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WiFi Vs 3G: Is 3G going to die?

(February 2006)
Mr. Syed M Hassan, MIEEE

MSc. Communications Engineering

The University of Yotk, UK.
masroor_zaidi@hotmail.co.uk

deployments for 3G services. On the other hand, Wi-Fi

Abstract— This report is intended to be a survey of the
comparison between third generation mobile telephony (3G) and
wireless local area network (Wi-Fi). Wi-Fi and 3G technologies
are used within this article as a platform for discussion. 3G is a
collection of services that was designed to offer mobile users high
speed data and voice services over a mobile network and Wi-Fi
refers to the Ethernet standard 802.11x designed to provide
wireless access for Local area networks. Although both the
technologies are very different from each other they are both
intended to provide broadband wireless internet access to
portable devices.
An examination of the basic infrastructures is then provided
along with the discussion of various technical issues that can be
evolved while providing this type of service.
Viability of 3G in the presence of its rival technologies is also
discussed. It will then conclude with an opinion on the various
effects on 3G market place.
I. INTRODUCTION
T HE 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
operates in the unlicensed ISM band which does not require
huge amount of investment, atleast 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 be 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 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.
A brief overview of Wi-Fi and 3G is provided in the section
II. This section describes the history and the standards
associated to these two technologies. A basic cost analysis is
then shown in the section III. Most resent deployments and
the market reviews are presented in the section IV and finally,
the conclusion is provided in the section V of this report.
II. TECHNOLOGY
Fig. 1. Adopted from GSA (Global Mobile Suppliers Association), shows
the evolution of mobile generations.
In this section, a brief overview of the technologies is given
to supplement the reader’s knowledge.
A. 3G
Third generation mobile phone technology was designed to
provide mobile phone users access to anything, any where and
any time. 3G is an integration of fixed and mobile
communication networks, internet and broadcasting, for

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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)
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”[9]. 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 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))”[4].
This is a very brief history of the great efforts which have
been made to provide up-to 2 Mbps to a mobile device.
B. Wi-Fi
Wi-Fi refers to IEEE 802.11 standard for wireless Local
Area Networks (WLAN). Wi-Fi is mainly used to connect
devices without the use of wires and allows them to share
network resources such as printers, file storage and broadband
internet connection. Wi-Fi provides broadband to Wi-Fi
enabled devices by using back haul Internet connection.
Wi-Fi operates in 2.4/5 GHz unlicensed ISM (Industrial,
Scientific and Medical) band. 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.
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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.
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.
III. COST COMPARISON
In order to undertake the cost comparison between 3G and
Wi-Fi capital expenditure (CPX) and operational expenditure
(OPX) have been taken in to account. This estimate is focused
entirely on the last mile access network which is the most
dominated area in the field of telecommunications. CPX
includes base station (BS) equipment cost, site development
cost and installation cost, whereas annual operational and
maintenance, power consumption, site lease and transmission
costs are included in OPX. This estimate does not include the
license fee, which is 4 billion pounds in the UK for 20 years
license. Other costs such as depreciation are beyond the scope
of this report.
A. Mobile Base Station Costs
The approximate figures are provided to estimate the costs
of typical 3G base stations.
Initial expenditure [1]
• There are three variations in the configuration of the base
stations:
3 sector with 1 carrier per sector approximately £35K/BS
3 sector with 2 carrier per sector approximately £55K/BS
3 sector with 1 carrier per sector approximately £75K/BS
• Site build cost approximately £50K/site
• Site installation approximately £20K/site
Annual Cost[2]
• Site lease: This cost is entirely site dependent. According
to a rough estimate: 6 to 7 K in urban and 2 K in
suburban
• Transmission cost approximately 2 to 3 K per annum
which is subjected to increase by 5% a year
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• Power consumption cost is estimated to be 3% of TABLE 1.3

MOBILE BASE STATION COST SUMMARY
equipment cost
No. of Urban Suburban
• Operational and maintenance (O&M) cost is estimated to carriers 5yrs 10yrs 5yrs 10yrs
be 5% of equipment cost per sector
Annual cost [7] 1 102.93
CPX ( K£)
• Site lease 2 123.51
3 144.10
This cost is entirely site dependent. According to a rough 1 63.54 123.58 39.52 75.55
estimate: 6 to 7 K in urban and 2 K in suburban OPX (K£) 2 71.78 140.05 47.75 92.00
• Transmission cost approximately 2 to 3 K per annum (New BS) 3 80.01 156.52 56.00 108.5
which is subjected to increase by 5% a year OPX (K£) 1 13.72 27.45 13.72 27.45
(Upgrade BS) 2 21.95 43.91 21.95 43.91
• Power consumption cost is estimated to be 3% of 3 30.19 60.38 30.19 60.38
equipment cost 1 166.5 226.5 142.5 178.5
TABLE 1.1 Total Cost( K£) 2 195.3 263.6 171.3 215.5
MOBILE BASE STATION COST SUMMARY (new BS) 3 224.1 300.6 200.0 252.6
Cost Categories Urban Suburban 1 116.7 130.4 116.7 130.4
BS Equipment cost (K £/BS) 35/55/75 Total Cost ( K£) 2 145.5 167.4 145.5 167.4
Site Build out ( K £/Site) 50 (Upgrade BS) 3 174.3 204.5 174.3 204.5
Site Installation ( K £/Site) 20 Above table is reproduced from [8].
Site Lease (K £/Annum) 6.5 Average 2 OPX= Operational Expenditure, CPX= Capital Expenditure, BS= Base
Transmission (K £/Annum) 2.5 Ave. (5% annual rise) Station, K= 1000
Power consumption (K £/Annum) 1/1.7/2.3 related to individual sites are considered here. These costs can
O&M ( K £/Annum) 1.80/2.80/3.80 be divided into following major categories.
Above table is reproduced from [8].
Initial Cost
• Operational and maintenance (O&M) cost is estimated to Wireless router and other equipment cost (Ave.): 700G.B.P.
be 5% of equipment cost
Site Installation: The site installation cost is a function of the
Table 1.1 summaries the cost estimate for mobile base number of sites and the number of access points per site.
stations. Assumptions have been made that on average 5 labor hours
required to install and configure a typical WLAN Access
TABLE 1.2 point. This gives approximately 200G.B.P/Site.
COST ELEMENTS OF CELLULAR BASE STATION Life cycle: Approximately 5yrs
New BS Upgraded BS Per Annum Cost
CPX
BS Equipment Yes Yes
Site Lease: This part of the cost is not considered due to the
Site Build-out Yes No existing infrastructure of broadband service providers.
Site Installation Yes Yes Transmission: Taking into account the existing wired
OPX infrastructure of broadband service provider for last mile
Annual O&M Yes Yes communication to the WLAN access point, this part is not
Power consumption Yes Yes
included in the estimate.
Site Lease Yes No
Transmission Yes No
Annual O&M: 5% of the total hardware cost.

Above table is reproduced from [8].
2G sites can be re used by upgrading and adding more
transivers in order to cop with 3G. In this case site build-out,
site lease and transmission need not be considered. Different
cost elements for new and upgraded base stations are
summarized in Table 1.2.
The cost per base station can be estimated according to
different configurations. The results have been provided in the
Table 1.3 based on 5 and 10 years life cycle periods.
B. Wireless LAN Costs
WLAN cost estimation is based on [2]. The author performed
detailed cost estimation in tow steps, modeling of the cost on
the basis of individual sites and cost which is shared between
many sites for example cost of the router which connects
various sites and the rest of the internet. In order to keep this
report simple only the capital expenditure and running costs
This cost is too small as compare to the mobile base station
cost.
IV. CURRENT DEPLOYMENTS
In October 2005 Philadelphia, one of the most historic cities
in the US, announced the plan to build the city wide wireless
broadband network. This network will be the biggest (135-
square-miles) municipal wireless network in the United States
of America. It will provide wireless broad band access to low
income residents just under $10 per month.
“A growing number of cities in the US are treating high-
speed internet as a basic amenity for citizens, like running
water or the electricity grid but as the concept expands so does
the battle with big business”. [5]
A UK based company known as The cloud provides multi
service platform to ISPs, mobile and cable companies to offer
their customers a best possible wireless LAN experience and
ease of use. By supporting all the major internet service

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providers, site owners can also maximize their potential
revenue.
City of London Corporation announced a roll-out of the Wi-
Fi network throughout London with the partnership with The
Cloud. London city will go live within six months. The idea is
to utilize street furniture and lamp posts to mount WLAN
access points. As London is Europe’s most visited city, this
roll out will allow millions of visitors and local people to
access internet any time and any where on or off the streets
using their Wi-Fi enabled devices such as laptops, PDAs and
Wi-Fi enabled mobile phones.
Chief Executive of the Cloud said, "Providing ubiquitous
Fig. 2. Adopted from [8], showing the basic infrastructure of The cloud
network.
wireless broadband access, over a network that is available to
millions of Wi-Fi devices, and will be available to the new
generation of Wi-Fi phones, gaming devices and other
applications will have a major impact on the way people
communicate, work and play in city centers," [5].
Most of the mobile phones which are now available in the
market have Wi-Fi chip installed. By just pressing a button on
the mobile phone the device can by-pass the mobile network
and connect to the internet in order to make the cheap IP
phone calls.
According to BBC, a company known as BROADREACH
and net telephony firm SKYPE has announced a roll-out of
their services to 350 hotspots around UK. Users will be
allowed to download the FREE Skype software from the
internet. Then they will be able to make internet phone calls
either PC-to-PC or PC-to-Phone using Wi-Fi air interface.
Telephony over WLAN is becoming very popular; there are
around 28 million WLAN users all over the world.
Broadreach have covered virgin mega-stores, the Travelodge
chain of hotels and all the major rail terminals in London and
currently serving around two million users.
V. CONCLUSION
First generation mobile systems used analog technology for
voice transmission, Global System for mobile
communications (GSM) also known as 2g, become digital,
adding more capacity and letting data to be transmitted.
General Purpose Radio Service which is 2.5g upgrade of
GSM it provides data-connectivity by allowing packets of data
to be sent separately from voice. Enhanced Datarate for GSM
Evolution marked as 2.75g, allows GSM to handle 3G level of
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datarate. Third generation mobile system promises mega fast
data connectivity and an increase in capacity of the network.
Wi-Fi provides the better datarate at a lower price as
compare to 3G. However, 3G provides ubiquitous coverage.
Initially coverage was an issue with Wireless LANs but after
the recent deployments of very large number of Hot Spots
around the world, it is now possible to access the internet at
the broadband speed in the majority of the places in the major
cities. If a user wants to surf the internet or download
multimedia contents, it can be done with a nice cup of coffee
in the relaxed environment which would be rather more
pleasant than checking the emails while moving at the speed
of 144 km/hr.
Regarding 3G, different people have different views. Some
people believe that 3G is viable others think that it is a waste
of time and money for the standardization bodies, service
providers, consumers and the people who are still trying to
develop a killer application for it. It seems that the mobile
market has left its users behind. It is observed that majority of
the people use mobile phones just to make voice calls or
sending Short Text Messages, even if they are on a 3G
network. One of the possible reasons 3G is not been widely
accepted that mobile devices are getting smaller and the users
cannot do much with such a small screen. The information
people need on the mobile devices does not have to be
updated at super fast speed and it is not worth watching a
movie on a screen 2” x 2” which increases the bill by a factor
of 4.
As the numbers of Hot Zones are increasing, it seems that
Wi-Fi will be a big rival of third generation mobile phone
network in the near future.
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, 2004.
[2] K. Thompson. “Large Scale Deployment of Public Wireless LANs- a
Feasibility Study”, MSc Thesis, Royal Institute of Technology
(KTH), Feb. 2003.
[3] J. Wang, “Will WiMAX + WLAN Constitute a Substitute to 3G- A
Techno-Economic Case Study”, MSc Thesis, Royal Institute of
Technology (KTH), Mar. 2004.
[4] http://www.3gpp.org, last accessed 15 March, 2006.
[5] http://www.bbc.org, last accessed 12 March, 2006
[6] http://entrepreneurs.about.com/od/businessideas/a/bizopps2005_3.ht
m , last accessed 11 March, 2006
[7] http://www.itu.int/itunews/issue/2003/06/thirdgeneration.html , last
accessed 13 March, 2006
[8] http://www.thecloud.net , last accessed 16 March, 2006
[9] D.J Pearce, Lecture Notes on “Personal and Mobile
Communications”, 2006
1. http://www.3gpp.org
2. http://www.bbc.co.uk
3. http://entrepreneurs.about.com/od/businessideas/a/bizopps200
5_3.htm
4. http://www.itu.int/itunews/issue/2003/06/thirdgeneration.html
5. http://www.thecloud.net
Syed M Hassan (M’02) has done his BE from Hamdard University, Pakistan
and currently he is doing MSc. in Communications Engineering at The
University of York. He has been involved in various projects both hardware
and software based since 1999. His current research interests includes low
cost transivers design, antenna design, radio wave propagation, advanced
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modulation and coding techniques, digital signal processing and

electromagnetic compatibility issues for wireless systems. Previously he
worked as a networked administrator at Orient Enterprise in Pakistan for 2
years. He is a member of IEEE since 2002.

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