3G, cheaper and better

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With 3G networks finally being rolled out world wide, it is no surprise that the prices of the 3G gear are tumbling, especially on the infrastructure end of things.

bq. Brett Simpson, analyst at research firm Arete Research LLC, says the typical node B — the radio link between wireless devices and the rest of a cellular network — today is selling for around €25,000 (US$29,500), down from €60,000 ($70,960) or €70,000 ($82,780) a year or two ago.“We expect it to drop below €15,000 [$17,740] in a few years, and some operators are telling us they want node B’s for the same price as a GSM BTS [€11,000 or $13,000] in the next couple of years,” says Simpson. “Vendors aren’t going to make money from this.”

The falling prices while might force the companies to tighten their belts, they should be taking a cue from the PC makers and use standardized components. That way at least they can do some software differentiation. Cheaper gear would mean even faster roll-outs, which would result in more users on the networks using more applications, resulting in more revenues for the carriers which in turn would fuel more demand for gear.

bq. Ed Candy, technology director at European carrier Hutchison 3G HK Ltd , jokingly explains why operators want to keep equipment prices low: “To develop new services, a much higher proportion of our network consists of application servers [than was the case with GSM]. We’re looking for really cheap base stations so we can go and spend all our money with the IT vendors.”

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