WI-FI NOT SEEN AS THREAT TO 3G WIRELESS DATA SERVICES, FOR NOW

The potential interplay between 3G and Wi-Fi is one of the “most important and controversial issues in telecommunications today,” said Alan Carr of the U.K.’s PA Consulting Group. Some analyst estimates say Wi-Fi eventually could eat into as much as 60% of the wireless data market that otherwise would be captured by 3G mobile offerings, he said. Experts speaking here, many of them representing wireless carriers or equipment makers, said the cellphone subscriber base that 3G data offerings would target had far too large a head start on Wi-Fi to be seen as a threat. But an Intel employee speaking from the audience questioned whether Wi-Fi wouldn’t potentially capture more share because it would put control over the network into the hands of end users.

Tadashi Onodera, pres. of Japanese wireless carrier KDDI, said his company planned to use a wireless broadband system as a complement to its 3G systems, in part to provide high data transmission to mobile handsets. That will provide high data rates in certain parts of the mobile network, he said. It also will be used for fixed wireless access using directional high-gain antennas, so a user will be able to access the base station of the mobile broadband network from a distant location, he said. “This will significantly expand the area of fixed broadband service,” he said. “The wireless broadband system will be used for both mobile and fixed services for broadened access.” The system automatically will select the mobile network for broadband access if a fixed wireless network isn’t available, Onodera said. Among the applications for a combined wireless local area network and a 3G system is telematics, he said. The company recently completed a test in Tokyo of such an experimental wireless connection for an auto environment, he said.

Onodera stressed copyright protection would be more important on fixed and mobile broadband networks in the future, saying the volume of content that carried such protection was set to increase substantially. He described a scenario in which a person watching a movie at home who had to leave before the end could can continue to watch from a mobile phone. The transmission quality would be selected based on the quality of the mobile device and the media, he said. “Unified user profile management” will enable subscribers to have access to such content with copyright protection, Onodera said. Among the areas to which digital copyright management is applicable is ringtones. With 7 million downloads of ringtones this year on its network, the carrier is rolling out “vocal ringtones.” As an example, he played a snippet of a Celine Dion song as a ringtone.

Jacobs asked whether separately priced wireless data services, such as Wi-Fi, would go the way of the payphone. He said it may be hard to convince customers of a wireless data and voice service, such as those that used Qualcomm’s CDMA2000 1x EV-DO technology, that they should pay a separate fee for wireless LAN access when they already had access to a broad wireless data network. Users of advanced versions of CDMA 1x and beyond “end up paying a flat rate for all you can eat,” he said. Jacobs and others said customers wanted to pay a flat rate for a service, rather than a per-use charge, as in the early days of dial-up Internet connections. He said: “We are moving to a time when high-speed wireless access will be available wherever you go.”

There is a business plan some wireless operators are embracing for Wi-Fi, Jacobs said. Some operators can provide additional coverage, what he called “spectrum multiplication,” by using Wi-Fi in areas where they might not want to devote enough capacity on their wide area coverage. He cited the airport lounge as an example. The cost of providing such coverage could be bundled in with the cost of providing “everywhere” coverage, he said. “That, I think, would be acceptable to most people, if indeed it was convenient,” which Jacobs said would mean an automatic switchover from a regular wireless network to 802.11 and then back in the other direction.

Joao Augusto Schwarz da Silva, head of communications and network technologies at the European Commission’s directorate general for the Information Society, dismissed the idea that Wi-Fi could pose a threat to 3G. He said that by the end of this year, 31,500 hot spots were forecast to be in operation worldwide, with predictions for up to 135,000 by the end of 2006. By the end of 2008, some analysts predict that 58 million people will use wireless LAN technology, including 8 million in Europe, he said. In Europe alone, cellphone users are projected to reach 2 billion by 2008. To compare the 2 technologies is “like comparing a Ferrari with a soapbox. We're not playing in the same league.” A 3G wireless cell typically covers 600 hot spots, he said. Still, he called Wi-Fi an “important soapbox.”

Altogether, 538 MHz were dedicated in Europe to such unlicensed operations, although he said the situation varied between countries. Austria and France have military operations in some of that spectrum, which da Silva said would be fixed in the “near future.” He said: “Regulators may be tempted to do something about this amount of spectrum which is available for unlicensed.”

One Wi-Fi challenge for cellular operators is to “make their infrastructure and service ubiquitous,” said Stephen Mallinson, CEO of Ip.access. “For the terminal vendor there is another challenge of having to make the hybrid products if they're to survive and to make them easier to use and provide a seamless experience for the user,” he said.

One factor that could change the competitive landscape between the 2 technologies is whether Wi-Fi systems will be able to transmit quality voice-over-IP traffic successfully, said Jean-Pierre Bienaime, chmn. of the UMTS Forum. One question is whether wireless LAN billing and other systems can be integrated easily with mobile wireless carriers’ systems, he said.