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3G By Any Other Name Mark Lewis,, 01.25.02, 1:40 PM ET

NEW YORK – Is this another case of grade inflation? Wireless investors today were poring over unconfirmed reports that Verizon Wireless may roll out “third-generation” wireless service as early as next week. But what now is being touted as “3G” was once considered merely 2.5G, an interim step on the road to the wireless broadband millennium.

Reuters reported late yesterday that Verizon Wireless, a joint venture of Verizon Communications (nyse: VZ – news – people) and Vodafone Group (nyse: VOD – news – people), may soon launch its third-generation network, “capable of streaming video and high-speed Internet” service to mobile-phone customers. (See: “Verizon Wireless Could Launch 3G Next Week.”)

Verizon Wireless has not confirmed the Reuters report, which said the new service would use the code division multiple access (CDMA) 2000 1XRTT standard developed by Qualcomm (nasdaq: QCOM – news – people). South Korean wireless firms have been using this standard for more than a year, but South Korea is not widely recognized as the birthplace of 3G. That honor more recently was conferred upon Japan, where NTT DoCoMo–using a different standard–started offering a limited form of 3G service in October 2001.

What’s going on? It depends on whom you ask. Andrew M. Seybold, editor and publisher of Forbes/Andrew Seybold’s Wireless Outlook, says the standard being used in Korea does indeed qualify as 3G, defined as offering speeds over 144 kilobits per second. (See “Technology Will Determine Which Wireless Stocks Win.”) Others say CDMA 2000 IXRTT, while fast, remains an interim step to 3G and therefore falls under the “2.5” heading, along with the rival general packet radio service (GPRS) standard that several Verizon competitors are using.

The fact remains that true 3G, in the sense of full-fledged, superfast wireless broadband service, remains at least several years away for U.S. consumers. The new services now being rolled out are less ambitious, although still potentially appealing to wireless Web surfers. (See “3G Networks? Not So Fast!”)

It boils down to a marketing issue: “3G” is what investors have been banking on and what early-adopter consumers have been waiting for–so the wireless firms prefer that label. Which is fine. By anybody’s definition, the new services represent a significant upgrade for wireless consumers. Whether 3G or not 3G, they are bound to be at least something of an improvement on poky old second-generation wireless service.