The Winding Road to 3G

When building designers figure out how to build a taller structure, they can get more use from a given amount of land.

When building designers figure out how to build a taller structure, they can get more use from a given amount of land. In the short run, such innovation lowers the demand for new real estate, but briefly declining real estate prices dont signal less need for places to live and work. Current wireless developments should be viewed with the same perspective.

Its easy to find ominous signs in the cooling demand for additional spectrum space for so-called third-generation, or 3G, wireless service. The budget sent this month to Congress by President Bush defers planned auctions of 700MHz spectrum space in the United States for three to five years; wireless providers seem uncharacteristically calm about that delay. Singapore canceled a spectrum auction earlier this month when it found only three bidders for what had been a planned offering of four licenses. Metricom, whose 128k-bps Ricochet service is the existence proof of high-speed wireless access, suffers from dwindling cash reserves and has slowed its network expansion in the face of the disappointing growth of its user base.

Even so, the eventual ascendance of wireless Internet access seems as certain as the coming of summer despite an unseasonably chilly spring.

Yes, U.S providers are loath to spend money on new 700MHz bandwidth, but this is partly because current broadcast users are proving more costly to dislodge than had previously been expected. Service providers would rather wait for legislated removal of broadcast interference while deploying new services through existing infrastructure. Sure, the cost of constructing wireless access points in 25 metropolitan regions has been a big roadblock for Metricom, but getting around costs like that has been the lot of infrastructure builders ever since the days of the national road project in the 1800s, whose actual costs sometimes doubled original estimates. In the long run, for wireless, the better roads of high-speed links will attract growing populations to the high-rise cities of new applications and services. Wireless links are the next generation of toll road, and competitive markets will find a way to make them pay.

Doomsayers might be tempted to point to the Iridium satellite network as refuting the doctrine that "if you build it, they will come." But Iridium differed in two key respects from 3G wireless. First, Iridium underestimated the speed of the move from voice to data as the fastest-growing form of traffic; second, Iridiums orbital satellites had long lead times and slow upgrade cycles.

On our IT road map, 3G wireless still looks like the road we want to take, despite bumps on the way to the fast lane.