The Future of the Wireless Business
By Carlo Longino, Fri Oct 18 00:00:00 GMT 2002

The future won't only bring changes in technology, but also to the way business is done by the industry.


Predicting the future can be a pesky
task, especially in business. Long-term planning isn’t something that
comes easily to a lot of companies; dealing with day-to-day tasks and
crises often prevents it. But looking beyond the next few years is
crucial in the wireless industry, as big changes are afoot.

No
one’s place in the industry is safe. Certainly the beating wireless
stocks have taken in the last year or two has proven that. But companies
across all sectors – equipment manufacturers, device makers, and most of
all, carriers – will be in great jeopardy unless they keep a close watch
on future technologies and don’t underestimate their impact on their
businesses.

The wireless networks of the future will shake up
the pecking order. Ad-hoc and mesh networks will dictate a bottom-up
market as opposed to a carrier-dominated top-down model – something
we’re already seeing in the proliferation of small and free WLAN
networks. Only by keeping abreast of, and prepared for, the emergence of
these technologies can companies adequately deal with them. The future’s
coming sooner than you think.

Disruption
Ahead


The scenarios, services, and technologies raised
in this week’s articles will force a lot of rethinking in the industry,
the least of which the radical changes that 4G and other network
advancements will bring (link to networks articles).

Already,
small WLAN providers are gaining a foothold in the market, strengthened
by companies like Boingo that allow their customers to access disparate,
independent networks in a variety of locations with one logon, set-up,
and billing contact. Some carriers have moved into this arena, notably
T-Mobile in the US through its purchase of Mobilestar, which is aiming
to deploy wireless networks in Starbucks shops and other locations
throughout the country.

WLAN is already a huge success in the
home and office segments; public access networks are also booming,
supported by a large number of free networks set up around the globe.
New, cheap, long-range WLAN equipment that can transmit signals as far
as 12 miles will enable neighborhood and local ISP’s, removing many of
the barriers to becoming a wireless data carrier. It’s hard to compete
against free or cheap 11Mbps access; but carriers must find a way to
combine the benefits of WLANs and mobile data networks.


“Wireless LAN is inherently unsuited for metropolitan-area
networks,” says analyst Seamus McAteer of the Zelos Group. “It’s hard to
see a viable near-term network nationally, but I wouldn’t underestimate
the amount of investment and market momentum of 802.11.”

Mesh
and ad-hoc networking scenarios offer up more questions – with a lack of
centralized infrastructure, how can carriers track and bill usage, and
guarantee consistent and acceptable end-user experience?

Other
new technologies may require the complete rebuilding of wireless
networks. While 3G will be downwards-compatible with existing
technologies (to a certain extent), other networks will mandate wholly
new infrastructure and devices. NTT DoCoMo has already run into this
problem in Japan, where its 3G WCDMA network isn’t compatible with its
2G PDC net. KDDI, on the other hand, has upgraded its CDMA 2G network
with compatible 1x technology, making use of its existing resources and
customers’ comfort with the existing system.

The early Japanese
lessons from 3G come into play with services as well. It seems that
instead of trying to develop all-too-often-useless killer apps, users
would be more interested in unfettered Net access. This has hit hard at
DoCoMo, and Tim Clark summed it up nicely in a recent edition of his
Japan Internet Report newsletter, describing a full-page DoCoMo
newspaper ad for the i-motion video service, featuring screenshots of a
cat: “Let me see if I have this advertising message straight: After
spending somewhere around U.S. $500 for the world's most advanced
commercially available cellular telephone, I can use it to... watch full
motion video imagery of my cat?

“And based on DoCoMo's FOMA
packet rates, I can expect to spend approximately U.S. $1.25 for the
extraordinarily compelling experience of viewing 12 seconds of full
motion cat video footage?”

The implications for network
equipment and device makers exist as well. Failure to account for these
new technologies could give start-ups just the market opening they need.
And with their stocks in the doldrums, they may not find their pockets
for acquisitions as deep as they once
were.

Evolution

So how will the
industry deal with these issues? Through a combination of changing
existing business models, creating new services and revenue streams, and
utilizing some other new technologies that will simplify these goals.


Some things in the business won’t change: networks will never
be totally self-sufficient – there will be a place for carriers in some
form. And networks, even ad-hoc ones, will still require some measure of
infrastructure. And until our brains are wired for telepathy, we’ll
still need devices.

Billing and back-end software must evolve to
support new network topologies. Carriers cannot shy away from mesh or
ad-hoc networks because they’re afraid they won’t be able to adequately
track and bill users. Users won’t expect airtime or services to be free,
but tracking and payment must be as un-cumbersome as possible.


Mesh network developers have already considered and accounted
for these scenarios. “It’s just a science project or charity if you
can’t bill for it,” says Rick Rotondo, the vice president of technical
marketing at MeshNetworks. Their technology allows the network operator
to keep track of each device’s usage, even when it’s communicating
solely in a peer-to-peer mode, then report that information to a billing
system when it’s next connected to the central network.

But
Rotondo sees current mobile data pricing structures as outmoded, and
says consumers will demand ISP-style flat-rate access. “People don’t
want to pay per minute or per bit,” he says. “They want to pay you a
monthly fee and make it all-you-can-eat. We don’t think people are going
to charge separately for peer-to-peer or per bit on the network, it’s
going to be one fee.”

Carriers must focus their efforts on
developing products and services for high-volume and big-spending
business customers. Developing expensive, flashy apps geared toward the
general public won’t pay off immediate benefits (as DoCoMo’s cat video
shows). “The real growth has to come from high-spending business users,”
McAteer says.

And the best way to do this is to enable and
support a seamless IP dialtone, and all that this entails. It must be as
simple to access corporate data from anywhere outside the office as it
is from a desk inside it. This doesn’t end with building out ubiquitous
high-speed networks; it also entails supporting roaming and taking on
the burden of authentication – of the utmost importance in corporate
networks. But this access can’t come through carrier
portals.

“Notebook users are ready to access data ubiquitously,”
McAteer adds. “The key is being able to seamlessly authenticate, and the
data dialtone must be as common as voice today, regardless of the
technology. It’s gotta just work.”

This also means carriers can
extend their roles as service integrators, taking advantage of their
position in the network and expertise to link mobile users with their
companies’ applications. Carriers’ experience thus far is really more in
being a service provider rather than an access provider, and they must
continue in that vein. As smaller mobile and wireless data providers
emerge, what will differentiate carriers will be their ability to
provide the whole package – integration of mobile applications with a
company’s existing wired apps, and providing and guaranteed secure and
trusted transaction – something that mom-and-pop WISPs or Boingo-type
collaboratives simply cannot hope to offer.

Carriers must make
the distinction between mobile data and mobile services. Giving a
would-be poet in a coffee shop a WLAN net connection is mobile data. But
giving a sales executive access to his company’s SFA application on a
PDA or with a wireless modem – and authenticating the connection,
linking to a VPN, and so on – is mobile services. Those services will be
what brings and keeps their corporate
customers.

Survival

Established
players in the industry shouldn’t run scared from future technology,
wary it will knock them off their perches. Changes simply can’t happen
overnight. “Old technologies don’t roll over,” McAteer
says.

Many technologies that will emerge will be a boon to the
industry – software-defined radio, Java, and all-IP networks are 3
examples. They’ll allow for easy upgrading and for users to easily
expand the capabilities of their devices.

Soft radio will allow
users to download new radio functionality – traveling to another
continent whose wireless nets operate on a different frequency than your
home country? Simply download the software before your trip to enable
your device to work on that frequency. Buy a data-only device? Use Java
to download a voice-over-IP app and it’s a phone now as well.


Someone has to be in a position in the value chain to offer
these services, and someone has to mediate between those providers and
users – and that’s where equipment manufacturers and carriers can again
maintain their relevance.

And by building out and supporting
all-IP networks, network gear makers enable the high degree of ubiquity
and configurability needed to support advanced mobile services. IP
mobility takes this even a step further, meaning when I log on from my
office or from my mobile device, I’m using the same IP address, giving
me access to the same services. Although such a system is
device-agnostic (I can access any data with any device), it’s also
device-intelligent (it won’t send a graphic intended for a 19-inch
monitor to a PDA’s 4-inch screen).

Without a doubt, things will
change in the wireless industry – new technologies will mandate some
evolution. But established players must utilize those new technologies
and adapt their businesses to suit
them.

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Carlo
Longino is a freelance writer based in Austin, Texas. His
previous experience includes work for The Wall Street Journal, Dow
Jones Newswires, and Hoover's Online.