The main difference between second- and third-generation networks is the speed of data transfer. Increased speed allows the creation of various new services, such as video transfer, mobile network games, multimedia file delivery, etc. Although manufacturers are starting to offer third-generation network equipment, consumers will have to wait for actual third-generation phones. Currently, the only successful example of a third generation phone is FOMA, which Matsushita (operating under the Panasonic trademark) has produced for the NTT DoCoMo network.

A WIDE ADOPTION of third-generation mobile communication networks remains well off in the future in Europe, the United States and, especially, Russia.

Japan-based NTT DoCoMo is the only communications giant that managed to launch a G3 network in Tokyo, starting on Oct.1.The Japanese seemed highly enthusiastic about the initiative: DoCoMo sold more than 4,000 G3 mobile phones the first day.

Unlike the Japanese, European operators, most of whom dished out huge amounts of cash for G3 licenses, have practically run out of financing and been forced to postpone G3 networks for an unspecified time. Western analysts say they do not expect a wide adoption of G3 networks in Europe until 2005-2006. The situation is not much better on the other side of the Atlantic Ocean, in the United States, where the Bush administration has deferred the G3 license auctions for at least four years.

In Russia, the fight for third-generation mobile phone licenses has been put off as well. Initially, the operators were expecting to receive them in 2001, but now the timeframe has moved to the first half of 2002.

The four main contenders –the Moscow-based MTS, Sonic Duo and VimpelCom (which operates under the BeeLine trademark) as well as the St. Petersburg-based North-West GSM – are still unclear about the bidding process. It may take the form of an auction or a tender; the Ministry of Communication and the operators themselves are refusing to release specific information.

Russian operators think the auction is the least attractive mechanism for issuing licenses. At an auction, Russian operators may find themselves in the same pitfall as their European counterparts did not so long ago, said Sergei Avdeyev, vice president of network development at VimpelCom. Having paid millions of dollars for their licenses, the Europeans found themselves with no money for developing the infrastructure.

"A more reasonable approach is the method used in the Scandinavian countries, where it was a tender instead of an auction," he added, "The candidates for the licenses submit documents proving they have all the necessary ingredients for developing the network: the infrastructure, the financing, etc. Then an independent commission evaluates the documents and chooses the winner; the payments remain at quite reasonable levels."

Thanks to an advertising buzz around G3, some operators are already starting to offer what they call "Two-Plus" services, referring to those that they claim are a step beyond the second generation of mobile networks. For instance, Sonic Duo, which will launch its network by the end of the year, is focusing its ads on the idea that its network is not the second, but is half way between the second and third generations.

The main feature of the company's services is the fact that it offers more advanced SIM-cards "by default." These cards, with a memory of 32KB instead of the standard 16KB, ease the access to various additional services. Earlier, during the past summer, VimpelCom began offering a similar SIM-card as it marketed a service under the brand name SIM Application Toolkit.

Personal Communications, a company that operates under the Sonet trademark, also says its network belongs to a "fractional" generation. The company operates in CDMA standard, which in Russia is not officially recognized as mobile. How-ever, de-facto Sonet is a full-fledged mobile-phone operator, and the number of its subscribers is growing rapidly. According to Personal Communications' head Mikhail Suslov, Sonet's hardware, assembled at U.S.-based Lucent Technologies, is in fact third generation.

"To switch to a third generation network, we just have to change our software," he added," The only problem is the licenses."

(Sergei Kuznetsov is a Moscow-based freelance writer.)