3G wireless technology has tremendous potential, but its biggest threat could be its own success. Its success, however, will lay the foundation for the next generation of wireless technology. I've been researching and writing about wireless data for over 10 years and have been through Mobitex, CDPD, GSM circuit-switched data, GPRS, EDGE, CDMA QuickNet Connect and CDMA 1xRTT. In U.S. markets, the excitement now is over 3G technologies such as UMTS/WCDMA/HSDPA (Universal Mobile Telecommunications System/Wideband CDMA, High-Speed Downlink Packet Access) from Cingular and CDMA 2000 EV-DO (Evolved Data Optimized) from Verizon and Sprint. And even these technologies are not standing still; Verizon last week indicated it would start field trialing an upgrade to EV-DO called Revision A around the end of 2006.

There is every reason to be excited. With typical throughput rates of around 500 kbps and latency in the 200 to 300 msec range (and moving downward with HSDPA and EV-DO Revision A), many networking applications that were quite sluggish with previous networks now perform quite well. Even operating IPSec and SSL VPNs over 3G networks is quite feasible despite their networking overhead. With planned enhancements, we're looking at typical rates closer to 1 Mbps and latency approaching 100 msec. It's not quite the broadband experience of a Wi-Fi connection - for instance, full-featured Web pages can still take tens of seconds to download - but it's not that far off either. At a recent industry association meeting I attended, an enterprising colleague had a UMTS/WCDMA connection that he allowed others in the room to share via Wi-Fi. About a half dozen of us took advantage of this, and we all had reasonable performance for e-mail and Web browsing, and that was over just one UMTS connection.

Within a year or so, these 3G services will be available nationally, and with competition, there will be downward pressure on pricing currently hovering around $80 for unlimited use. That's the good news. The second part of the story, the bad news, is that despite the excellent performance, the current macrocellular architecture inherently has limited capacity. This has to do with how many users can access the available radio spectrum simultaneously for voice and data given large cell sizes.

In an analysis I completed recently on the spectral efficiency and capacities of different wireless technologies, it was quickly clear that broadband data demands could rapidly swamp these networks. While monitoring my own network usage, I observed that I can easily consume 10 MB of data per hour on the downlink through typical e-mail usage, exchanging documents with colleagues, accessing databases and doing research on the Web. Taking a highly evolved cellular technology such as UMTS/HSDPA, one cell site with one 5-MHz radio channel can support about 3,000 users who, each hour, consume 10 minutes of voice service and 100 kB of data (indicative of wireless e-mail).

But if those users are doing office applications and consuming the 10 MB of data I just quoted, then that figure quickly falls to about 500 users. These numbers of users assume a highly uniform demand distribution. Given that user data traffic is bursty, the actual number of users who can obtain satisfactory broadband service actually will be a much lower number, though I haven't seen an analysis yet that fully accounts for typical wireless data usage patterns. With a coverage radius of 1 kilometer, the limited network capacity translates to just a small percentage of the total population being able to obtain broadband service from such a network.

That's the conundrum. If the cellular operators ramp up broadband subscribers, they can quickly consume the network. This is one reason operators are not in any hurry to decrease their flat-rate pricing plans. Wi-Fi gets around this capacity problem by allowing the same spectrum to be reused over much smaller geographic areas.

This leads to the third part of the story: In my optimistic view, 3G data services for both business and consumer entertainment and multimedia applications will see steady growth and will start to generate significant revenues, thus providing the impetus for the next generation of wireless technology deployment. What is that exactly? It's not completely clear. Options include new 3G spectrum that the FCC plans to license in mid 2006, denser deployments of base stations and enhanced radio techniques such as antenna diversity, channel equalization, MIMO, multi-carrier CDMA and OFDM. Down the road, MIMO-OFDM is a promising candidate for maximizing spectral efficiency in wide radio channels. Another approach is closer integration between 3G and Wi-Fi networks, which would allow Wi-Fi to serve high user densities in places like office buildings and airports. It's likely that vendors and operators will use all of the above in creative combinations. Coupled with this next phase of wireless technology, you can expect a move to all IP networks with voice handled as VoIP.

Successful business models for this new wireless future remain elusive, yet the momentum is huge. And keep in mind that it will be several years before we get to this next stage. In the meantime, assuming you can afford them, there are few reasons not to start using 3G services. They are very good, getting better and have a very bright, though somewhat out-of-focus future.