Developing a corporate wireless computing strategy is one of the more challenging propositions for an IT manager today. Government mismanagement of spectrum in Europe over the last few years makes it difficult to find inspiration across the pond, even if they are a generation ahead of us in platform. Now our officials are wrestling different plans for distributing the next generation (3G) of wireless spectrum. For businesses in America to engineer successful mobile strategies, it is important to know what is going on behind the scenes with players from wireless operators to device manufacturers to software OEMs.
Byron Crowell speaks with wireless expert Bruno Giussani, author of "Roam - Making Sense of the Wireless Internet" (Random House, October 2001). Bruno, an award-winning technology writer living in Switzerland, was European Editor of The Industry Standard magazine and European Internet columnist for The New York Times. He has also been a director of Internet strategy at the World Economic Forum for two years. Bruno has researched and analyzed the wireless space for years and has some fascinating insight and intriguing views on how we should plan our strategies moving forward.
You outline in your book how European governments made some really bad decisions by auctioning off spectrum to the highest bidder in order to make their budgets look better during the high tech frenzy of 1999-2000. Do you think that the US has learned anything from what happened in the European 3G-spectrum auction debacle?
Most likely they have, but it's difficult to say what has been most responsible for the delay in allocating spectrum for US 3G operators - is it a lesson learned from the European licensing mess, a case of bad planning, or does it have more to do with September 11? By which I mean that, for example, the entire spectrum that is currently used or reserved by the US Army will not be freed anytime soon as a result of the new focus on national security concerns. The basic problem is that while European countries have been setting aside chunks of "third-generation" spectrum for years, the US government has not. So, a big part of the spectrum that would be considered for possible auction to 3G operators is already either used or allocated to somebody. And those "somebodies" are very diverse, from the Catholic Television Network to the US army to a lot of other players. The issue is how to get the spectrum back.
Which brings us to the question of how to treat spectrum as a property. Is it a tradable asset or does it belong, at least to some degree, in the public trust?
The first question is: who owns the spectrum? Formally, the government does. The government manages the spectrum on behalf of the citizens and is supposed to find the best usage of it. So, they distribute it to either this cause or that company or that person, where the usage is most beneficial to society or where the government can get the highest financial payback. Which is what European governments have been trying to do during the last two years. Now, if I am one of the companies that gets a license for using the spectrum, what can I do with it? I can use the license - to start broadcasting, for example. Or I can just keep it. In the case where I'm not actually using it, can I trade my license?
There is a discussion going on, pretty much behind closed doors, about spectrum ownership. What if, instead of licensing companies to use it for a given period of time, governments started selling the spectrum to them? That's very risky because this process could not be reversed easily. There are some indications that international groups are actually trying to push the American government into basically privatizing the spectrum: not only licensing it (giving out usage rights) but privatizing it completely. If this happens in the States, it may start a kind of domino phenomenon all over the world.
Should we be concerned about the creation of a monopoly situation?
Yes, or in any case, a situation where very few actors would control a highly valuable resource. Although people can't actually see the spectrum and it's not something you can physically touch, the reality is that it's becoming the key component of a critical infrastructure for the future of the economy and really, the whole functioning of society. Everything is going wireless because communications are increasingly wireless. And the economy is increasingly about communication and information. Therefore, that resource and that crucial part of the infrastructure needs to be managed very carefully and not just given away.
An alternative would be to set up markets for license rights, where unused licenses could be traded, without touching the actual ownership of the spectrum, which would remain in the hands of governments. This may actually create a better and more efficient usage of the spectrum.
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This gets us to the disagreements on how we should view spectrum. Super-futurists like George Gilder would say that innovation will solve the bandwidth problem and that it will become an infinite resource. Do you disagree with this outlook?
Well, there's a crucial difference between wired and wireless. In the wired perspective, when a pipe is filled you can always put down additional fiber and open up lots of new possibilities. But the spectrum is finite; you cannot generate new spectrum out of a factory. The only thing you can try to do is design technologies that allow you to squeeze more information or more data into the same spectrum. But it's not something that is expandable at will. Martin Cooper, the inventor of the portable cell phone, has calculated that the ability to use the spectrum has doubled roughly every thirty months ever since Marconi made the first radio call. Which means that spectral efficiency has been improved by one trillion times in the last century, and there is no reason to believe that this will not continue.
Is the present rate of technological development going to be fast enough to meet demand?
No. It is not able to generate the amount of spectrum we would need. What we need are new, more efficient technologies to squeeze more data into the same spectrum. Cooper also believes - and I agree with him - that we've probably almost reached a kind of a tipping point, or threshold where conventional ways of thinking of how to squeeze more stuff into the finite spectrum may come to an end. So we need some new ways of thinking, some new technological approaches.
Do you see wireless as a possible solution for the last mile issue instead of cabling everything?
Over the last few years, there have been a lot of attempts in Europe to use an approach called wireless local loop. I've seen none succeeding. Most of the companies that have tried it have actually failed. I work in an office in Switzerland that used to be a leader in this space, and the company went bankrupt. So far, wireless has not been demonstrated to be a viable alternative to the physical last mile.
IT Solution Journal readers are senior level IT managers and engineers who implement solutions for a living. Can you give us some insight into what we can learn and how we should plan mobile strategy based upon what has happened in Europe?
Firstly let me say that I think that there is incorrect thinking behind the premise that Europe is ahead of the United States in wireless. This is not true, despite the fact that Europe has implemented a single standard for cellular telephony (GSM). It is more a question of a huge difference in approach between the US and Europe.
Much of the push towards the so-called "wireless Internet" in Europe is coming from the telecom industry, especially from the big cell phone manufacturers like Nokia and Ericsson. By contrast, in the USA, the push towards the wireless Internet is coming from the computing industry. It's coming from the Microsoft's and Compaq's, at least in terms of what you can do and how you imagine the kind of services and applications you would be using. Of course, Sprint PCS and Verizon and the other telecom suppliers are moving into the space, but they are not the key players, while their correspondents in Europe are the key players. So Europe and America have a completely different approach to what this space is all about. That's why, for example, solutions that come from the computing industry, like wireless LAN, are much more popular and are developing in a much more aggressive way in the States than they are in Europe.
In Europe, for example, we don't have the equivalent of Starbuck's putting down wireless LAN hot spots in every café, at least not so far. We don't have the equivalent of the New York Stock Exchange connecting 1,500 computers through a wireless LAN. We don't have people like top bankers from Merrill Lynch going around with Compaq Ipaq computers in their pockets connected through a wireless LAN to the company system. Some people in Europe are starting to do this, but it's not that advanced, because that's a solution that comes originally from the computing industry.
In Europe you have attempts to squeeze the Internet into the phone. That was the WAP
approach; the small screen, small keyboard kind of approach. Now these things are
slowly coming together, you see the first integrated devices hitting the market, such as
the Handspring Treo.
I think this is a key point: Americans should get rid of; the idea that they are behind Europe. They are just coming to the same thing from a different perspective.
So you think that the sort of viral or grassroots wireless technologies that are growing from the ground up, ubiquitous LAN that sort of thing, are going to be more viable for solutions, in the US in the short term?
Well, let me approach that from the opposite end. Right now, we have an absolute mess of non-coordinated parallel developments. We tap into every possible kind of technology and some people are actually trying to twist some of the technologies to make them do things that they are not designed to do. That's the current situation. At the end of the process - which will probably take five to ten years - we may actually arrive at a point where all these will start converging. And, of course, the essence of the convergence will be the Internet protocol. Everything will be based on IP.
To get there, we will have some incredible engineering challenges. But when it starts to converge, then you will see a blossoming of functionalities and capabilities that we can't even imagine now. The way this will look is pretty much the way the Internet looks like today, which is like a cloud where you just throw in a message at your end and it pops out at the other end, and you have no clue how it got there, what networks it has been using, what technologies it has been exploiting.
And a lot of scenarios built up now over the long term, over say a ten-year perspective,
are about devices that can tap into various available layers of wireless connectivity at the
same time, choosing the one that is most efficient depending on where you are, what you
are trying to do-watching a picture or sending an e-mail or making a phone call - or
more efficient in regard to cost or performance. So, in that sense, even developments like
the grassroots wireless LAN developments that are now happening pretty much all over
the States and in a few cities in Europe, look quite like the peering that prompted the
commercial phase of the Internet.
You talk quite a bit in your book about the issues regarding billing strategies for wireless data. We've seen a number different schemes tried in Japan and Europe with various degrees of success. What do you think, in the end, is going to be the solution that wins?
The billing systems of telecom operators, especially wireless telecom operators, are some of the most sophisticated billing systems available today. Yet, they're not sophisticated enough to really handle data transactions or data payments on a micro-payment level because this would involve billions of very diverse transactions. I'm a big believer, at least for the short to medium term, in the subscription model. Subscription is what i-mode has been doing in Japan. i-mode, which is a service of NTT DoCoMo, is the most interesting "wireless Internet" microcosm out there today.
How would you characterize the i-mode model?
Many believe that i-mode is about downloading logos and pictures and some stuff that's very culture-specific, very rooted into the Japanese culture. But really i-mode is all about the business model. It's not about the technology; it's completely about the business model.
What DoCoMo has been doing is building a platform that allows providers of content, services and applications to deliver them in a very easy way and to be paid for that, and for users to sign up or to abandon that subscription in an equally easy way.
And the easiest way to pay for a service is to subscribe to it. A lot of people just subscribe to two or three services for which they pay a fixed amount per month. They get the service and the monthly fee gets charged to their phone bill. DoCoMo keeps 9% and pays the rest to the provider of the content or service.
The 9% of the subscription fee that DoCoMo keeps is almost insignificant, but more importantly, it gets all the traffic generated by the use of these services - the traffic fees. So the more applications and services and content that are compelling - the more the user will use i-mode and the more they generate traffic and, therefore, the more DoCoMo earns from traffic revenues. DoCoMo doesn't develop any content by itself. It simply provides content developers with a great platform that lets them get paid if they provide compelling content. That's all they need to do: make the life of the content providers easy, they get their money through the traffic they generate, and the service providers take all the risk of innovation.
I think that similar kind of models will eventually win out globally, although not necessarily implemented by DoCoMo.
Can you tell us about some wireless solutions that you've seen actually rolled out in corporate environments that are really interesting?
There are several parts of a company where you can put wireless technology to work with some interesting effect or impact. The first one - and probably the most interesting - is the supply chain - buying, moving, storing and transporting goods. You can put wireless to work to keep track of the flow of goods and of inventory, for example.
A second one is about your people that are not in the office but need to be in contact with the office and especially need to be in contact with the systems that you can access when you are at the office: the company databases, CRM and so on. These are field workers, maintenance workers, specialists that go out and install a new machine, electricians that are up on top of an electric pole and have to repair something. Letting them tap into the company information resources from where they are, at the moment when they need it, is invaluable. Because when you are an electrician on top of an electric pole and you need a piece of information, either you go down to the truck and pick up the phone and call somebody, or you have a possibility to pick up your pocket computer and dial up the system and access it from there. It doesn't take an MBA to understand that there's a huge advantage in terms of efficiency. And that's just the simple, straightforward example.
A third space is that of machine-to-machine communication in the sense of monitoring systems or self-monitoring systems. This means that the machine can actually operate some self-diagnostic and alert if something is wrong or if, for example, it is low on resources or low on stock.
And the last part of the activity of a company that can be impacted positively is all the
customer-facing activities, marketing and sales, essentially the ability to pick up your
device and ask a question to the company system and, because you can answer that
question the customer has been asking you, you maybe get a sale that you would not have
gotten otherwise
Because response is in real time...
Exactly. There are a couple of interesting phenomena to notice here. One is that advanced technology used to be at the center of the company. I'm talking about communication technology, not specialized tools for doing your work, but communication technology. This used to be pretty much at the office, at the headquarters. And now it's getting into the hands of the people that are out on the field. This signals an interesting demographic shift where the most sophisticated wireless applications are being used by the blue collars, and no longer only by the white collars, if you allow me to use some old-fashioned definitions.
In other words, sophisticated wireless information technology is going from the center of the corporation to the edges, where it's put to work for serving the customer. And the next step is actually to let it shift even more towards the edges, in the hands of the customer itself. That's for example what FedEx and the other parcel services are doing through their web-based tracking system. The same information that is gathered for and by the FedEx , DHL or UPS guys on their handheld devices and sent back wirelessly to a central system so that the company can better track its functioning, also serves to better inform the customer. Because the customer can go on the Web and check out where the package is and track the whole trajectory of it all across the world. This also means that the customer knows whether the package is still in transit, if it has been delivered, if it's lost. So, if UPS loses a package, it cannot say, oh, it's in the mail, because you can go on the Web and figure it out. By pushing the information out toward the edges of the company, instead of keeping it at the center, companies are becoming not only more efficient, but more transparent.
Right. Okay, how you would bet if you were running an IT department, if you were a CIO today in the US, if you had a wireless solution to implement and we're trying to figure out the architecture to use to do that, do you wait for 3G to come out? Do you wait for 4G? Do you use Blackberry? What is your feeling on the winning platform for solutions today?
I would go for the Blackberry, because you used that example, but there are other examples out there. What I mean is: I would definitely try to look what kind of devices and what kind of connectivity and what kind of platform gives me a competitive advantage today, using today's technologies. You can always wait for more bandwidth, new networks or better devices that will come in one, two, five, ten years - but that's not a solution, because by that time you will have a different set of needs. The good approach is: can you find a way to design applications and services (and to interface them with your company systems) that work within the limitations of today's networks and devices, by compensating them with the advantages of mobility? Mobility is really the key issue, the "killer application" of the wireless Internet. Can you bring untethered connectivity into your company in a way that creates value, or a competitive advantage? There are many ways to do it with today's technologies. So I would definitely look at today's technology without waiting for 2005 and the cool devices that will come out and will allow me to do everything.
The basic idea here is that in today's business setting, having access to low-bandwidth, targeted information everywhere is way more important that having access to high-bandwidth services only somewhere (at the office, that is).
I personally have a Compaq Ipaq. Microsoft's position on all of this is that everything will converge onto a PC - which has consistently been their position on anything in the world - and that, as the PC shrinks and the pocket PC becomes something that's more useful and the Windows CE operating system gets better, that that's where everything's going to end up.
Great. But how many times have you used Word or Excel on your Ipaq?
A couple, but not very many. I take your point!
The issue is you can always squeeze the functionality of a computer into a pocket device. But the reality is that there are very few occasions when you are actually moving - and I mean physically moving like walking down the street - when you need those functionalities. You need Word when you're sitting at your desk or you're sitting in a conference room or in your hotel room or at Starbuck's, and most of those times you have your laptop with you anyway. And if it's just for taking notes, you don't need Word, any notepad software will do.
What you need when you are really on the move - when you are physically walking down the street - is another kind of application. It's the kind of application that allows you to get that quick alert. And zap out that urgent e-mail that just comes to your mind right now, and these kinds of things - which are all pretty much low and middle bandwidth kinds of applications, and all possible today. If you just analyze how people function, there are very few cases where you really need the full capacity of a PC in your hand when you are moving.
I don't think that anybody starts looking at a PowerPoint presentation while walking down the street, or even downloading a video and watching it walking down the street.
Then when you end up in a... in a stationary position, not in mobility, but in a portability position, which is sitting around at Starbucks, maybe the Ipaq can offer you some service. But you usually have another alternative, which is the laptop.
I don't think that we can talk about substitution. I don't think that we can say, oh, in two years, nobody will carry a laptop because everybody will carry an Ipaq. This will not happen. One will always be a complement to the other for different kinds of situations. When I walk out of the office tonight and I go home, I just bring my Palm along because I want my three thousand addresses with me in case I have to call somebody. But I don't care about bringing the laptop along. If I go to a conference tomorrow, then I probably take both. Microsoft has understood this. Just look at its .Net initiative, which considers the pocket devices just as a piece of a much bigger picture.
That's really how corporations should look at wireless solutions - use the best technology currently available as part of an overall business strategy. Then you aren't dependent on the future decisions of governments, operators, and vendors for your success.
(Copyright IT Solutions Journal 2002)
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