‘‘2.5G’’

mobile technologies such as GPRS or EDGE, nor will we discuss the myriad possibilities for

‘‘4G’’ mobile technologies. While all of these are interesting, we have only limited space and

our goal is to tease out what we believe are important themes/trends/forces shaping the industry

structure for next-generation wireless services, rather than to focus on the technologies

themselves. We use 3G and WiFi as shorthand for broad classes of related technologies that

have two quite distinct industry origins and histories.

Fig. 1. Adopted from GSA (Global Mobile Suppliers Association), shows

the evolution of mobile generations.

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2.0 What is 3G?
Third generation mobile phone technology was designed to provide mobile phone users

access to anything, anywhere and anytime. 3G is a technology for mobile service providers.

Mobile services are provided by service providers that own and operate their own wireless

networks and sell mobile services to end-users, usually on a monthly subscription basis. Mobile

service providers10 use licensed spectrum to provide wireless telephone coverage over some

relatively large contiguous geographic serving area. Historically, this might have included a

metropolitan area.

Today it may include the entire country. From a user perspective, the key feature of

mobile service is that it offers (near) ubiquitous and continuous coverage. That is, a consumer

can carry on a telephone conversation while driving along a highway at 100 km/h. To support

this service, mobile operators maintain a network of interconnected and overlapping mobile

base stations that hand-off calls as those customers move among adjacent cells. Each mobile

base station may support users up to several kilometers away. The cell towers are connected to

each other by a backhaul network that also provides interconnection to the wireline public

switched telecommunications network (PSTN) and other services. The mobile system operator

owns the end-to-end network from the base stations to the backhaul network to the point of

interconnection to the PSTN (and, perhaps, parts thereof). 3G is an integration of fixed and

mobile communication networks, internet and broadcasting,

For example; Television broadcasts can be seen using a mobile phone. This can only be

achieved with the higher data rate.

The data rates supported by 3G are:

 2Mbps ( Indoors, Max. speed up-to 10 km/h)
 384 Kbps (sub urban, Max. speed up-to 120 km/h)
 144 Kbps (Rural, Max. speed up-to 500 km/h)

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Development efforts were started in 1988 when International Telecommunications Union

defined requirements for 3G. In 1992 World Administrative Radio Conference (WARC)

defined frequencies for Future Public Land Mobile Communications which is now known as

IMT- 2000. In June 1998, 10 satellites based and 5 terrestrial based radio interface solutions

were submitted to ITU. Finally three of them were selected, W-CDMA from Europe,

cdma2000 from USA and TD-SCDMA from China. Ideally there should be only one standard

throughout the world as one of the reason behind the great success of GSM technology was

that it was a single standard at least in Europe, “how good it would be if they carry on the same

spirit throughout the world”.

In December 1998 third generation partnership project (3GPP) was established. 3GPP

is an agreement of collaboration between a number of telecommunications bodies like

Association of Radio Industries Association (ARIB Japan), China Communications Standards

Association (CCSA), Alliance for Telecommunications Industry Solutions (ATIS) and

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Telecommunication Technology Committee (TTC). According to 3GPP,“The original scope

of 3GPP was to produce globally applicable Technical Specifications and Technical Reports

for a 3rd Generation Mobile System based on evolved GSM core networks and the radio access

technologies that they support (i.e., Universal Terrestrial Radio Access (UTRA) both

Frequency Division Duplex (FDD) and Time Division Duplex (TDD) modes). The scope was

subsequently amended to include the maintenance and development of the Global System for

Mobile communication (GSM) Technical Specifications and Technical Reports including

evolved radio access technologies (e.g. General Packet Radio Service (GPRS) and Enhanced

Data rates for GSM Evolution (EDGE))”. This is a very brief history of the great efforts which

have been made to provide up-to 2 Mbps to a mobile device.

3.0 WI-FI
Wi-Fi is the popular name for the wireless Ethernet 802.11b standard for WLANs. Wire

line local area networks (LANs) emerged in the early 1980s as a way to allow collections of PCs,

terminals, and other distributed computing devices to share resources and peripherals such as

printers, access servers, or shared storage devices. One of the most popular LAN technologies was

Ethernet.

Over the years, the IEEE has approved a succession of Ethernet standards to support higher

capacity LANs over a diverse array of media. The 802.11x family of Ethernet standards are for

wireless LANs. Wi-Fi provides broadband to Wi-Fi enabled devices by using back haul Internet

connection.

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Wi-Fi LAN operates in 2.4/5 GHz unlicensed ISM (Industrial, Scientific and Medical) band.

The current generation of WLANs support up to 11 Mbps data rates within 100m of the base

station. Discussion about all the standards related to 802.11 is beyond the scope of this report.

Only 802.11 a/b/g are intended to be discussed. IEEE 802.11a operates in 5 GHz ISM band

and can achieve up-to 54 Mbps data rate. IEEE 802.11b and 802.11g operates in 2.4 GHz ISM

spectrum and can support data-rate up-to 11Mbps and 54Mbps respectively. IEEE 802.11g is

also backward compatible with IEEE 802.11b, which means that devices based on 802.11b can

connect to 802.11g and vise versa. 802.11g is the most popular due to dual mode operations

and simplified RF design. 802.11a required much more complex and expensive RF circuitry to

operate at 5 GHz Frequency and hence did not catch up.

In general Wi-Fi can provide a coverage up-to 10s of meters. Multiple base stations can

be used in order to increase the range of coverage. Each area served by a particular base station

is known as a Hot Spot. There could be several hotspots in a building and hundreds of them in

a city. Universities and a large number of corporations had deployed their hotspots to various

locations such as Airports, Hotels, coffee shops and train stations all over Europe and America.

In the last 2 years, we have seen the emergence of a number of service providers that are

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offering WiFi services for a fee in selected local areas such as hotels, airport lounges, and

coffee shops. In addition, there is a growing movement of so-called ‘‘FreeNets’’ where

individuals or organizations are providing open access to subsidized WiFi networks.

Recently a UK based company named ‘The Cloud’ has announced city-wide Wi-Fi

coverage in the nine major cities in the UK including London, Manchester and Birmingham.

Wi-Fi has also reached to trains and coaches for example a US based company ‘WiRan’ is

providing broadband connection to the coach passengers using Wi-Fi and EDGE. Wi-Fi does

not provide hand-offs between base stations. A user has to remain in the same cell in order to

receive continuous service.

It is widely seen that Wi-Fi is used for data-services such as web-browsing, e-mail

clients and file transfers. However, it is also possible to use wireless LANs to transport real

time voice and video traffic as well, which enables Wi-Fi to support voice telephony services

over Wireless LANs.

4.0 How 3G and WI-FI are the same

It might appear that 3G and WiFi address completely different user needs in quite distinct, non-

overlapping markets. While this was certainly truer about earlier generations of mobile services

when compared with wired LANs or earlier versions of WLANs, it is increasingly not the case.

The end-user does not care what technology is used to support his service. What matters is that

both of these technologies are providing platforms for wireless access to the Internet and other

communication services.

The ways in which the two technologies may be thought of as similar,

4.1. Both 3G and Wifi are wireless

Both technologies are wireless, which

i. Avoids the need to install cable drops to each device when compared to wireline

alternatives and

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 ii. Facilitates mobility. Avoiding the need to install or reconfigure wired local

distribution plant can represent a significant cost saving, whether it is within a

building, home, or in the last -kilometre distribution plant of a wireline service

provider.

Moreover, wireless facilities can provide scalable infrastructure when penetration will increase

only slowly over time (e.g., when a new service is offered or in an overbuild scenario). New

base stations are added as more users in the local area join the wireless network and cells are

resized.

Wireless infrastructure may be deployed more rapidly than wireline alternatives to

respond to new market opportunities or changing demand. These aspects of wireless may make

it attractive as an overbuild competitor to wireline local access, which has large sunk/fixed

costs that vary more with the homes passed than the actual level of subscribership. The high

upfront cost of installing new wireline last-kilometer facilities is one of the reasons why these

may be a natural monopoly, at least in many locations.

Wireless technologies also facilitate mobility. This includes both:

a. The ability to move devices around without having to move cables and furniture and

b. The ability to stay continuously connected over wider serving areas.

We refer to the first as local mobility and this is one of the key advantages of WLANs over

traditional wireline LANs. The second type of mobility is one of the key advantages of mobile

systems such as 3G. WLANs trade the range of coverage for higher bandwidth, making them

more suitable for ‘‘local hot spot’’ service.

4.2. Both 3G and Wifi are access technologies

Both 3G and WiFi are access or edge-network technologies. This means they offer alternatives

to the last-kilometer wireline network.

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 Beyond the last kilometer, both rely on similar network connections and transmission

support infrastructure. For 3G, the wireless link is from the end user device to the cell base

station which may be at a distance of up to a few kilometers, and then dedicated wireline

facilities to interconnect base stations to the carrier’s backbone network and ultimately to the

Internet cloud. The local backhaul infrastructure of the cell provider may be offered over

facilities owned by the wireless provider (e.g., microwave links) or leased from the local

wireline telephone service provider (i.e., usually the incumbent local exchange carrier or

ILEC). Although 3G is conceived of as an end-to-end service, it is possible to view it as an

access service.

For Wi-Fi, the wireless link is a hundred meters from the end-user device to the base

station. The base station is then connected either into the wireline LAN or enterprise network

infrastructure or to a wireline access line to a carrier’s backbone network and then eventually

to the Internet. For example, Wi-Fi is increasingly finding application as a home LAN

technology to enable sharing of DSL or cable modem residential broadband access services

among multiple PCs in a home or to enable within-home mobility . Wi-Fi is generally viewed

as an access technology, not as an end-to-end service.

Because both technologies are access technologies, we must always consider the role

of backbone wireline providers that provide connectivity to the rest of the Internet and support

transport within the core of the network. These wireline providers may also offer competing

wireline access solutions.

For example, one could ask whether a local wireline telephone company might seek to offer

WiFi access as a way to compete with a 3G provider; or a 3G provider might expand their

offerings (including integrating WiFi) to compete more directly with a wireline service

provider.

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 Finally, focusing on the access nature of 3G and WiFi allows us to abstract from the

other elements of the value chain. Wireless services are part of an end-to-end value chain that

includes, in its coarsest delineation at least;

i. First the Internet back bone (the cloud);

ii. Kilometre network providers (wireline telephone, mobile, cable, or a NextGen

carrier);

iii. Kilometer access facilities (and, beyond them, the end-user devices). The backbone and

the second kilometer may be wireless or wireline, but these are not principally a

‘‘wireless’’ challenge. It is in the last kilometer—the access network—that delivering

mobility, bandwidth, and follow-meanywhere/ anytime services are most challenging.

4.3. Both offer broadband data service

Both 3G and WiFi support broadband data service, although as noted earlier, the data rate

offered by WiFi (11 Mbps) is substantially higher than the couple of 100 kbps expected from

3G services. Although future generations of wireless mobile technology will support higher

speeds, this will also be the case for WLANs, and neither will be likely to compete with

wireline speeds (except over quite short distances).

The key is that both will offer sufficient bandwidth to support a comparable array of

services, including real-time voice, data, and streaming media, that are not currently easily

supported over narrowband wireline services. In this sense, both will support ‘‘broadband’’

where we define this as ‘‘faster than what we had before’’.

Both services will also support ‘‘always on’’ connectivity which is another very important

aspect of broadband service. Indeed, some analysts believe this is even more important than

the raw throughput supported.

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5.0 Difference between 3G and Wifi

There are several of the important ways in which the Wi-Fi and 3G approaches to offering
broadband wireless access services are substantively different.

5.1. Current business models/deployment are different

a. 3G represents an extension of the mobile service-provider model. This is the technology

of choice for upgrading existing mobile telephone services to expand capacity and add

enhanced services. In contrast, Wi-Fi comes out of the data communications industry

(LANs) which is a byproduct of the computer industry.

b. The basic business model is the telecommunications services model in which service

providers own and manage the infrastructure (including the spectrum) and sell service

on that infrastructure. In contrast the basic business model is one of equipment makers

who sell boxes to consumers. The services provided by the equipment are free to the

equipment owners.

c. With respect to deployment, 3G will require substantial investment in new

infrastructure to upgrade existing 2G networks, however, when deployed by an existing

mobile provider, much of the 2G infrastructure (e.g., towers and backhaul network) will

remain useable. For WiFi, it is hoped that deployment can piggyback on the large

existing base of WLAN equipment already in the field. In both cases, end-users will

need to buy (or be subsidized) to purchase suitable interface devices (e.g., PC cards for

3G or WiFi access). In contrast to 3G, Wi-Fi wireless access can emerge in a

decentralized, bottom–up fashion (although it is also possible for this to be centrally

coordinated and driven by a wireline or mobile service provider). While the prevailing

business model for 3G services and infrastructure is vertically integrated, this need not

be the case for WiFi. This opens up the possibility of a more heterogeneous and

complex industry value chain.

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5.2 Spectrum policy and management
a. One of the key distinctions between 3G and WiFi that we have only touched upon
lightly thus far is that 3G and other mobile technologies use licensed spectrum, while
WiFi uses unlicensed shared spectrum. This has important implications for
i. Cost of service;
ii. Quality of service (QoS) and congestion management; and
iii. Industry structure.

b. First, the upfront cost of acquiring a spectrum license represents a substantial share of the

capital costs of deploying 3G services. This cost is not faced by Wi-Fi which uses the shared

2.4GHz unlicensed, shared spectrum. The cost of a spectrum license represents a substantial

entry barrier that makes it less likely that 3G services (or other services requiring licensed

spectrum) could emerge in a decentralized fashion. Of course, with increased flexibility in

spectrum licensing rules and with the emergence of secondary markets that are being

facilitated by these rules, it is possible that the upfront costs of obtaining a spectrum license

could be shared to allow decentralized infrastructure deployment to proceed.

c. The different spectrum regimes have direct implications for industry structure. For

example, the FreeNet movement is not easily conceivable in the 3G world of licensed

spectrum. Alternatively, it seems that the current licensing regime favors incumbency

and, because it raises entry barriers, may make wireless-facilities-based competition

less feasible.

5.3 Status of technology development different

5.3.1 Embedded support for services

a. Another important difference between 3G and WiFi is their embedded support for voice

services. 3G was expressly designed as an upgrade technology for wireless voice

telephony networks, so voice services are an intrinsic part of 3G. In contrast, WiFi

provides a lower layer data communications service that can be used as the substrate on

which to layer services such as voice telephony. For example, with IP running over

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 WiFi it is possible to support voice-over-IP telephony. However, there is still great

market uncertainty as to how voice services would be implemented and quality assured

over WLAN networks.

5.3.2. Standardization

It is also possible to compare the two technologies with respect to the extent to which they are

standardized. Broadly, it appears that the formal standards picture for 3G is perhaps more clear

than for WLAN. For 3G, there is a relatively small family of internationally sanctioned

standards, collectively referred to as IMT-2000.36 However, there is still uncertainty as to

which of these (or even if multiple ones) will be selected by service providers.

In contrast, Wi-Fi is one of the family of continuously evolving 802.11x wireless Ethernet

standards, which is itself one of many WLAN technologies that are under development.

Although it appears that Wi-Fi is emerging as the market winner, there is still a substantial base

of HomeRF and other open standard and proprietary technologies that are installed and

continue to be sold to support WLANs. Thus, it may appear that the standards picture for

WLANs is less clear than for 3G, but the market pressure to select the 802.11x family of

technologies appears much less ambiguous—at least today.

5.3.3. Service/business model

3G is more developed than Wi-Fi as a business and service model. It represents an extension

of the existing service-provider industry to new services, and as such, does not represent a

radical departure from underlying industry structure. The key market uncertainties and portions

of the valuation that remain undeveloped are the upstream equipment and application/content

supplier markets and ultimate consumer demand.

In contrast, Wi-Fi is more developed with respect to the upstream supplier markets, at

least with respect to WLAN equipment which has become commoditized. Moreover, consumer

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demand— certainly business demand and increasingly residential broadband home user

demand—for WLAN equipment is also well established. However, commercialization of Wi-

Fi services as a access service is still in its early stages with the emergence of Boingo and

others.

5.4 Other differences

1. 3G will work only your sim is in the phone, while WIFI can work with no sim in Wifi

hotspots.

2. 3G is third generation mobile phone telephony, while wifi is a technology like

Bluetooth which enable devices to interconnect with other.

3. 3G is telcos stuff run on 2100Mhz. As with telco it usually available in very wide area

while, wifi is wireless computer network stuff intended mainly for laptops and

computers and usually cover just 30-100m from the wifi hub.mainly run on 2400Mhz .

6.0 Some implications for industry structure and public policy

In this section we consider some of the implications that emerge from the preceding

analysis, as well as offer some speculations on the possible implications for industry structure,

competition, and public policy.

6.1 WiFi is good for competition

One implication that emerges from the above analysis is that the success of WiFi wireless local

access alternatives is likely to be good for local competition.

a) First, if only 3G survives, then it is less likely that we will see non-vertically integrated,

decentralized service provisioning. And, the higher entry costs associated with

acquiring licensed spectrum and the need to construct a geographically larger network

to begin offering service will limit the number of firms that compete in the market. Of

course, this does not mean that wireless access services would not be competitive—

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 there may be more than enough competition among existing mobile providers to

preclude the exercise of market power.

b) Second, if both 3G and WiFi survive, then the diversity of viable networking

infrastructure strategies will be conducive to greater facilities-based competition.

c) Third, success of the WiFi service model could help unlock the substantial investment

in private networking infrastructure that could be used as the basis for constructing an

alternative infrastructure to the PSTN and cable wireline networks. As noted above,

this will require adding the necessary business functionality and technical support to

enable base station owners to bill for WiFi service. Once this is developed, the

opportunity to create novel new ways to leverage the existing infrastructure investment

will be increased.

d) Fourth, if only the WiFi service model survives, then we would expect this to be

inherently more competitive because of the lower entry barriers for setting up local

access services. The use of unlicensed spectrum means that property rights over the

spectrum cannot be used to exclude potential entrants, although congestion—if not

appropriately managed—could be just as effective in limiting competition.

6.2 Wi-Fi and 3G can complement each other for a mobile provide

Yet another alternative might be for WiFi to be integrated into 3G type networks. Actually, this

seems like the most likely scenario since there are compelling reasons for why these two

technologies may be used together. Each of the technologies has distinct advantages over the

other that would allow each to offer higher quality services under disparate conditions. Putting

the two together would allow a service provider to offer a wider set of more valuable services.

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6.3. Success of Wi-Fi is potentially good for multimedia content

Multimedia content benefits from higher bandwidth services so the ability to support higher

speed wireless access may help encourage the development of broadband multimedia content.

On the other hand, the lack of a clear business model for deploying broadband services over a

WiFi network may raise concerns for how content would be paid for and/or digital rights

management issues. The digital rights management issues are perhaps more difficult to control

(from a content provider’s perspective) in a more decentralized, end-user-centric environment

than in a centralized service-provider network (i.e., contrast Napster to AOL). The vertical

integration model of 3G may offer greater control, which might actually encourage more

content production.

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 CONCLUSIONS

This article offers a qualitative comparison of two wireless technologies that could be

viewed simultaneously as substitute and/or complementary paths for evolving to broadband

wireless Traditional radios are based on dedicated hardware. By implementing the radio

technology in software, it becomes feasible to design more flexible radios that may more

readily support multiple protocols and may more easily be upgraded/modified to incorporate

new protocols or other features. For additional information, the two technologies are 3G, which

is the preferred upgrade path for mobile providers, and WiFi, one of the many WLAN

technologies.

The goal of the analysis is to explore two divergent world views for the future of

wireless access and to speculate on the likely success and possible interactions between the two

technologies in the future. While the analysis raises more questions than it answers, several

preliminary conclusions appear warranted. First, both technologies are likely to succeed in the

marketplace. This means that the wireless future will include heterogeneous access

technologies so equipment manufacturers, service providers, end-users, and policy makers

should not expect to see a simple wireless future.

Second, we expect 3G mobile providers to integrate Wi-Fi technology into their

networks. Thus, we expect these technologies to be complementary in their most successful

mass-market deployments.

Third, we also expect WiFi to offer competition to 3G providers because of the lower

entry costs associated with establishing WiFi networks. This may take the form of new types

of service providers (e.g., Boingo), in end-user organized networks (e.g., FreeNet aggregation

or municipal networking), or as a low-cost strategy for a wireline carrier to add wireless

services. The threat of such Wi-Fi competition is beneficial to prospects for the future of last

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kilometer competition, and will also encourage the adoption of Wi-Fi technology by 3G

providers as a defensive response.

Analysis also suggests a number of areas where further thought and research would be

beneficial. These include the obvious questions of how to integrate 3G and WiFi networks or

how to add the appropriate billing/resource negotiation infrastructure to WiFi to allow it to

become a wide-area service-provider platform. These also include several more remote

questions such as which style of technology/business approach is favored by the rapid pace of

wireless technology innovation or which is more likely to favor the development of

complementary assets such as broadband content.

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 References

1. K. Johansson, A. Furuskar, P. Karlsson, and J. Zander. “Relation between Base

Station Characteristics and Cost Structure in Cellular Systems”, paper submitted to
IEEE PIMRC, 2017.

2. K. Thompson. “Large Scale Deployment of Public Wireless LANs- a Feasibility

Study”, MSc Thesis, Royal Institute of Technology (KTH),
3. http://www.3gpp.org
4. http://www.bbc.co.uk
5. http://entrepreneurs.about.com/od/businessideas/a/bizopps2005_3.htm
6. http://www.itu.int/itunews/issue/2003/06/thirdgeneration.html
7. http://www.thecloud.net

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