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C O L U M N  
If You Build It, Will They Come?

  October 29, 2001
  By Dave Molta


Nearly 20 years ago, I pitched the idea of building an Ethernet backbone network at the university where I worked. The school had already invested considerable resources in a campuswide cable TV system that provided low-speed data services, so my boss was skeptical. When he asked me to identify the demand for high-speed LAN services, my response was a variation of "if you build it, they will come."



Like many tech-industry sectors, today's wide-area wireless data industry faces similar obstacles -- except the build-out estimates include many more zeros at the end. And when asked to identify the current demand, most infrastructure pitchmen have only analyst projections at hand. Rich media and other bandwidth-intensive applications may indeed be the wave of the future, but mapping out a compelling short-term return on investment is a daunting challenge.

The World Stage

Organizations can get a significant bang out of today's wireless data services -- if application architects agree to think inside a somewhat dated box of limited bit rates and simplified user interfaces. Advocates of 3G are not satisfied with these constraints. They trumpet the virtues of a new generation of wireless data services built around an evolving CDMA architecture capable of doling out millions of bits per second. Nearly every major carrier has a 3G plan. Many have invested heavily in spectrum auctions, and some are building out systems. But most -- especially the U.S. service providers -- are taking it slow, waiting for that killer application to distract them from their bread-and-butter service: wireless voice.

Wireless industry innovators won't be found in New York or Chicago, but across the Atlantic and Pacific oceans. Early buildouts are expected in Europe, where cellular's appeal is enhanced by cross-national adherence to standards, and where spectrum availability and population density make cellular more cost-effective. The cause is bolstered by Nokia's and Ericsson's Goliath-like presence. Their interests are clearly served by pushing the bleeding edge.

On the Pacific Rim, Japan and Korea are the global leaders pushing the paradigm shift, and these countries need not wait for the killer business application. Japan's NTT DoCoMo has clearly demonstrated the existence of a mass market for wireless data -- after all, digital-messaging services on i-mode phones are a cultural phenomenon. In Korea, Samsung is hoping that if it establishes itself as the global innovator, U.S. suppliers will become the Hyundais of the wireless market.

Going Stateside

Back home, the competitive landscape is a mess, though not as chaotic as it has been. Industry consolidation has decreased the number of major players, and further shake-outs will come once the economy heads north again. Nonetheless, challenges remain.

Qualcomm, whose wireless technology is superior to anything we might consider importing from overseas, is arguably the U.S. trump-card holder -- having a vast portfolio of patents for CDMA technologies and a credible cadre of U.S. equipment manufacturers and service providers lined up as allies. Helping the United States maintain its technical lead, U.S. universities keep cranking out engineers, many of whom are foreign nationals staying in this country. However, the supporting cast of equipment manufacturers and service providers may not be up to snuff. Lucent and Nortel are reeling from the malaise characterizing the broader telecommunications-equipment industry. And the service providers' "fortress mentality" has them ignoring the obvious benefits of standards cooperation and mutual promotion of services.

In five years, we in the U.S. market may look back and wonder how we could have been so blind to market realities. Or we may feel gratified if global competitors spend billions on next-generation systems and the customers don't come.

Send your comments on this column to Dave Molta at dmolta@nwc.com.


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