Saturday, June 30, 2007

Expert opinion on 3G and 802.11

What do the analysts think? It depends. Everyone acknowledges that there was a 22% decline in wireless and mobile network infrastructure spending in 2002. Research house IDC, for one, in its Worldwide Wireless and Mobile Network Infrastructure Forecast and Analysis, 2002-2007 study, says that the demand for 2.5 and 3G remains strong. Indeed, IDC expects annual spending on 2.5 and 3G network infrastructure to grow from $38.3 billion in 2002 to nearly $49 billion in 2007. Wireless phone infrastructure providers like Ericsson (Quote), Nokia (Quote), and Nortel (Quote) no doubt hope that IDC is right.

"The essential rationale for deployment of 3G networks -- gaining spectrum efficiencies, easing network capacity constraints, lowering operating costs, and expanding revenue opportunities through provisioning of data services -- remains intact," says Dr. Shiv K. Bakhshi, research manager for the IDC's Wireless and Mobile Network Infrastructure program. He believes that the rising popularity of MMS and picture messaging will "legitimize the culture of data consumption in a mobile environment and spur deployment of network infrastructure." But, he notes, it's not just 3G driving these developments; "public WLANs and hotspots" will also help in this development.

"The WLAN industry will continue to experience stellar growth as deployments in several key markets take place," predicts Allied Business Intelligence (ABI) analyst John W. Chang, senior analyst, and some of that growth will come at 3G's expense.

ABI reports in its Worldwide Deployments, Drivers, Players and Forecasts for 802.11x, that "Some of the leading wireless carriers worldwide, including T-Mobile (Quote), AT&T (Quote), and Verizon (Quote), have made announcements of deploying WLAN services as their 3G plans are delayed. WLAN is easier to install and costs far less than setting up a 3G network. In addition, 3G's data rate of 144 kbps, a portable data rate of 384 kbps, and an in-building fixed rate of 2 Mbps are slow, compared to that of WLAN. As WLAN moves toward 54 Mbps, it is apparent that 3G cannot compete with the data rate of WLAN. Though 3G will be deployed worldwide due to its voice capacity benefits, telecom carriers are seeing WLAN hotspots as the immediate revenue generator for data services." This view is not just that of an analyst looking at plans. On January 29, British Telecomm (BT) announced that it would be deploying 802.11b--and 802.11a soon--hotspots with three business partners. BT plans to have 4,000 hotspots in place by the summer of 2005. According to David Hughes, BT director of mobility, its BT Openzone hotspot customers will pay 10% of the price to download 1MB of data compared to a 3G user at four times the speed. In short, he declares, "At the moment, it looks like Wi-Fi is one-tenth of the price of 3G, and four times as fast." Even with 3G's much better range, which would you rather have? Some analysts, like ABI's director of automotive electronics Frank Viquez, think that, "802.11 promises to have the most potential, given its minimum raw bandwidth of 10 Mbps and dramatic growth outside the vehicle industry," even when a wireless data user is traveling at speed. Can the two technologies get along? Some experts think they can, but given the stalled economy and 802.11's lower price, deployment costs alone may cause 3G to flounder. Who knows? Instead of 3G laptops in 2007, perhaps we'll have 802.11 mobile phones.

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