The Capacity Question
By Mike Masnick, Thu Apr 21 03:30:00 EEST 2005

With all of the wireless broadband solutions coming about, the capacity question doesn't get nearly enough attention. Many of these solutions aren't designed to handle that much data -- and the services may suffer because of it.


Over in South Korea, KT made some news today by announcing that when it launches its WiBro offering, it will be on a pay as you go basis rather than a flat-rate. The reasoning given won't surprise many, other than for being forthright about an issue that many in the wireless and mobile space have often tried to ignore or hide: "WiBro cannot ready itself for flat-rate pricing because the technology uses spectrum, which is a limited resource."

While that's a little misleading -- all wireless technologies use spectrum, and some do offer flat-rate plans -- it still highlights an important, but often ignored area in mobile broadband: capacity. With WiBro set to be integrated with mobile WiMax, it might disturb some people to find out that the initial provider of the service is worried about capacity issues already. People talk about WiMax as if it will replace DSL -- but if it can only be successfully priced on a "pay as you go" model, rather than a flat-rate model common to higher level DSL offerings, it's going to be a tough sell.

Even the article discussing the KT WiBro announcement quotes people pointing out that HSDPA (which also uses spectrum, and should also have capacity issues) is likely to catch on much faster, because it's expected that it will be priced on a flat-rate basis.

The capacity issue is the same reason that Verizon is going slow with its EV-DO rollout -- making sure the network can actually handle the traffic. The high monthly rates that Verizon is charging are almost as bad as pay as you go. Both are designed (successfully) to limit usage -- which is a difficult way to encourage adoption of new technologies.

The Internet caught on, in large part, due to the common acceptance of flat-rate dialup fees. People don't necessarily like having to pay attention to how much data they're using. They want to feel free to explore -- which is where the value is in a data connection. This isn't to say the capacity issues aren't real. They're very, very real -- which is why some are questioning how successful wireless VoIP can be. If the high bandwidth applications can't work on these networks in a way that makes economic sense -- then it's difficult to see how these wireless broadband solutions can ever become the mass market success that so many like to predict. If the industry wants to be a real replacement to wireline broadband solutions -- then it needs to deal with the capacity question soon.