The Wireless Edge: The Uneven Uptake of Wireless Data

Why is Wi-Fi surging ahead and why is cellular data still struggling, even against the backdrop of global 3G network deployments? The simple answer is that Wi-Fi is fast, cheap and easy while cellular data remains slow, expensive and complicated. That's beginning to change, but slowly. First some evidence to support the claim. A new study from Research and Markets projects that WLAN equipment and services will grow at an annual rate of 30 percent, to a global figure of $5 billion for the year by the end of 2006. In other words, Wi-Fi is continuing to grow at a healthy clip. Meanwhile, IDC in May reported that wireless data constituted only 5.8 percent of wireless revenues in the UnitedStates during the fourth quarter of 2004. This 5.8 percent actually adds up to $1.6 billion in revenues for the quarter, which is nothing to sneeze at, but it represents limited usage, especially when you consider that some half of this figure is revenue from text messaging. IDC expects this figure to grow to 20 percent by 2009. Let's try and understand the dynamics of this slow growth.

Like any successful technology, wireless technology must provide value without exacting too high a cost. That is why Wi-Fi is so successful and popular. It allows me to write this column in the comfort of my living room while providing all the broadband speed I need at a cost that is laughably low. And that is why cellular voice service has grown to 1.8 billion subscribers around the world.It offers the convenience of telephony from anywhere, at any time, at a cost that consists of the monthly fee--affordable for most people--and, with degraded voice quality relative to wireline, but at a quality level that most people accept.

Now compare this with cellular data. Let's start with the laptop scenario. There is definite value in having connectivity from anywhere, and I personally can't imagine giving up the convenience of my nationwide wireless data service. But today, the costs are still high. First there is the obvious monthly charge of $80 for EDGE or EV-DO for unlimited usage. This eliminates quite a fewpotential users right off the bat. But there are plenty of other costs. Let me list some. With non-3G technologies, the networks are still too slow for many applications. Chances are that your laptop is also configured for automatic Windows and virus updates, meaning your system may be downloading megabytes of information and you won't even realize it. This slows down the performance of other applications and drives up bills on usage-based plans. That's not the network's fault, but it's still a usage cost. Yes, there are workarounds, such as making sure laptops are configured exactly right forwireless networking, using wireless middleware, mobile-optimized versions of applications and so forth. But dealing with all these represents a large integration cost compared to just "using" your existing networking applications. Meanwhile, configuring a phone to work as a modem via Bluetooth can bedevilishly complicated. The alternative is a separate account and a data card.

Continuing on, Microsoft Windows XP has integrated support for Wi-Fi that provides a consistent user experience regardless of Wi-Fi hardware vendor. However, there is no comparable support for cellular data. And in the next version of Windows, Windows Vista, you can look forward to further improved Wi-Fi support and still no native support for cellular data. This doesn't mean you can't use cellular data with Windows, it just means it isn't as easy as it should be, for both end users and IT managers, and it requires additional utilities you have to run to configure and manage your connections.

In the smartphone scenario, including wireless PDAs, devices have impressive computing capability. But the number of business applications targeted for these devices is still very small, with wireless e-mail and calendar management seeing the greatest usage. Making other enterprise information available often involves custom development. More cost. And if you have a smartphone, chances are that the operator has neutered it so you can't use it as a modem for your laptop anyway. Why? Because of potential abuse by some users with lower priced smartphone plans consuming too much data using their laptops. This is the single biggest reason I don't use a smartphone, much as I would like to. Today's smartphones also often involve separate management and security architectures from their laptop cousins--another cost.

So is there any hope? I believe so. To begin with, new data technologies such as EV-DO and HSDPA are beginning to overcome the performance barrier. This means that many existing applications work at an acceptable level--though, ironically, only if the networks don't become too popular, as network datacapacity is still relatively limited. Despite the high monthly cost, Reuters reports that Verizon now has 500,000 subscribers for EV-DO. Tiny compared to its 40 or so million voice subscribers, as of June, but not bad for how new the service is. Pricing is also improving, albeit slowly. For instance, Sprint's just released EV-DO pricing is $80 unlimited, but it also offers a $40 plan for 40 megabytes that is capped at $90 if users exceed their quota, a creative pricing compromise. I was briefed last week on Sprint's new program, called Sprint Mobile Business Assessments, where Sprint works closely with a company to help it develop comprehensive mobility solutions. This is typical of how all the operators are providing assistance to enterprises to help overcome integration challenges.

Smartphone-oriented applications such as wireless e-mail are also getting good traction. They provide an effective e-mail experience at a reasonable monthly fee and are easy to install, configure and manage. Other enterprise applications for smartphones are starting to see the light of day. So piece bysmall piece, the cellular data picture is getting brighter. But for somebody such as myself, who has been involved in wide-area wireless data projects for 14 years now, it's sure happening slowly.