Thursday, August 20, 2009

Compare 3G wifi

The two most important phenomena impacting telecommunications over the past decade have been the explosive parallel growth of both the Internet and mobile telephone services. The Internet brought the benefits of data communications to the masses with email, the Web, and eCommerce; while mobile service has enabled "follow-meanywhere/ always on" telephony. The Internet helped accelerate the trend from voicecentric to data-centric networking. Data already exceeds voice traffic and the data share continues to grow. Now, these two worlds are converging. This convergence offers the benefits of new interactive multimedia services coupled to the flexibility and mobility of wireless. To realize the full potential of this convergence, however, we need broadband access connections. What precisely constitutes "broadband" is, of course, a moving target, but at a minimum, it should support data rates in the hundreds of kilobits per second as opposed to the 50Kbps enjoyed by 80% of the Internet users in the US who still rely on dial-up modems over wireline circuits, or the even more anemic 10-20Kbps typically supported by the current generation of available mobile data services. While the need for broadband wireless Internet access is widely accepted, there remains great uncertainty and disagreement as to how the wireless Internet future will evolve.

The goal of this article is to compare and contrast two technologies that are likely to play important roles: Third Generation mobile ("3G") and Wireless Local Area Networks ("WLAN"). Specifically, we will focus on 3G as embodied by the IMT-2000 family of standards2 versus the WLAN technology embodied by the WiFi or 802.11b standard, which is the most popular and widely deployed of the WLAN technologies. We use these technologies as reference points to span what we believe are two fundamentally different philosophies for how wireless Internet access might evolve. The former represents a natural evolution and extension of the business models of existing mobile providers. These providers have already invested billions of dollars purchasing the spectrum licenses to support advanced data services and equipment makers have been gearing up to produce the base stations and handsets for wide-scale deployments of 3G services. In contrast, the WiFi approach would leverage the large installed base of
WLAN infrastructure already in place.

In focusing on 3G and WiFi, we are ignoring many other technologies that are likely to be important in the wireless Internet such as satellite services, LMDS, MMDS, or other fixed wireless alternatives. We also ignore technologies such as BlueTooth or HomeRF which have at times been touted as potential rivals to WiFi, at least in home networking environments.4 Moreover, we will not discuss the relationship between various transitional, or "2.5G" mobile technologies such as GPRS or EDGE, nor will we discuss the myriad possibilities for "4G" mobile technologies.5 While all of these are interesting, we have only limited space and our goal is to tease out what we believe are important themes/trends/forces shaping the industry structure for next generation wireless services, rather than to focus on the technologies themselves. We use 3G and WiFi as shorthand for broad classes of related technologies that have two quite distinct industry origins and histories.

Speaking broadly, 3G offers a vertically- integrated, top-down, service-provider approach to delivering wireless Internet access; while WiFi offers (at least potentially) an end-user-centric, decentralized approach to service provisioning. Although there is nothing intrinsic to the technologies that dictates that one may be associated with one type of industry structure or another, we use these two technologies to focus our speculations on the potential tensions between these two alternative world views.

We believe that the wireless future will include a mix of heterogeneous wireless access technologies. Moreover, we expect that the two worldviews will converge such that vertically-integrated service providers will integrate WiFi or other WLAN technologies into their 3G or wireline infrastructure when this makes sense. We are, perhaps, less optimistic about the prospects for decentralized, bottom-up networks – however, it is interesting to consider what some of the roadblocks are to the emergence of such a world. The latter sort of industry structure is attractive because it is likely to be quite competitive, whereas the top-down vertically- integrated service-provider model may – but need not be -- less so. The multiplicity of potential wireless access technologies and/or business models provides some hope that we may be able to realize robust facilities-based competition for broadband local access services. If this occurs, it would help solve the "last mile" competition problem that has bedeviled
telecommunications policy.

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