Up for grabs
The wireless Internet jackpot
Erik Sherman, Contributing Editor

For players hoping to rake in big bucks providing wireless Internet access, that image may come discomfortingly close. Hitting it big means a massive payoff, yet one wrong spin may swallow that investment coin. Uncertainty exponentially increases the risk. Slot machines leave little question about where to put the money and what to do after you've made the deposit. Would that wireless Internet were so clear.

While virtually everyone in computing and telecommunications agrees that the wireless Internet will become important, that's about the last note of harmony you'll hear on the subject. Companies—and even countries—wrestle in choosing underlying technologies. Different segments of the industry use wireless Internet as a tool for grabbing market share from each other. Device manufacturers and content producers scramble to find applications and designs compelling enough to attract users. Consumers are left to sort through pitches from telecommunications carriers, ads from device vendors, and media hype, all the time wondering if they are even satisfied with all the other services they've already purchased. So is it any wonder that even as they pour billions of dollars into technology and infrastructure, companies scramble to find a winning combination?

Expected jackpot

"The market's been very stagnant and hasn't gone anywhere," says Becky Diercks, director of wireless research at Cahners In-Stat Group. Diercks pegs the number of people who used wireless data services in 1999 at 1.7 million. If she's right, that figure will grow to 24 million subscribers in the US alone by 2003, which would mean a financial jackpot starting in a few years. Yet who exactly might claim it remains unclear.

Although the term "wireless Internet" sounds monolithic, it is anything but. One can discern three distinct technologies and markets: mobile, fixed-location, and tetherless wireless access. Mobile gives people already busy with cell phones, pagers, and notebook computers Internet access as they move from one location to another, often through handheld devices. Fixed-location wireless is primarily for consumers and businesses that want fast Internet connections in areas that have neither cable nor DSL access. Tetherless access is a cross between mobile and fixed location. Professionals on the move might want connectivity at the places they are likely to frequent, including airports, convention centers, and hotels. Localized wireless networks, in turn connected to the Net via wires, offer these users a fast connection, while sparing them from having to compete with others for a handful of wired outlets.

John Yuzdepski

Wireless Internet has also become a tool of differentiation among wireless companies. In general, wireless communications has come a long way, now closing on a 30 percent market penetration, according to Strategy Analytics, a Boston-based market research firm. Yet further adoption is running into two barriers: cost and consumers' perceptions that they do not need such services. Carriers hope that adding Internet access will distinguish them from their competitors and turn those hesitant consumers into subscribers.

On top of marketing muddiness and pressures of competition, the wireless industry already uses a hodgepodge of incompatible systems that may become more complicated as companies try to manage data alongside voice traffic.

Start with fixed-position wireless. Carriers can use standard radio distribution systems like multichannel multipoint distribution service (MMDS) or local multipoint distribution service (LMDS) to manage traffic. There are also, however, proprietary solutions, like Hughes Networks' DirecPC satellite service, which uses a dial-in uplink and a high-bandwidth satellite downlink. Even Microsoft has been making noise about getting into this "space" with a satellite-based service.

The technology jumble extends to other areas. Many tetherless solutions use standard IEEE-802.11 to provide 11-Mbit/sec wireless connections in places such as the Roosevelt Hotel in New York, the American Airlines terminal at San Jose International Airport, or the Hilton Wichita Airport Executive Conference Center in Wichita, KA. According to Robert Lansey, COO of Show Digital, a New York firm that installed the system in the Roosevelt, the basic approach is to bring wired access into a facility using a T1 or some other digital line. By planning likely usage and optimum transmitter positions, each user gets an 11-Mbit/sec wireless link into the common wired access, replicating the experience of a corporate desktop.

Road warriors can use a laptop and a compatible PC-Card NIC (network interface card) to plug in. Such facilities can be found spread about the country, but few companies use 802.11 networks, and equipment manufacturers have not started adding supporting circuitry in Ethernet PC Cards. Some locations, like the Roosevelt Hotel, have converters for those who only have Ethernet connectivity.

This collection of numbers and acronyms is tame compared to mobile wireless access. There are some proprietary solutions, like the Ricochet service offered by Metricom, which permits movement within a covered metropolitan area. Most mobile Internet access, though, relies on the same cellular networks that bring wireless voice capabilities, and that means major barriers to truly free-roaming operation.

Border disputes

Cellular networks have developed organically, using vastly different technologies. According to Lance Hiley, strategic marketing manager for wireless system products at Lucent Microelectronics in Ascot, UK, about half a dozen different standards find use today, varying geographically.

IS-136, which Hiley calls "America's technology," grew out of analog mobile networks. "It has a similar footprint, so you'll find IS-136 networks throughout the United States and Canada—also in Central and South America," Hiley says. CDMA (code division multiple access) has been popularized by Qualcomm and is found mostly in North and South America, though it can also be found in Japan and Korea. China, as well, has plans to put some CDMA networks in place. Japan has another standard, called PDC.

Finally, there is GSM, or global system mobile. "It's pretty much carved itself the niche of being the dominant digital format in the world," according to Hiley, who says just over 50 percent of all digital wireless subscribers worldwide use GSM phones. "It began as a European standard and has pretty much 100 percent market share in Europe." GSM is available in both 900- and 1800-MHz versions in Europe as well as a 1900-MHz GSM in some parts of the US. "You guys never do anything the way the rest of the world does," Hiley laughs.

And the essence of that joke presents one of the biggest hurdles to wireless Internet: proprietary networks. None of these technologies are compatible with the others, so a device that provides Internet access in one country—or even a certain area of a country—may no longer do so after driving a short distance down a road.

It may seem illogical. After all, the more widespread mobile access becomes, the bigger the market will grow. But this is an issue of politics, both corporate and national. Corporations like AT&T, Bell Atlantic, and Sprint have made huge financial bets on underlying technologies and aren't in a hurry to spend more money to be compatible with a competitor. In some countries, especially the United States, patchworks of technologies blanket the land. Users may find their devices working only in particular regions.

Governments also have stakes of economics, as well as pride. Neither Europe nor the US, for example, wants to feel the lesser party in a compromise. But as companies look ever increasingly toward global trade, such inherent incompatibilities become more than mere irritants.

Two major working groups are sculpting standards for this third-generation (3G), technology, a European group called UMTS (Universal Mobile Telecommunications System), backed by electronics giant Ericcson, and CDMA 2000 in the US, which is affiliated with Qualcomm. It sounds promising, but don't expect easy agreement.

"People are trying to protect their turf," warns Reeder. "In fact, Qualcomm has gotten trade representatives involved in this. They're appealing to them saying the Europeans aren't playing fair. At least they're making noise about talking together. Whether they're really going to talk together remains to be seen."

Some industry experts will predict, at least publicly, that differences will be reconciled and that a unified 3G product will emerge. Others not beholden to one particular approach seem more skeptical.

"I would keep a healthy distrust of anyone predicting either or," says Patrick McQuown, president of Proteus, a consulting group in Washington, DC. "Nobody predicted [the current situation]. Why are they going to be able to predict third generation? I think there are too many political powers at play here."

But what

With unified carrier technology a seemingly dim prospect, the only hope for ubiquitous access is for vendors to create devices that support all the major standards. Certainly that goal will present a design challenge. But first there's a bigger challenge—namely, figuring out exactly what wireless Internet connectivity will be able to do.

Eugene Tiller

Consumers with handsets that have wireless Internet access could bring new information resources to bear on daily decisions. Even now, travelers can check directions in an unfamiliar city through devices like an Internet telephone from Sprint PCS or a Motorola two-way pager offered by carrier SkyTel. And there may be driving uses that neither the general public, nor the industry, currently envisions.

"There's a whole class of applications that only make sense on the wireless Web," remarks Yuzdepski. "I'm sitting in downtown Chicago and I'm looking for a place that does wicked martinis. Where can I get these things?"

Ready or not

And even if wireless technology is ready for the Internet, the Internet may not be ready for wireless. Web pages and other Internet resources are by and large designed for the desktop. That is fine for the notebook user with a wireless PC-Card modem, but handheld device users will have, at best, a difficult time gaining access to them. In addition, each type of wireless network has different demands for presenting and transmitting data, so a Web page designed to support GSM, for instance, cannot be used with a CDMA handset.

"That's where the complication comes," says Chetan Sharma, a development project manager for Luminant Worldwide, a Dallas-based provider of Internet and electronic professional services. "The server of the site needs to know what kind of device it's interacting with." The spectrum of transmission technologies has led vendors to develop WAP (wireless application protocol), which applications can use to translate their information for use in a variety of networks, including GSM and CDMA.

Then there are more subtle problems of how well given applications work with a wireless handset. Just think of the number of multipage emails you receive. Imagine them coming over, slowly but poorly, on a tiny screen that can display at most a few words at a time.

"This is a huge business strategy people have to think through," says Eugene Tiller, a senior technologist and usability expert at the American Management Systems Center for Advanced Technologies, who thinks that content is not ready for some of the new devices. "That means porting one or two pieces of Web applications to these handheld, small, mobile devices," he says. "You're not surfing the Internet. You're surfing a microscopic portion of the Internet filtered by all the major organizations that are going to be giving us this content."

Business re-evaluations could fuel major industry changes, and transform consumer perceptions. Are handsets primarily phones, conduits for companies pushing information to subscribers, media players for Internet-based broadcasting, or some blend of all these? The answers are just another factor keeping those slot-machine wheels in motion.

There is some data on what consumers, at least, will actually do with wireless Internet access, and it may be surprising. Forget intelligent shopping or reading email. Try horoscopes.

"Horoscope is one of the most popular applications in somewhere like Finland," says Roberta Wiggins, director of wireless mobile communications at the Yankee Group, a Boston research firm. As for email, file transfer, and database access, "it's just been hard up until now to justify doing it wirelessly, because we have a good wire in the US. [People] don't see the reason to use wireless."

Sharma, who has researched leading applications in Europe, has seen similar patterns emerging. In his view, the top use is entertainment, like interactive games, chat services, and soap-opera updates, the last being very popular in France. After that come information services, such as news, weather, and airline updates. Third comes e-commerce to buy products and trade stocks.

An amusing set of applications? Perhaps, but those looking for that payoff may not have room to be choosy. And the possibility of a big jackpot certainly exists. According to a study from Solomon Wolff Associates, a Mountain Lakes, NJ, research firm that completed 6000 surveys with Internet users, 46 percent of all Internet users in the US say they are "definitely" interested in wireless access. Of all US Internet users, 48 percent already use wireless phones.

Vendors should not take such news as permission for celebration, at least not yet. Customer satisfaction levels with current service providers—of all types—are abysmal. Less than a third of those surveyed were completely satisfied with their long-distance service providers. Local service providers and ISPs fared even worse at 26.5 percent and 28.4 percent, respectively. Bringing up the rear, current wireless service providers, come in at 17.9 percent, suggesting that even with the right technology, even with the right applications, virtually no one has a lock on their customers.

So even with the promise of new technical horizons, wireless is less a brave new world of opportunity than it is the same old long-odds business environment. Certainly there are new services and content, but wireless Internet is likely to be a new ground on which to fight old battles.

Author information

Erik Sherman is a writer and photographer based in Marshfield, MA. He covers business and technology for such publications as Newsweek, Computerworld, and Smart Computing. His latest book is Home Networking! I Didn’t Know You Could Do That(Sybex).