each device when compared to wireline alternatives; and (2) facilitates mobility. Avoiding the need to install or reconfigure local distribution cable plant can represent a significant cost savings, whether it is within a building, home, or in the last mile distribution plant of a wireline service provider. Moreover, many types of wireless infrastructure can provide scalable infrastructure when penetration will increase only slowly over time (e.g., when a new service is offered or in an overbuild scenario). New base stations are added as more users in the local area join the wireless network and cells are resized. Wireless infrastructure may be deployed more rapidly than wireline alternatives to respond to new market opportunities or changing demand. These aspects of wireless may make it attractive as an overbuild competitor to wireline local access, which has large sunk/fixed costs that vary more with the homes passed than the actual level of subscribership. The high upfront cost of installing new wireline last- mile facilities is one of the reasons why these may be a natural monopoly, at least in many locations.
Wireless technologies also facilitate mobility. This includes both (1) the ability to
move devices around without having to move cables and furniture; and (2) the ability to stay continuously connected over wider serving areas. We refer to the first as local mobility and this is one of the key advantages of WLANs over traditional wireline LANs. The second type of mobility is one of the key advantages of mobile systems such as 3G. WLANs trade the range of coverage for higher bandwidth, making them more suitable for "local hot spot" service. In contrast, 3G offers much narrower bandwidth but over a wider calling area and with more support for rapid movement between base stations. Although it is possible to cover a wide area with WiFi, it is most commonly deployed in a local area with one or a few base stations being managed as a separate WLAN. In contrast, a 3G network would include a large number of base stations operating over a wide area as an integrated wireless network to enable load sharing and uninterrupted hand-offs when subscribers move between base stations at high speeds.
This has implications for the magnitude of initial investment required to bring up WLAN or 3G wireless service and for the network management and operations support services required to operate the networks. However, it is unclear at this time13 which type of network might be lower cost for equivalent scale deployments, either in terms of upfront capital costs (ignoring spectrum costs for now) or on-going network management costs.