Air Time: Let the Most Scalable Wireless Network Win

As the movers and shakers in wide-area wireless converge on Orlando for the CTIA conference and exhibition this week, much of the hype will focus on new wireless devices that run over cellular broadband networks, new mobile services and the emerging market for mobile WiMAX. In one corner, you have a mature oligopoly of cellular carriers catering to the impulsive desires of consumers. In the other corner are members of a renegade WiMAX ecosystem, high on promise but slow to get out of the gate. Will these two markets compete or converge? In large part, it will depend on which one is able to satisfy emerging appetites for scalable broadband services. The market dynamics are intriguing. You have pure-play cellular carriers like AT&T/Cingular and Verizon Wireless touting the virtues of their respective mobile broadband technologies, HSPA (High-Speed Packet Access) and EV-DO (Evolution-Data Optimized). You have pure-play mobile WiMAX provider Clearwire energized by a recent infusion of capital. And you have Sprint, struggling to integrate its EV-DO and iDen (Nextel) networks while also rolling out Mobile WiMAX. What a show! Despite the constant commercial hype revolving around the advanced capabilities of broadband cellular systems, reality is somewhat different than the marketing spin offered by commercial carriers, especially when it comes to enterprise-oriented services. Today's networks are quite limited in overall capacity, and if it weren't for the fact that the mobile applications market is limited to e-mail and messaging, we'd probably have a lot more angry customers. All of the carriers know they are capacity-constrained, and to deal with that problem, they keep prices high and impose onerous restrictions on subscribers through their service-use policies. Verizon Wireless, for example, aggressively advertises unlimited data plans, but when you read the fine print, you discover it's really unlimited e-mail, Web browsing and corporate intranet access. Sprint and AT&T impose similar restrictions.

In their quarterly reports, carriers brag to Wall Street about the rapidly increasing proportion of revenue that comes from data services. As the mobile telephony market approaches saturation, it's clear that future growth must come from new applications. But the reality is that beyond e-mail and messaging, there aren't any truly compelling applications. Some might explain this lack of innovation by asserting that application developers simply haven't caught up with infrastructure providers, but the reality is much more complex. The carriers aren't all that anxious to see the emergence of bandwidth-intensive mobile applications because they know they don't have capacity to support these apps. Fortunately for them, the mobile device market is so fragmented, it's not all that appealing to application developers anyway. Yes, AT&T is hyping a new 3G Video Share service at CTIA. I can hardly wait to read the fine print on that plan.

WiMAX offers greater hope for more scalable mobile data infrastructure. The technology is a generation ahead of cellular as a platform for IP data services, optimized to support high throughput and low latency. While spectrum is fragmented globally, there is sufficient theoretical capacity in most markets to support truly interesting mobile broadband applications. However, mobile WiMAX can't succeed based on mobile data alone. A credible VoIP-based telephony solution must be part of the package. Sprint is now promising to roll out mobile WiMAX service reaching 100 million customers by the end of 2008. Even if you believe their time-line--and shame on you if you do--that's still a limited footprint. Clearwire will be there as well, but overall, it will be a challenge for WiMAX providers to compete with established cellular providers that offer much more mature offerings and global coverage.

Meanwhile, cellular carriers will be talking about new technical advances aimed at improving performance of their systems, trying to instill confidence in existing customers that these innovations will level the playing field with WiMAX. On Tuesday, FCC chairman Kevin Martin painted a nice picture of the future with promises of new sub-1-GHz spectrum offerings that will result from the planned reallocation of TV spectrum once analog broadcast services go away in February 2009. Although it isn't really news, this is perhaps the most significant announcement coming out of CTIA on day 1.

In the end, the providers that control the most spectrum are the likely winners. Let's hope they market appealing services that deliver real business value.