Wireless

January 8, 2004
What does 2004 hold for wireless industry?

Andrew Seybold

UNITED STATES -- At the end of each year, those of us who write for a living feel compelled to look into our crystal ball and make predictions about what will happen next year. It gives us an opportunity to prove how smart we are, though, most of what we say is common sense. It is always more gratifying to say something and be proven right, than to say nothing and to wish we had. Since we all have short memories, it is easy to forget what we predicted that did not happen!

Before I begin on my journey into 2004, let me take a little credit for being right that when local number portability (LNP) became available on 24 November 24 2003 [in the United States] it was a ho-hum event. Many predicted that 30 million unhappy customers would change wireless networks, while I made a case for a much smaller number. I cited existing contracts and that while most of us were unhappy with the coverage from our existing networks, changing networks with expectations of better coverage would only disappoint us. Others believed that being able to have our wired number become our wireless number would be a big deal. Again, I argued that it would not happen that way. Certainly, if you are a single person, the ability to have your wired number transferred to your wireless number might be appealing.

However, for a family of four the issue is who gets the home number. Dad probably does not want it since he does not want to have to answer his cell phone only to find that the call is for one of his kids or his wife. His wife probably does not want it for much the same reason, and the kids want their own number so they do not have to share it with their parents and can talk to whomever they want without parental guidance.

So, what will 2004 have in store for the wireless voice and data community? Here goes:

Wi-Fi
Wi-Fi will continue to be a big deal, and Wi-Fi hotspots will continue to garner a lot of press as will Wi-Fi hot-zones (groups of hotspots covering larger geographic areas). However, the bottom line is that Wi-Fi users will find more "free" hotspot services. Wi-Fi and wired high-speed broadband services will become a perk for business travelers. Companies that continue to charge for access will find that the number of paying users will decrease during the year, not increase.

VoIP
This is another "hot" area for 2004. Intel, Cisco and other computer-related companies really believe that VoIP will become a big deal in 2004. They expect to see many wireless devices capable of both wide-area and Wi-Fi VoIP. They also expect VoIP to eat into the revenues of traditional wired and wide-area wireless companies. Nevertheless, they do not understand that VoIP is currently about the last few hundred feet and beyond this, the service requires back-end infrastructure based on existing wired technology. Unlike today's wired and wireless wide-area technology, VoIP does not include any aspects of quality of service (QoS) that will propel it into the forefront of a "happening" technology.

Wi-Max and other new technologies
Intel is betting heavily on Wi-Max, a wide-area, licensed and unlicensed technology that is being reviewed by the IEEE. At first, you might think that Wi-Max would be a big deal in 2004. However, those who do not, at present, "control" an existing technology such as GSM or CDMA, are pushing it. Wi-Max is more about non-traditional wireless firms trying to create a "standard" they can control. Wi-Max is a new technology that is not yet ready for prime time and 2004 is far too soon for any real progress to be made in this area.

Bluetooth
Bluetooth might actually make a dent in the US market in 2004. Bluetooth has been too long in coming to market here. It has been adopted in Europe at a much faster rate than in the US and elsewhere. I still like the promise of Bluetooth, the wireless wire. However, the Bluetooth SIG has been so slow to finish standards that low power Wi-Fi could keep it out of the mainstream market. Even so, Bluetooth has a chance in 2004 and that chance has more to do with car kits for wireless phones, than anything else. If the Bluetooth SIG does not get it right in 2004, the technology will become an also-ran.

Technology wars: GSM vs. CDMA
The wars should be over but they are not. It is most interesting to me that the ones keeping the wars alive are those who claim they "own" 70 percent of the world's wide-area wireless market (GSM community). At this point, all of us should realise that the technology wars are over and it is time to turn attention toward providing services that customers want and will pay for. In 2004, we will see more than a few wireless devices that will blur the standards. Devices that will work on GSM and CDMA networks, devices that will operate on GSM/W-CDMA and CDMA networks, and other devices that are smart enough to make the technology used in any given area of the world a non-issue.

The US wireless market
For the past two or three years, we have all been predicting a consolidation in the US wireless market. Conventional wisdom is that six national players cannot continue to exist in the US market and that industry consolidation will occur. I still believe that this is true and I have already gone on record saying there will be announcements of mergers and/or acquisitions in 2004. There are several reasons for this. First, AT&T Wireless does not like the fact that it dropped from the largest to the third-largest network in the US in less than a year. Second, I believe that additional spectrum is years away from becoming a reality (see below) -- some have it and some need it.

I believe that Cingular and AT&T Wireless will merge in 2004 or at least announce the intent to merge and the government will let this happen. Cingular needs spectrum, AT&T Wireless needs to be number one again, and together, they might have enough spectrum to build out W-CDMA in the US. They need each other. Besides, I believe that BellSouth wants out of Cingular. An AT&T/Cingular merger would be the perfect setting for BellSouth to opt out.

BellSouth would then pursue all of Sprint, wired and wireless, to augment its Latin American CDMA networks with a US CDMA network and pick up nationwide long distance as well (not to mention additional MMDS spectrum for broadband wireless service to the home).

Push-to-talk (PTT)
At least one US wireless network will deploy a PTT technology that will challenge Nextel's Direct Connect in terms of set-up and latency times. This first network will not be using VoIP. Several other networks, after scrapping their existing VoIP networks in favor of this new PTT system using standard voice channels, will follow it.

3G
This is an easy one. At the end of 2004, there will be more CDMA 3G customers in the world than W-CDMA customers. Further, Verizon will have implemented EV-DO in its top 100 markets by the end of 2004, while AT&T Wireless (or CingATT Wireless) will have only four US markets up and running W-CDMA. We will see at least two wireless network operators (somewhere in the world) that are currently running GSM overlay their GSM networks with EV-DO for their data play. I know this sounds strange, but I believe that it will happen!

What I cannot predict
I cannot predict whether the FCC will finally take a stand on the Nextel/public safety interference issue and approve the present consensus plan (which will keep the FCC in court for the next three years). Will the FCC finally realise that delaying its decision may mean hell to pay when a cop or other public safety person is killed in the line of duty because he or she could not communicate? This entire issue has gone on way too long. Lives will be lost if the FCC does not act. However, this is typical of today's FCC, which tries to be all things to all people and cannot make decisions even when lives are on the line.

Nor can I predict what NextWave will do with the balance of its spectrum. Will it build out a near-nationwide wireless data network or will it sell the rest of its spectrum and go home? I thought I knew the answer a few months ago, but based on the deafening silence from NextWave these past few months, I am no longer sure.

Moreover, I cannot predict what the Federal government will do with the spectrum. It will succumb to today's infatuation with Wi-Fi, review interference specifications and implement what it is calling "temperature" guidelines, thus creating a situation whereby today's mission-critical communications networks become less-than-mission-critical.

What I hope will happen
Not to beat a subject to death, I really hope that by the end of 2004 we will see the major wireless operating system companies (Symbian, Palm and Microsoft) and traditional wireless companies embrace wireless applications that do not require a browser. Wouldn't it be nice if these companies finally realised that desktop connectivity and wireless connectivity require different paradigms? Well, I can dream can't I?