3G and Wi-Fi in 2005

The wait is over: 3G wireless services are finally going to emerge this year. Just because 3G infrastructure is being deployed, however, doesn't mean customers will be lining up to

Dave Molta

January 7, 2005

3 Min Read
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However, just because 3G infrastructure is being deployed, it doesn'tmean customers will be lining up to buy. The go-to-market strategy forthis technology is very complex, and it requires a careful balance ofsupply and demand. While spectrum positions have improved all carriersas a result of industry consolidation and FCC auctions, significantperformance and scalability concerns still exist. When you price 3G dataat $79.95 per month, as is the current norm, you don't have to worry toomuch about capacity because the potential customer base is so small.However, once the price falls to half that amount, the market will growsubstantially. Drop the price even more, and the market is bigger still.Can carriers effectively meet growing demand? That's a big question in2005.

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

The future success of 3G data is tied in a rather convoluted way to thesuccess of WLANs. That's because many people view these services ascompetitive, and they envision a future when metro-area WLAN deploymentswill meet the needs of mobile data users at higher service levels andlower cost than cellular. To a certain degree, the expansion of Wi-Fihotspot service demonstrates that there really is market demand forwide-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 needwide-area data coverage in 2005 or 2006, you're probably better advisedto 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, itdoesn't mean we won't see rapid market growth. With many of the mostpressing security concerns addressed by new standards, you can expectorganizations of all sizes--from small shops to the largestenterprises--to be busy rolling out Wi-Fi services during 2005. Thetechnology is improving, as are the price points. And while a fewskeptical IT managers will hold out because they aren't convinced of theROI, those individuals will eventually give in to the reality thatwireless LANs are inevitable, the latest cost of doing business. Let'shope they don't have to wait until their next job to plug into thatreality.Beyond the enterprise, Wi-Fi is also poised to make a second run at thehome market. Over the past two years, Wi-Fi routers that allow thesharing of DSL and cable connections have become increasingly popular.With prices falling to under $50, it's a no-brainer alternative topulling Cat 5 if ever there was one. But that's just the tip of theiceberg. In the coming year, WLANs will begin to emerge as thefoundation for converged home networks that combine voice, video anddata. The days of the proprietary cordless phone are numbered; they'llsoon be replaced by VoIP versions. Likewise, connections between yourcomputer, your stereo system and your television will provide newentertainment possibilities. There undoubtedly will be some uglinessalong the way as new products make their way to market. But the futureof wireless multimedia is bright indeed.

Dave Molta is Network Computing's senior technology editor. Write to him at [email protected]

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