Sunday, August 23, 2009

Deployment Status

While 3G licenses have been awarded in a number of markets at a cost of billions of dollars to the licensees, we have seen only limited progress with respect to service deployment. Indeed, many of the licensees have seen their market values drop precipitously as a consequence of the high costs of obtaining the licenses, increased cost of deployment expectations, and diminished prospects for short-term revenue. The cost of obtaining the licenses contributed to the worldwide slump in the global telecommunications sector.

In contrast, we have a large installed base of WiFi networking equipment that is growing rapidly as WiFi vendors have geared up to push wireless home networks using the technology. The large installed base of WiFi provides substantial learning, scale, and scope economies to both the vendor community and end-users. The commoditization of WiFi equipment has substantially lowered prices and simplified the installation and management of WiFi networks, making it feasible for non-technical home users to self- install these networks. However, although there a large installed base of WiFi equipment, there has been only limited progress in developing the business models and necessary technical and business infrastructure to support distributed serving provisioning. In addition, many of the pioneers in offering wireless access services such as Mobilstar and Metricom went bankrupt in 2001 as a consequence of the general downturn in the telecom sector and the drying up of capital for infrastructure investment.

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