The communications industry is also being transformed, just like the PC industry was verticalised more than a decade ago. Writes Kevin Werbach:
The hardware elements of communications have already started to go horizontal. Handset vendors are outsourcing production to the same contract manufacturers that are prominent in the PC industry. Switching equipment increasingly uses general-purpose semiconductors. Once connectivity can be integrated into devices at marginal cost, though, the possibility of an entirely different communications industry arises.
Imagine that every laptop, every PDA, every home media server is also an agile communications device, able to connect to any available network. In such a world, paying a carrier for access to a single network, with a limited choice of services and hardware, will seem archaic. There will still be services businesses linking together these devices and, more important, the user data that flows across them. But they won’t look much like the integrated communications carriers of today.
We saw exactly such a 10X force shake up the computer industry in the 1980s. The communications industry is ready for dis-integration.
While wireless has revolutionised voice communications over the past few years (there are now estimated to be a billion cellphone users worldwide), the world of data is also starting to get impacted with a protocol that goes by the unlikely name of WiFi, or 802.11. WiFi protocols offer connectivity in a 100-metre radius of the access point at speeds from 11-54 Mbps.
Wireless local area networks (WLANs) can, in the words of Douglas Hayward (Financial Times, July 17, 2002), cut cabling costs, pack more users into offices, and dramatically cut the cost of moving employees around buildings. Users can even wander around offices while staying connected to corporate networks including the telephone network, if it runs over IPThey are valuable for workers in non-office environments where fixed-wire networks are impossible, such as maintenance engineers in factories and doctors and nurses in hospitals.
WLAN hotspots are sprouting up all across the globe in a grassroots phenomenon, reminiscent of how the Internet access itself was popularised in the mid-1990s. Most recently, a group of companies in the US, led by Intel, IBM and ATT Wireless, have come together to discuss the formation of a nationwide 802.11 data network. WiFi, which has been seen as primarily, a LAN technology is being seen as the platform to build high-speed public data networks. This is happening because the technology has become standardised, popular, powerful and cheap.
Writes the H. Asher Bolande in the Asian Wall Street Journal (June 18, 2002):
[WLAN] has proven irresistible to the telecom carriers who provide the bulk of Asias Internet access. Fixed line providers in Japan, Korea, Taiwan and Hong Kong are suddenly racing to dot cities with public hot spots designated zones ofwireless coverage like restaurants or hotels, where customers with specially equipped laptops can conveniently flip up an antenna and surf at broadband speed.
WLANs move from private computing to public networks puts fixed and mobile service providers on a collision course, analysts say. By rolling out hot spots, the fixed-line operators are venturing into high-speed wireless data, territory mobile providers have staked out for themselves as their future basket. After all, the promise of Internet anywhere, anytime was the selling point that drove them to invest billions of dollars in 3G.
Tomorrow: Wireless (continued)