The Real 3G – Verizon Wireless’s new BroadbandAccess service will shake up the already shaken industry.

When Verizon Wireless launched its broadband wireless offering in the San Diego and Washington markets earlier this month, it became the first major U.S. carrier to offer a true 3G data service.

By Matthew Maier Business 2.0

As defined by the Federal Communications Commission, a 3G system must offer data speeds ranging anywhere from 144 kilobits to 2 megabits per second, depending on the end user’s location. By that metric, none of the existing data systems we’ve heard about — including Sprint PCS (PCS) Vision and AT&T Wireless (AWE) mMode, which offer data speeds ranging from 50 to 80 kilobits per second — was an honest-to-Pete 3G service, despite some marketers’ claims. In fact, the only real 3G deployment in the United States to date belongs to a tiny Washington-based carrier named Monet Mobile Networks, which offers broadband wireless to consumers in Minnesota, Wisconsin, and the Dakotas.

Based on a wireless communications protocol called 1XEvDO developed by Qualcomm (QCOM), Verizon’s BroadbandAccess offers subscribers download speeds of 300 to 500 kbps. Since BroadbandAccess is currently limited to use on laptops, subscribers must shell out $149 (after a $100 mail-in rebate) for a Sierra Wireless PC card to access the service, and an additional $80 per month to use it. EvDO-compliant phones or PDAs, such as those developed by Samsung or LG for carriers in Korea, are expected to hit the U.S. market early next year.

Caught flat-footed, Verizon’s competitors are scrambling to keep up. Both AT&T Wireless and Cingular are busy implementing network upgrades to a technology called Edge, which will let them offer data speeds of about 100 kbps. That’s slower than EvDO, but when it rolls out nationally within the next six months, Edge will be more broadly available. Eventually, AT&T and Cingular will upgrade their networks to a technology called wideband CDMA, which will allow them to offer true 3G speeds. Both carriers expect to be finished with that process sometime late next year.

Sprint PCS — the nation’s No. 2 CDMA carrier — is taking a different approach. Not convinced Verizon’s choice is the right one, Sprint is holding off on 3G for now. Instead, Sprint is focusing on its PCS Vision service, which, with speeds of 50 to 70 kbps, has been one of the most successful data services offered by a national carrier. Since its launch last summer, PCS Vision has attracted 2.7 million customers, each spending an average of $10 per month downloading ringtones or sending pictures, providing some of the strongest evidence yet that data services are finally translating into serious revenue per user. "We don’t have any plans to roll out EvDO," says Sprint PCS spokesman Dan Wilinksy.

The remaining carriers, namely T-Mobile and Nextel (NXTL), don’t have clearly defined 3G strategies. While T-Mobile has been very active in Wi-Fi, rolling out thousands of hotspots and partnering with aggregators like Boingo Wireless, it’s been slow to lay out its path to 3G. Nextel has adopted a potentially dangerous wait-and-see approach, so it will eventually have to play catch-up.

As the nation’s largest carrier, Verizon is accustomed to setting the pace. While being first to offer commercial 3G is unlikely to translate into immediate riches, it should help the company to cash in on early adopters, a fact some industry-watchers don’t discount. "I think this could give them a huge edge over their competitors," says Glenn Fleishman, editor of Wi-Fi Networking News. With cell-number portability soon to be a reality and customer churn expected to soar, any service that can help attract new users and squeeze more revenue out of existing ones will give carriers a leg up on the competition.

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