The 100-kilobit-per-second cellphone technology was meant as a stepping-stone for cellphone carriers as they progress toward 3G, or third-generation, telephone networks that -- at 2.4 megabits per second -- rival landline broadband service. Carriers are speeding up their networks to increase their own capacity for phone calls and to create more attractive wireless Web services.
Yet in the past few months, carriers have announced plans to launch networks that use both EDGE and the 3G standard w-CDMA. The largest to do so was also the latest, Telia Sonera in Sweden, which late last week said it will deploy 3G-standard network equipment in urban areas, where the number of possible customers is large enough to warrant the risk of deploying the expensive equipment, while less-expensive EDGE will serve rural areas.
EDGE, short for Enhanced Data GSM Environment, is based on the Global System for Mobile Communications wireless standard.
Many newcomers to the "oceans of EDGE, islands of w-CDMA" deployment philosophy, as Deutsche Bank put it in a research note, are from Asia and Europe, where providers were focused more on 3G and had planned only minimal EDGE deployments.
Why the change? At 100kpbs, EDGE "hits a wireless data sweet spot" in rural areas, which are traditionally overlooked by wired broadband service providers that mainly focus their digital subscriber line (DSL) and cable modems lines in urban areas, said Chris Pearson, executive vice president of 3G Americas, which is a cellphone industry organisation. In many areas that wired broadband hasn't reached, an EDGE service would be among the fastest Web experiences of any kind, he said.
There is another reason: economics. While there are signs of improving financial conditions overall, cellphone service providers have announced conservative capital expense budgets for this year. EDGE is "a low-priced complementary solution" to the more expensive 3G technologies, Deutsche Bank said in its note.
EDGE equipment makers that stand to benefit by this shift include Nokia's struggling network division, which forecasts a slight improvement in 2004 from the 15 percent revenue decline reported last year. Other major makers of EDGE equipment include Ericsson, Nortel Networks, Siemens, Alcatel and Motorola.
