Will the wireless broadband standard of the future be Wi-Fi or WiMAX?
The members of the "Emerging Wireless Technologies" panel at the 2005 Cyberposium conference at HBS on January 29th debated that question and contemplated whether either technology—or both of them—could even rush the current mobile phone standards toward obsolescence.
Moderator Graham O'Keefe, senior partner at Atlas Venture, asked panelists about the possibility that Wi-Fi technology for voice would simply leapfrog other technologies already available.
Ron Sege, president and CEO of Tropos Networks, said one expectation for Wi-Fi is that it may do just that in third world countries, where its low network roll-out costs would be particularly welcome. He acknowledged that Wi-Fi handsets aren't ready for "prime time," but estimated the glitches will be overcome in a year or two.
But Clint McClellan, senior director of marketing for Qualcomm Strategic Marketing, said that even the relatively large Wi-Fi networks that Sege's company is building still won't be wide enough for most customers. "Over the last fifteen years, the Verizons and the Sprints have invested billions of dollars in network infrastructure, and the bottom line is that with wireless now, we want to talk where we are; we don't want to have to be destination-based," McClellan said. He added that Wi-Fi networks have been successful in cities, but "most customers wouldn't want to be limited to using their mobile handsets in a specific location."
"I don't want to have a Wi-Fi phone where I have to go to a downtown area. And right now, I don't really have any problem with the phones…I can generally make a call wherever I am," he said.
Richard S. Grinell, vice president and director of TD Capital Ventures, agreed that Wi-Fi could assist cellular networks. He noted that he can't get reception on his mobile phone in his office, regardless of which carrier he uses.
"There is a concept of using Wi-Fi as a means to get better reception, to offload some of the traffic from the licensed spectrum to the unlicensed spectrum where it's possible," he said. But he added that major cellular carriers have invested heavily in licenses for the portion of the broadband spectrum they planned to use for their third-generation wireless applications. To embrace another cheaper technology now may make it difficult to justify those earlier investments to shareholders.
| You've got to disabuse yourself of the notion that one WiMAX antenna is going to eliminate the need for all this Wi-Fi infrastructure. |
| — Ron Sege, Tropos Networks |
"If you're someone like Vodafone and you've spent billions of dollars on your 3G spectrum license, the last thing you want to do is start talking about Wi-Fi or any other technology that's going to subvert users from your 3G network that you spent so much money on," he said. "It's a very dicey market right now for the Wi-Fi convergence with cellular."
McClellan pointed out, however, that most cellular carriers offer flat-rate contracts with unlimited minutes for their heaviest users. In that case, the carriers can save money by sending customers to the cheaper Wi-Fi network when appropriate. "They're getting that eighty dollars from you every single month. So if you're at an airport or a destination-based area where people use their PCs, in some cases they'd love for you to go onto a Wi-Fi network…to get you off (their) network to improve the capabilities of that," he said.
But Sege said that Wi-Fi's reach shouldn't be underestimated. "You've got to get out of your mind the notion that Wi-Fi is 300 feet….We're going to do all of Oklahoma City, 400 square miles. What that allows is that anybody can build a network of that scale in a city and then run voice over Wi-Fi," he said.
That means the current mobile phone companies, many of which already compete fiercely with each other, may find themselves dealing with newcomers to the market who could force them to lower their prices.
"So now there's going to be new carrier entrants coming in and challenging the incumbents. They're not going to have, perhaps, the luxury to charge us high rates for networks that are fully depreciated because there's going to be competition charging us sixteen dollars a month and two cents a minute versus an eight dollar a month flat rate," he said. "It'll be good for the consumer."
Reach, and the remote control
Panelists also discussed the convergence of, and competition between, WiMAX, another wireless networking standard being supported by Intel, Nokia, Analog Devices, and some other players, and Wi-Fi.
A single WiMAX base station has a range of up to 30 miles, making it an ideal solution, some analysts say, to developing a truly nationwide wireless broadband network. The reach of a single Wi-Fi station is measured in feet, not miles. While some in the industry believe Wi-Fi's earlier arrival on the market may squeeze out WiMAX despite its distance capabilities, the panelists seemed to think the two technologies will wind up being used in tandem.
"Wi-Fi is fully commercial; that's what [Sege] is capitalizing on," McClelland said. "WiMAX you use for backhaul, and backhaul point-to-point."
But McClelland said there has been enough adoption of the Wi-Fi standard in businesses and homes that even if Intel gives WiMAX base stations away for free, adoption within individual devices may be inhibited.
The Qualcomm headquarters is "lit up" with Wi-Fi access points, he noted. "I don't think our IT manager is going to go in and put in WiMAX just because Intel's giving it away for free."
McClelland said he expects to see WiMAX used for backhaul, but believes it will likely get squeezed out for other uses that already have other viable solutions.
"You've got to disabuse yourself of the notion that one WiMAX antenna is going to eliminate the need for all this Wi-Fi infrastructure," Sege agreed. "…It just defies the laws of physics and makes no more sense than sticking a big street lamp on the top of the Empire State Building and lighting up the city of New York. You want to cover the whole city? You're going to need the same number of access points, or in our case Wi-Fi cells, as you do today."
"It's a great point-to-multipoint solution. It'll standardize and drive costs down, but it's not going to materially affect how you use the client side every day in your laptop," he said.
With wireless broadband capabilities expanding significantly, one audience member wondered if the traditional broadband providers, such as cable and incumbent telephone companies, would take steps to try to halt the advance of the technology.
Panel moderator Graham O'Keefe said that those companies have an opportunity to create branding relationships with Wi-Fi network builders or other wireless providers. Panelist Mark Bowles, who is founder as well as vice president of business development and marketing for Staccato Communications, a semiconductor company that sells single-chip solutions to consumer product, mobile telephone, and personal computer manufacturers, said he believes the market for wireless devices needs to be expanded beyond PCs and mobile phones to more mundane devices.
"Half the population of the U.S. never uses anything more complicated than a remote control, or a (regular) phone," he said. "I think if we want to expand the market we need to expand the available market, most of which hasn't been touched." 