WLAN will not be a threat to 3G
– in the long run
|There is a lot of discussion about WLAN at the moment and how it could affect the 3G business models by simply being a faster and cheaper alternative to transfer data than 3G can offer.|
However, the discussion going on at numerous conferences around the world does seem to be somewhat spurred on by some people with some sort of interest in WLAN, rather than an unbiased look at WLAN opportunities in the future. Some market players – including mobile operators – are also investing in WLAN partly to use the possibilities that WLAN offers today, but also to have WLAN onboard in the case that it really takes off.
While there is no doubt that WLAN will be a good complementary technology to 2.5G and 3G data transfer, actually stating that it will be able to dilute the 3G business models is very premature and actually does seem more like one of those famous quotes that we all are so familiar with, like: “There is no reason anyone would want a computer in their home.”
Ken Olsen President, Chairman and founder of Digital, 1977.
Ken Olsen was absolutely right when he said that back in 1977. In those days computers were still huge, Bill Gates had just dropped out of Harvard, Steve Wozniak offered his new computer (Apple) to Hewlett-Packard, who reject it as a non-viable product and Steve’s partner and co-founder Ron Wayne promptly sold his shares in Apple for US$800!
But if Ken Olsen had looked further ahead, at how technology always seems to get faster, smaller, cheaper and creates new uses for itself, he might not have been so bold in his statement.
This seems to be much the same case with WLAN right now. Most people seem to be focusing on the short-term possibilities with this technology and coming to the conclusion that WLAN will have an impact on 3G in the longer term.
Compared to 3G, WLAN has quite a long list of factors that would need to be addressed, before WLAN gets up to the level of 3G. Some of the more important factors are things like:
·Lack of business models
·Few or no roaming possibilities, both nationally and internationally
·Less coverage than 3G
·Voice over IP is not as developed as the mobile standards
·Difficult for seamless handover between networks when on the move
·Low penetration of WLAN enabled handhelds compared to mobile phones
·Few in the WLAN business can afford to subsidise terminals on the scale we see on the mobile markets
Basically right now, WLAN offers faster online access than the mobile technologies can offer. So if you are in an airport lounge it is both cheaper and much faster to connect your Laptop or Pocket PC through a WLAN connection than through your mobile operator. However, once you are on the move WLAN becomes more difficult. Here people are saying that in the future there will be huge WLAN coverage both from public and private WLAN networks, but this is where some of the issues start to arise.
If you have a private WLAN network that others nearby can access – how will you ensure that they are not downloading illegal content? The first court cases have already turned up with huge bills being sent out to users downloading movies from sites like Kazaa. And that is just movies – there is other content that is much worse. I would ensure myself by not giving others access. Also many ISP’s have a longer-term strategy of leaving the flat rate scenario. There are already a number of Scandinavian ISP’s that now offer price plans for ADSL where they charge Euro 0,07 pr. downloaded Mb! Would you like to pay for other people’s use of your WLAN?
In the early days of the Internet, there were Internet Cafés on every corner of every city. But in those days, many did not have a PC at home. Today, only the larger remain, often catering for tourists in the bigger cities. As more and more people can not only check and send email from their mobile phone – but also send pictures home as well, even that business will decline. Many Internet Cafés have more focus on games today, catering for the younger generation and serving as a meeting point and place to hang out.
In the same way WLAN has a function today and can fill a gap – for now. If you look at the longer term, the basic two parameters where WLAN has its advantage today – speed and price – will no longer have quite the same effect. Looking at speed, mobile networks already offer speeds of up to 2Gb download in places like South Korea and pricing for mobile data traffic will not only come down, but also be differentiated depending on what type of data you are accessing on the network.
Of course WLAN will evolve as well, but right now there are few real indications that in the longer term WLAN will endanger the 3G business models.
All the figures about how the mobile markets will develop up to 2005 are described in Strand Consults latest report ” Facts & Figures – The Current And Future Western European Market For Mobile Services” In connection with the compilation of Strand Consults reports about the Western European market for SMS and MMS P2P messages and Premium Mobile Services based on SMS/EMS, MMS, WAP and Mobile Applications, Stand Consult has collected, analysed and presented a great deal of information and actual sales data. This work was done to enable us to estimate the current and future market value of both P2P mobile messages and Premium Mobile Services.
This 300+ page report “Facts & Figures – The Current And Future Western European Market For Mobile Services” contains the full collection of Strand Consults mobile estimates from 2002 – 2005 for 16 countries in Western Europe.
All the data is presented in well-arranged graphs and tables and is very easy to navigate.