TCS Daily

Fine Tuning

By Duane D. Freese - January 23, 2003 12:00 AM

Wireless. That's the buzzword that permeates telecommunications nowadays. It certainly filled up the headlines and the hearings in Washington last week.

At a Senate hearing with all five Federal Communication Commissioners on Tuesday, both the regulators and the legislators cooed about the potential wireless provides to promote competition and innovation.

FCC Chairman Michael Powell noted, "Most of the significant competition in voice has come from wireless phone service." The FCC's newest member, Democrat Jonathan Adelstein, echoed, "Wireless services offer a dynamic and burgeoning new avenue for competition in both broadband and voice communications."

Up on the dais, meanwhile, Sens. Barbara Boxer, D-Calif., and George Allen, R-Va., announced their intention to introduce the Jumpstart Broadband Act, to get the FCC to provide more unlicensed spectrum so Wi-Fi devices could gain cheap, high-speed connections to the Internet. And they presented their bill the very next day.

The FCC, for its part, has announced its own intention of opening up part of the unused TV spectrum for wireless services.

All of this wireless buzz set the Computer Electronics Show (CES) in Las Vegas last week humming, too. Intel CEO Craig Barrett, whose company is part of an alliance called Cometa that is seeking to promote Wi-Fi, said, "I'm here to really remind you all that the PC is alive and healthy, and unwiring the PC and allowing it to have access to the Internet, and allow ... it to converge with consumer electronic devices, is, I think, going to be the main theme that comes out of CES."

There is no question that people - especially Americans - like their freedom and mobility, as can be seen in their adoption of cell phones over the last decade. From about 16 million commercial wireless subscribers in 1993, the cell phone market grew to more than 130 million last year. Nearly half of all households have at least one cellular phone user. And for six million cell phone customers, it's their only phone.

And now comes Wi-Fi, a short-range means using unlicensed radio waves to provide high-speed access of up to 11 Megabytes per second (20 times plain, old 56 kilobyte per second dial up rates) to so-called "hot spots" all over the country.

Combined with voice over Internet technology, which bypasses the public phone systems switched network, these technologies may, as Jeff Pulver, co-founder of Vonage, which offers flat-rate long distance calling over the Internet, told the Los Angeles Times, "revolutionize telephone service [by] enabling consumers to have the ultimate freedom of choice about who will be their service provider."

That is certainly a possibility. But here's the rub. It is in the offing - not here, and not overnight. Even, David Reed, a former chief scientist at Lotus Corp., and an optimistic promoter of "open spectrum" and a wireless Internet, says, "My gut feeling is that in 10 or 20 years this will be as big as the Internet."

That's a long time in telecommunications terms. Twenty years ago AT&T was both the long distance and local phone company for almost all Americans and long distance phone calls cost on average about 50 cents a minute. Ten years ago, as noted earlier, barely a tenth of American households had a mobile phone and the Internet was merely a whisper on the horizon. BellAtlantic wasn't merged with Nynex and GTE; there was SBC, Ameritech and Pacific Bell as separate local telephone companies. Time wasn't with Warner Bros., much less combined with AOL. Fiber optics was the buzzword of that age.

Yet, many who see wireless as the future take its inevitability as allowing for a sort of blasé attitude about the current regulatory decisions affecting competitors to the Bell phone monopolies and the access to the legacy wireline network. That access is something the Bells agreed to provide during negotiations of the Telecommunications Act of 1996.

For example, Arnold Kling, an MIT-trained economist who writes often for Tech Central Station on technology issues, says maybe we shouldn't encourage any more investment in the wire structure or competition for the last mile of copper that now leads into every person's home.

Weblogger and Wi-Fi expert Corey Doctorow says, "I think the phone companies intuitively understand that the day that someone offers a credible alternative to the phone company is the day that the phone companies go out of business. Hating the phone company is a grand American tradition."

That may or may not be true. I haven't seen many polls showing people literally hate their local phone company. Most vituperation has been focused on the "cable guys," who now control the other primary communication wire into most people's houses.

But in any event, a transfer won't come overnight, and maybe not at all. There are a lot of obstacles in the way of a wireless world.

Consider the problems of Wi-Fi as a catalyst for change in broadband access.

As Sen. Sam Brownback, R-Kan., asked at Tuesday's hearings: "Isn't it true that Wi-Fi requires a broadband wired connection that's within 300 feet of the wireless access point?"

That certainly is the case today. And that makes continued line sharing, by which Bell competitors were able to bring high speed Digital Subscriber Line technology out of the closet, vital to keeping Wi-Fi hotspots affordable. So-called 3G wireless technology simply isn't fast enough at 384 kbps to match up with the 11 Mbps Wi-Fi, at least for large data files. Furthermore, recent studies have shown that up to 7 percent of text messages are being lost on transfer in the wireless network. That's hardly a level of reliability that any business can afford.

Indeed, a lot about the reliability of Wi-Fi and wireless is open to question.

While Wi-Fi advocates dismiss potential interference problems, the Defense Department certainly has not. It is worried that too many Wi-Fi hot spots could end up interfering with weather, airport and even missile radars.

The threat may be overblown, but who can say how much interference there would be if everybody went wireless and Wi-Fi? Sept. 11 demonstrated that when everyone got on his cell phone at once, no one could talk to anyone on them.

And then there is the question of wireless speeds. Mobility is great, but speed is important, too. There may be ways to juice the phone wire by bringing fiber to the curb, for example, that would create a gigabyte world of information exchange much faster than wireless - except by laser light - can ever achieve.

Competition on the wireline could force that into being, as well as improvements in wireless communication. But foregoing competition on the wireline could lead to Bells, with their monopolies of them, leveraging that market power into the wireless sphere. Verizon, SBC and Bell South all have big wireless cellular stakes. By bundling services together, they could gain control over the whole telecommunications sector, a la AT&T 20 years ago. It is naïve to think they won't try. Why help them succeed?

Let me reiterate. I don't doubt that wireless can play a major role in promoting competition now and in the future. A Yankee Group forecast for the corporate wireless e-mail market said it would grow from 1 million users now to more than 9 million users in 2007 - about a 26 percent penetration of wireless e-mail among total mobile workers. That makes sense to me. As do the revenues, up to $3.5 billion a year then. But most traffic will still go by wireline. And I think Wi-Fi will do wonders for high technology.

But wireless just isn't ready to act as the backbone of an advanced nation's communication system. It instead will act as an add on providing mobility and freedom for the wired network. Not a replacement but an oftentimes complement and sometimes competitor.

In short, rather than betting on wired or wireless I'd bet on both, as long as competition is sustained in each realm. It's the only thing that makes sense.

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