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The Wireless Edge: The Uneven Uptake of Wireless Data

Why is Wi-Fi surging ahead and why is cellular data still struggling, even against the backdrop of global 3G network deployments? The simple answer is that Wi-Fi is fast, cheap and easy while cellular data remains slow, expensive and complicated. That's beginning to change, but slowly. First some evidence to support the claim. A new study from Research and Markets projects that WLAN equipment and services will grow at an annual rate of 30 percent, to a global figure of $5 billion for the year by the end of 2006. In other words, Wi-Fi is continuing to grow at a healthy clip. Meanwhile, IDC in May reported that wireless data constituted only 5.8 percent of wireless revenues in the United
States during the fourth quarter of 2004. This 5.8 percent actually adds up to $1.6 billion in revenues for the quarter, which is nothing to sneeze at, but it represents limited usage, especially when you consider that some half of this figure is revenue from text messaging. IDC expects this figure to grow to 20 percent by 2009. Let's try and understand the dynamics of this slow growth.

Like any successful technology, wireless technology must provide value without exacting too high a cost. That is why Wi-Fi is so successful and popular. It allows me to write this column in the comfort of my living room while providing all the broadband speed I need at a cost that is laughably low. And that is why cellular voice service has grown to 1.8 billion subscribers around the world.
It offers the convenience of telephony from anywhere, at any time, at a cost that consists of the monthly fee--affordable for most people--and, with degraded voice quality relative to wireline, but at a quality level that most people accept.

Now compare this with cellular data. Let's start with the laptop scenario. There is definite value in having connectivity from anywhere, and I personally can't imagine giving up the convenience of my nationwide wireless data service. But today, the costs are still high. First there is the obvious monthly charge of $80 for EDGE or EV-DO for unlimited usage. This eliminates quite a few
potential users right off the bat. But there are plenty of other costs. Let me list some. With non-3G technologies, the networks are still too slow for many applications. Chances are that your laptop is also configured for automatic Windows and virus updates, meaning your system may be downloading megabytes of information and you won't even realize it. This slows down the performance of other applications and drives up bills on usage-based plans. That's not the network's fault, but it's still a usage cost. Yes, there are workarounds, such as making sure laptops are configured exactly right for
wireless networking, using wireless middleware, mobile-optimized versions of applications and so forth. But dealing with all these represents a large integration cost compared to just "using" your existing networking applications. Meanwhile, configuring a phone to work as a modem via Bluetooth can be
devilishly complicated. The alternative is a separate account and a data card.

Continuing on, Microsoft Windows XP has integrated support for Wi-Fi that provides a consistent user experience regardless of Wi-Fi hardware vendor. However, there is no comparable support for cellular data. And in the next version of Windows, Windows Vista, you can look forward to further improved Wi-Fi support and still no native support for cellular data. This doesn't mean you can't use cellular data with Windows, it just means it isn't as easy as it should be, for both end users and IT managers, and it requires additional utilities you have to run to configure and manage your connections.

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