Will Wi-Fi eclipse the promise of 3G?

3G was so over-hyped, and expectations were built so high, it could only disappoint. Now the same thing is happening to Wi-Fi....

3G was so over-hyped, and expectations were built so high, it could only disappoint. Now the same thing is happening to Wi-Fi. But behind the hype there are real applications for each technology – the difficult part is identifying what to use the technology for and when to start doing it.

The wireless and mobile market had its ups and downs last year, but it has progressed slightly.

Wireless Fidelity emerged unexpectedly, prompting rapid growth in equipment sales and a proliferation of wireless Lan “hotspots”.

Cellular networks eventually evolved to GPRS (2.5G), and multimedia messaging service (MMS) hit the market. But GPRS has not been successful so far, because it is expensive and is disappointing in terms of bandwidth, reliability and roaming support.

It will be hard for mobile operators to justify the cost of building 3G networks until their 2.5G services succeed. They are banking on a
good year for wireless data but voice will remain the industry’s mainstay in 2003.

Operators believe faster networks will bring an uptake in data services, but complex pricing and PC-like applications that operate poorly on small handset screens will limit growth. Bar some early technology adopters, enterprise users will wait until 2004 to adopt mobile data services.

In the consumer market, MMS and picture video services will be the surprise success story of 2003. While mobile operators strive for success with 2.5G networks, 3G will see more delays.

The strength of wireless networks is that they enable business users to fill information shadows. An enterprise cannot be “real-time” if staff are inaccessible when new information emerges, or information is inaccessible when staff need it. But wireless networks must accommodate a mix of applications, from high frequency use/low bandwidth to low frequency use/high bandwidth.

Enterprises must compromise between speed, ubiquity and cost. The differences in Wi-Fi, 2.5G and 3G in these areas will determine where they are used and for what. Services will be effective only where they achieve the right match of technology, application and device type.

While 2.5G services are approaching ubiquitous coverage and work well for short messages, when used for PC office applications such as e-mail with file attachments, they are slow and expensive. Moving to 3G will be an improvement but it will still fall far short of a low-cost broadband service.

Wi-Fi hotspots can provide the high bandwidth and low costs per megabyte needed for PC applications. But despite the growing number of WLans in offices and at public hotspots, they will be available in few locations relative to the coverage of cellular networks.
WLans are on a roll, with Wi-Fi-certified products providing interoperability from a wide range of suppliers. Prices are low and Wi-Fi will increasingly be built into, or at least bundled with, many new notebook and PDA purchases during 2003, reaching 80% of all commercial notebooks by 2005. Demand for wireless internet access in the home, office and in public places will therefore grow rapidly.

Large, financially stable telecoms operators are displacing wireless start-ups as Wi-Fi hotspot infrastructure owners. With simple precautions and an eye on emerging security standards, enterprises can now safely and productively adopt WLan for mobile staff.

Issues with roaming from one hotspot provider to another will remain throughout most of 2003 and most hotspot users will adopt a pay-as-you-go model.

Businesses must build a policy on Wi-Fi use and communicate it to their staff. You can no longer ignore
Wi-Fi and you need to take security measures even if you do not intend to use it.

There is no single wireless technology that meets all business needs, so you must match the applications to the service. Articulate a Wi-Fi usage policy now, address the security issues and investigate where this technology can bring you tangible benefits.

See whether current GPRS services meet your needs. Test the network – do not take advertised capabilities at face value. Meanwhile, wait for 3G to mature, coverage to expand and prices to stabilise.

Ian Keene is vice-president at Gartner Research

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