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For the U.S., a 3G wake-up call in Cannes

U.S. carriers were once ahead of global rivals in the race to offer third-generation wireless broadband services. Now Europe and Japan are in the lead, say execs gathering for next week's 3GSM Congress.

European and Japanese cell phone carriers have retaken the lead over the rest of the world in the race to offer next-generation cell phone technology, say executives gathering in Cannes for next week's 3GSM World Congress 2004.

After five years of famously slow progress, third-generation (3G) networks using standards with cumbersome names like UMTS or W-CDMA are now available throughout the United Kingdom, Germany, Austria, Japan and Korea. Carriers such as T-Mobile or 3 in Europe and NTT DoCoMo in Japan are using the technology, which operates 50 times faster than present-day cell phone networks, to boost network capacity, improve coverage areas and to offer new services including 2.4 megabit per second wireless broadband.

"Deployment of (3G) networks is gaining traction in Europe, and we're getting orders from Asia," said Alan Buddendeck, a spokesman for cell phone maker Motorola, which plans several announcements at the 3GSM World Congress 2004. "We are anticipating the traction only to grow."

Carriers in the United States had the lead over their European and Japanese rivals for a relatively brief period of time in late 2002 and early 2003. But their trials of 3G technology haven't progressed yet to commercial releases, mainly because their attention strayed to more pressing issues such as the November 2003 deadline to let subscribers keep their telephone numbers when switching carriers.

The U.S. carrier now closest to launching a widespread commercial 3G service in the United States is Verizon Wireless, which believes it will have a network providing average user speeds of 300 to 500 kilobits per second this summer. That service is currently available in Washington, D.C., and San Diego.

U.S. carriers say don't count them out too soon. Verizon, for one, believes it can catch up in the next two years, having just ordered billions of dollars in high-speed wireless network equipment. "We'll be there soon, don't worry," said a Verizon executive requesting anonymity.

A finish line that matters
Carriers have their eye on the 3G prize because, as a whole, they're counting on data-oriented services to make up for plunging revenue from voice calls. Once faster networks are in place, carriers can initiate their plans to sell broadband in areas overlooked by the cable or DSL industry. Analysts forecast a few hundred million dollars in extra revenue once they do.

Third-generation networks also create a better experience for customers downloading games or streaming video or audio, two major new services being introduced by carriers worldwide.

"Carriers are trying to build loyalty," Sun Microsystems Vice President Alan Brenner said. He added that increased speeds "help services get very attractive."

Existing data services, such as mailing pictures, also benefit from increased speed. "Most handsets on the market have these capabilities," said Annemarie Duffy, senior marketing manager at Microsoft. "If you dig deep enough, you can find them. The question is how many people use it? The reason they aren't being used is it's not providing the best customer experience."

As more complex applications start selling, so will handsets with more computing power that have been sitting on store shelves and in warehouses, Duffy and other executives have long said.