Despite being a relatively new player in the traditional wireless field, Wi-Fi services have quickly taken over as one of the leading technologies for high-speed wireless data communications as shown by the small but increasing number of tech-savvy consumers clustered in local coffee houses or airport lounges surfing the Internet from their personal computers.
Wi-Fi’s influence has not gone unnoticed by wireless carriers. Some, like T-Mobile USA Inc., are leveraging acquisitions to become the largest single Wi-Fi provider in the world, while others have taken a more cautious approach, tying limited rollout plans to roaming partnerships with hot-spot aggregators like Wayport Inc. and iPass Inc.
Even with such widespread support, analysts predict Wi-Fi’s grip on wireless data soon could come under pressure from high-speed wide area network technologies, including CDMA2000 1x EV-DO and UMTS, which a number of operators have announced plans to launch by the end of this year. According to analysts, those high-speed WANs are expected to provide speeds similar to what Wi-Fi can provide with coverage comparable with cellular voice networks.
Late last year, Pyramid Research analyst John Yunker noted in a research paper that after previewing EV-DO services in a test environment, he felt the technology could be effectively marketed as a Wi-Fi alternative if EV-DO provided at least 300 kilobits per second throughput speeds during peak usage and if mobile carriers provided nationwide coverage.
Verizon Wireless appears set to meet both of those requirements as it announced earlier this month plans to spend $1 billion during the next two years to provide EV-DO service across its nationwide network with a number of major markets covered this summer. The carrier already provides its BroadbandAccess EV-DO coverage in San Diego and Washington, D.C., as part of a limited launch last year.
Verizon Wireless claims the EV-DO network provides between 300 and 500 kilobits per second of data throughput, which has been corroborated by independent analyst testing, with peak bursts of greater than 2 megabits per second. Depending on the wired backhaul connection used and number of users, analysts say Wi-Fi networks typically provide around 500 kbps of throughput.
With similar network speeds, EV-DO’s biggest advantage when compared with Wi-Fi comes in coverage, as a typical Wi-Fi hot spot can cover between 100 and 300 feet while a traditional EV-DO cell tower can cover several square miles. Analysts noted that EV-DO’s combination of comparable speed and superior coverage should prove to be a compelling offering for Verizon Wireless customers.
“EV-DO offers significant speed, and Verizon’s national intent adds the much-needed ubiquity of a wireless data solution, giving Verizon a determined edge over Wi-Fi and other solutions,” noted research firm Current Analysis in a report. “A national network provides greater mobility than a Wi-Fi solution can provide. As a result, this announcement helps to limit the grand hype that Wi-Fi has enjoyed, as it takes speed up a notch and also supplies greater coverage.”
Analysts also were impressed with Verizon Wireless’ planned investment in the EV-DO network, noting the costs would amount to between $4 and $5 per potential customer, which was much less than the anticipated $15 per pop some were forecasting. The costs are also less than some estimates of what it would cost to deploy a nationwide Wi-Fi network, which few industry observers believe would be feasible.
Verizon Wireless is not the only wireless carrier with an offer on the horizon that could threaten Wi-Fi’s success. AT&T Wireless Services Inc. said last year that it plans to offer UMTS-based services in four markets, including Seattle and San Francisco, by the end of this year with additional rollouts depending on market demand. While the UMTS standard has been plagued with a number of technical issues that have slowed deployment, the technology is expected to provide network speeds similar to EV-DO.
Cingular Wireless L.L.C. and T-Mobile USA have not announced plans for UMTS deployments, but are expected to both follow that GSM migration path in the future. Sprint PCS has said it will skip the EV-DO specification for the voice-enhancing EV-DV specification that is expected to be ready by 2006, while Nextel Communications Inc. is rumored to be looking at either an EV-DV migration or possibly high-speed data transmission technologies being developed by Flarion or IPWireless.
Even with the planned expansion of high-speed WANs, the wireless industry does not appear set to write off Wi-Fi completely as carriers are expected to continue to offer Wi-Fi solutions in high-traffic locations that will allow them to provide high-speed data services without using precious cellular network capacity. Analysts note this mixing of networks could be especially important in airport locations where customers often place maximum stress on spectrum capacity with voice calls and additional cell-site deployments are difficult to arrange.
Wi-Fi also continues to have an end-user pricing advantage over high-speed WANs with hot-spot charges ranging from free in some locations to around $50 per month for unlimited use compared with the $80 per month Verizon Wireless charges for access to its EV-DO network. T-Mobile USA offers unlimited access to both its more than 4,000 hot-spot locations and its GPRS-based WAN for as low as $30 per month.
Analysts note that while carriers may have to price high-speed data offerings aggressively to draw customers, they are concerned that carriers may be too aggressive and undervalue their services.
“Our concern is that Verizon won’t price EV-DO aggressively because it either can’t or won’t,” Pyramid Research’s Yunker said, explaining it could take awhile to find out how much customers are willing to pay for the extra mobility EV-DO provides compared with Wi-Fi.
Yunker added that he expects carriers will leverage their experience with Wi-Fi to find the perfect match of price and coverage for their high-speed WANs and will continue to support Wi-Fi services.
