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3G and Wi-Fi in 2005

However, just because 3G infrastructure is being deployed, it doesn't
mean customers will be lining up to buy. The go-to-market strategy for
this technology is very complex, and it requires a careful balance of
supply and demand. While spectrum positions have improved all carriers
as a result of industry consolidation and FCC auctions, significant
performance and scalability concerns still exist. When you price 3G data
at $79.95 per month, as is the current norm, you don't have to worry too
much about capacity because the potential customer base is so small.
However, once the price falls to half that amount, the market will grow
substantially. Drop the price even more, and the market is bigger still.
Can carriers effectively meet growing demand? That's a big question in
2005.


The Mobile Observer


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Today, carriers like Sprint offer unlimited data service offerings that
vary from $15 per month for a Treo smartphone to $80 per month for a
wireless notebook. However, as technology improves, it will be difficult
for carriers to enforce this tiered pricing model. If I can use a
Bluetooth-equipped cell phone as a dialup modem for my notebook
computer, why would I pay the higher price? The best way for carriers to
address this is to reduce the prices for all-you-can-eat data services.
Flat-rate pricing is counter to current business practices. Inexpensive
flat-rate pricing is even worse. The carriers also need to find a way to
get 3G modems embedded--or at least bundled--with new notebook
computers. Today, Dell is one of very few PC manufacturers that will
ship you a notebook computer preconfigured for 3G.

The future success of 3G data is tied in a rather convoluted way to the
success of WLANs. That's because many people view these services as
competitive, and they envision a future when metro-area WLAN deployments
will meet the needs of mobile data users at higher service levels and
lower cost than cellular. To a certain degree, the expansion of Wi-Fi
hotspot service demonstrates that there really is market demand for
wide-area Wi-Fi. But delivering such a service over unlicensed spectrum,
especially at 2.4 GHz, presents enormous technical obstacles. Clearly,
you should expect the footprint of Wi-Fi to grow. But if you need
wide-area data coverage in 2005 or 2006, you're probably better advised
to turn to your favorite carrier and pay the damn bill.

While Wi-Fi's status as a wide-area alternative to 3G may be tenuous, it
doesn't mean we won't see rapid market growth. With many of the most
pressing security concerns addressed by new standards, you can expect
organizations of all sizes--from small shops to the largest
enterprises--to be busy rolling out Wi-Fi services during 2005. The
technology is improving, as are the price points. And while a few
skeptical IT managers will hold out because they aren't convinced of the
ROI, those individuals will eventually give in to the reality that
wireless LANs are inevitable, the latest cost of doing business. Let's
hope they don't have to wait until their next job to plug into that
reality.