It's time for a reality check
If modern wireless mythology is to be believed, it wont be long before everything in the business world will be linked to the Internet and remotely controlled via cellular phone. People will walk down the street to a chorus of beeps and rings as coupons and ads from nearby shops arrive at their wireless inboxes. Mobile workers will be able to get the latest report from the office, even if theyre cooling their heels in the back of a cab. No wireless device will have a keypad, because theyll all be controlled by voice commands.
Its time to come back to reality.
While the future will indeed be wireless, some of these expectations are likely too great.
When observers ponder how we might reach sky-high penetration rates and widespread use of mobile commerce, they often begin at a disheartening point: The quality of todays networks must be dramatically improved if the industry is to achieve its Herculean goals. And they ask this revealing question: If wireless users today think that coverage and voice quality stinks, how can they be confident or interested in using wireless data applications tomorrow?
Last year, the Cellular Telecommunications and Internet Association said that customer satisfaction with wireless service had dropped from 70 percent in 1996 to 53 percent in 1999. A study by The Yankee Group last summer found that two-thirds of cell phone users would switch providers if they thought they could get better coverage.
The people of New York think wireless service is so bad that Rep. Anthony Weiner, D-Brooklyn/Queens, last year introduced legislation requiring the Federal Communications Commission to compile biannual reports on the quality of networks. "The idea is to provide consumers with more information about different services," said Serena Torrey, Weiners spokeswoman. "Not only about pricing plans, but on the depth and breadth of quality."
The bill would require the FCC to compile reports on dropped calls, busy signals and coverage issues, and to post the results on a Web site, just as the U.S. Department of Transportation reports on airline issues such as lost baggage and on-time departures. The plan provides a measure of accountability to customers without impinging on free-market activity, Torrey said.
Similar efforts are afoot across the nation. The California Public Utilities Commission, for example, is considering forcing cellular operators to allow new customers to return their phones and terminate their contracts within 30 days if they find coverage isnt as promised.
Assuming that the basics of coverage and customer service are ultimately mastered, wireless devices eventually will be widely deployed by enterprises, industry experts say. But it wont take the super-high-speed data streams promised by third-generation (3G) networks to achieve that widespread use, and it wont happen until the marketplace better understands how to best use wireless technology.
Not the Same as the Wired Web
While many enterprises are looking to wireless as an extension of existing Internet strategies, that assumption could be off the mark.
"The biggest misrepresentation in the entire wireless world is that people are approaching it from trying to figure out how to replicate the wired Web experience on a personal device. That inevitably results in coming to the wrong answer and services that arent relevant," said Alistair Rennie, general manager, applications business group of 724 Solutions. "Its not a new platform for weather reports, but a new business model, a new way to interact with businesses," he said. 724 Solutions helps financial organizations build wireless services that enable their customers to perform transactions or maintain accounts.
The slew of companies that once emerged hoping to make it easier to translate the Web to the wireless Web missed one important step. "No one bothered to ask the consumers what they wanted," said Roland Van der Meer, a partner of venture capital firm ComVentures. "Its a classic case of the engineers leading the charge."
Assuming that operators and application providers can figure out what users want and can deliver next-generation networks, many believe that penetration rates will eventually soar. Not only will more customers use wireless gear, more users will have multiple devices.
In addition, the volume of communication to and from machines is expected to grow. Dave Murashige, Nortel Networks vice president of strategic marketing, wireless Internet, estimated that there are about 9 billion microprocessor chips built every year, and only about 10 percent of those go into computing devices; the rest are built into products that potentially could be controlled by wireless gear.
But to reach the skyrocketing penetration rates that some leaders hope for, the investor community will have to learn patience. Wireless is already a mass-market phenomenon; it cant turn on a dime.
"A lot of investors like to see a revolution and an immediate return in 18 to 24 months," said Chris Isaac, managing partner of Andersens North American wireless industry practice. "Introducing new technology into an existing market is always an evolutionary thing. It wont turn the world on its head in one years time."
Much of the buzz in the wireless industry these days surrounds startups with unique plans for delivering different types of wireless data services. But ComVentures is sticking to the nuts and bolts, with investments in companies that are developing technology to help operators improve networks by extending coverage and capacity.
"If you cant build a robust voice network, how are you going to build a robust data network?" ComVentures Van der Meer asked. "There are a lot more interesting infrastructure plays to be done."
Poor networks today are surely slowing down the rate at which enterprises are deploying wireless solutions. Future networks are expected to dramatically change the value of wireless, especially for enterprise users. "The value, and where the value is achieved today, is different than where it will be able to be achieved three to five years from now," said Roy Dube, a partner of PricewaterhouseCoopers.
Currently, theres less value to be gleaned from corporate wireless applications because network coverage isnt pervasive and transmission isexcruciatingly slow. For example, companies that might want to deploy specialized applications for workers who visit remote areas of the country might not be able to take advantage of wireless.
It may take some time to turn that around. "I have a hard time thinking that even in the next 10 years, 100 percent of the U.S. will be covered," Dube said. "But thats not a reason not to pursue it. You can get substantial benefits today if you understand the limitations out there."
Once service providers do move ahead with deploying enhanced networks that can handle data, operators and applications providers would do well to realize that high speed isnt the be-all and end-all.
"One myth is that bandwidth is a solution to everything," Andersens Isaac said. A lot of hype surrounding wireless data has compared the potential speed of a wireless data network to that of existing broadband landline offerings. "That exercise is meaningless in a lot of ways, because what applications do at the desktop is substantially different than what they do at a cell phone," he said.
According to Isaacs research, many corporate users said that 56-kilobit-per-second speeds on a mobile device would satisfy most applications. But thats not to say that future wireless networks that aim to deliver as much as 2 megabits per second of data arent necessary. In addition to speed, 3G networks are designed to be more spectrally efficient than current systems, so operators could offer more data to more customers at lower costs.
Regardless of speed, the networks of the future will have one important characteristic that will be key to improving the end-user experience: Theyll be packet-based.
"What all these technologies we talk about do is facilitate the removal of batch mode from the data communications environment," Nortels Murashige said. "The fact that were about to fundamentally change the dynamic of the way information is delivered is why we see huge projections for growth."
Most of todays wireless data offerings that are delivered over the traditional voice networks use circuit switched technology, so users must essentially dial up to use many wireless data applications, similar to using a dial-up landline connection. In the example of wireless e-mail, messages sit at a server until the user dials up to retrieve the messages. Navigating through a wireless Web site requires the device to dial up to the network with nearly each button click on the phone. Packet data will enable more instant delivery of information and a smoother user experience.
Not many people will argue with the belief that improving the user experience may encourage most enterprises to find ways in which wireless can improve their businesses. Dube believes that nearly every type of business can find value from some sort of wireless application: Just as many companies use the Internet in some way from a plain Web site touting their wares to e-commerce services they likely will also employ wireless in some way. "Its parallel to the Internet," he said.
Dube said that among his clients, interest in wireless continues to grow despite the market downturn. He estimated that about one-third of companies are doing small pilots with wireless applications; another third have plans to look into it, maybe next year; and the remaining third are in industries that may not be leading-edge users of the Internet.
The overall market struggle has affected the vendor and application communities but that isnt necessarily bad. "The slowdown, at least for mobile, is fairly healthy," Dube said. Theres been so much hype around wireless that many companies were feeling compelled to use it, even if they didnt know exactly how it would benefit them. "Reality can now catch up with the hype," he said.