If you felt windburned by Internet hype-the dot-this and dot-that, the dreamy soundtracks of high-tech commercials, and the shirt-tailed boys worth 50 mil-brace yourself for a wave of propaganda that could be even worse. Its subject: wireless technology. Now that Web start-ups are folding faster than lawn chairs in October, wireless has become perhaps the nation's most overdiscussed topic.
Why the hype? And why now? Thank the Internet yet again. The great promise of wireless is that it will deliver useful online data anywhere, anytime. Says Bill Joy, Sun Microsystems' chief scientist and perhaps the high-tech industry's most respected genius: "It's mostly about 'personal' information. What makes a phone useful is that people call you or a specific place. A wireless device will be useful if what it does or accesses is relevant to you or the place that you're in. Almost nothing of the current Web has this flavor." Even so, Joy and others agree that wireless hype risks outstripping reality. After all, today's wireless user has to put up with tiny screens, lilliputian keyboards, and slow-as-molasses connection speeds.
To help distinguish fact from fantasy, take a hype-free look at 10 things you need to know about wireless.
1. What is "wireless," anyway?
Wireless has the rare distinction in the lexicon of high-tech terms of actually being self-explanatory. Simply put, wireless technology is any technology that communicates through the air, without cables. Wireless is more than a century old, dating back to the late 1890s, when Italian electrical engineer Guglielmo Marconi used his radio-signaling contraption to transmit across the English Channel and, eventually, across the Atlantic Ocean. Over time, walkie-talkies, Casey Kasem, and "10-4, good buddy" all followed. Today, wireless technologies range from the infrared zapping of your television remote control to the satellite communications that carry the gazillion channels to your set, and have loads of applications in between.
2. What's so great about mobile Internet access?
The vision looks something like this: When kicking the tires of that new SUV you've got your eye on, you might scan the sticker price with a bar code reader in your phone and be notified that a dealer across town has a much lower price. You might walk into a Starbucks and get a coupon sent to your mobile phone, so that you spend a slightly smaller fortune on that latte grande. Or maybe you'll drive out of the Denver airport and have your cell phone tell you, step-by-step, how to navigate the labyrinth and make your way to your hotel. Better yet, you might take a picture of Junior, blow it like a kiss to your handheld to crop it, and then send it to Grandma with nary a tangled cable along the way.
Your phone may also become something of a digital wallet. Already in the U.S., the familiar names of e-commerce are gearing up for m-commerce (mobile commerce). EBay and Yahoo auction freaks can place bids from their phones-and receive alerts when they've been outbid. Amazon.com and Barnesandnoble.com sell books and music through the scaled-down Web browsers available on certain cell phones. Some research firms predict that Americans will spend as much as $21 billion annually via mobile devices by 2004.
3. So what are the killer apps?
To date, obviously, voice has been the big deal in wireless. But e-mail can now alight on cell phones and PDAs with ease. Instant messaging, à la AOL, is coming to Sprint PCS phones and BlackBerry handhelds. Already, short messaging services, called SMS, have been a huge hit with users abroad, allowing them to type brief notes to others using cell phones. Indeed, many popular Internet-based services are actually better suited to cell phones. For example, it's more useful to hear from a flight-tracking service that your flight has been canceled before you return your rental car.
In fact, few think that there will be wireless applications, other than voice and Internet access, that will be must-haves. "Everyone's in search of a killer app. That's a wrongheaded approach," says Mark Zohar, research director of telecommunications at Forrester Research. "At the end of the day, the key benefit of wireless is that it extends existing applications and content anytime and anywhere." That means if you have a My Yahoo account, your calendar, stock quotes, weather reports, horoscope, and e-mail could be easily accessed from your cell phone or PDA. But don't expect a new set of previously unheard-of functions.
4. What exactly are the various wireless technologies?
The first broad category is voice technology, best known to date as the invention that's allowed people to annoy you by yakking away in restaurants. That technology is now being adapted to carry data.
In the U.S., the primary digital technologies are TDMA (time division multiple access) and CDMA (code division multiple access), which are to cell technology roughly what AM and FM are to radio-two different approaches to accomplishing the same task. When a user places a call, a digital phone converts his voice into binary code-a sequence of ones and zeros-and compresses it. The difference comes in how that information is then transmitted. TDMA slices a call into short segments, which are relayed along a single frequency. CDMA assigns a unique sequence code to each digital chunk and transmits it over multiple frequencies.
GSM (global system for mobile communication) is another digital cellular-phone standard, first deployed in Europe in 1992. Similar to but incompatible with TDMA, it's now the dominant technology overseas and carries most of the world's wireless calls.
Over the past few years, these technologies have been updated and integrated with the wireless application protocol (WAP), a set of instructions-a sort of electronic lingua franca-that allows handheld devices and cell phones to access text-based services such as e-mail and Web pages. Various further tweaks are in the pipeline. Referred to generically as 2.5G technology (signifying "second and a half generation"), these improvements are aimed primarily at increasing access speed for wireless Web and e-mail use.
3G, expected to hit the airwaves by 2004, is the collective name for the so-called third generation of wireless technologies. Compared with current refinements, 3G will be more akin to a chassis-up rebuild of wireless. Its big advantage: much higher speeds. Today's phones receive data at up to 14.4 kilobits per second (remember that modem you had in '93?). 3G promises two megabits per second, the kind of speed you'd get from a fully torqued DSL modem, and enough spunk for high-quality video transmission.
Although the above wireless technologies can and do carry data, they do so, in essence, over the phone. There are other technologies designed to move data directly from place to place, usually within a relatively small radius. Using these standards, wireless local area networks (LANs) can now span thousands of feet, meaning you can tote your laptop into the backyard without losing your connection. Other versions will smarten up dumb devices, allowing, say, your TV and VCR to function together untethered.
Right now, by far the most popular wireless technology for home and office is the impenetrably named 802.11b standard. Typically found in airports, on college campuses, and at the headquarters of major high-tech companies, 802.11b uses the 2.4-gigahertz frequency to transmit data at speeds of 11 megabits per second. That's faster than many wired networks, and more than seven times faster than a high-speed Net connection such as DSL. Plug a transmitter (called an access point) into a DSL modem, for example, and a wireless card into a laptop and discover the joy of surfing the Net from your bathroom-or maybe even your neighbor's bathroom.
Bluetooth is a radio chip that will communicate with other Bluetooth-enabled devices located within a 30-foot radius. Swedish phone maker Ericsson started the Bluetooth initiative in 1994, and since then, nearly 2,000 companies have signed on, including heavyweights like Nokia, IBM, Motorola, Microsoft, and Intel. Bluetooth products should be available soon: Ericsson is cooking up a wireless earpiece, and Motorola is showing off a mobile phone that when talking to a Bluetooth laptop will act as its modem.
HomeRF, like Bluetooth, will allow users to create what amounts to a personal area network (PAN). Devised in 1998 by Compaq, IBM, and Hewlett-Packard, among others, HomeRF is a short-range transmission technology. Already, Motorola makes a cable modem using HomeRF that allows multiple PCs within a 150-foot range to access a single modem.
5. How well will all of this really work?
Good question. It's no secret that cellular-phone technology … well, to use the scientific term, sucks. Even the biggest wireless carriers can't blanket every corner of the country. And as if that wasn't enough of a problem, the U.S. cellular matrix is a crazy quilt of warring, incompatible technologies. In the early 1990s, European nations wisely agreed on a single standard (GSM), assuring that rival networks would be interoperable. No such luck in the U.S. Embroiled in a classic standards battle, operators are intent upon trying to force-feed consumers their brand of cellular technology. That's why that Sprint PCS phone has been gathering dust in a kitchen drawer ever since your company provisioned AT&T phones. Even some phones that work on the GSM system in the U.S. won't work abroad. Whenever you hear the term dual-mode, tri-mode, or multi-mode, it means the device you're looking at is actually two or three different cell phones packed into one. Efficient, huh?
Those headaches are only for the cellular-based technologies. Another problem is that many home wireless data technologies aren't only incompatible; they actually interfere with each other. HomeRF, for instance, can interfere with 802.11b technology, which could conceivably interfere with Bluetooth devices. Meanwhile, don't plan on transferring sensitive data while microwaving that popcorn. Under some conditions, even that could screw up transmissions. With high-speed fixed wireless connections, which require "line of sight" (meaning transmitters have to be within eyeshot of receivers), fog alone could disrupt a connection.
6. So, will wireless technologies ever become fully compatible?
At this point, it's anybody's guess. It is very possible that unless the industry rallies around a single standard, the technologies will continue to diverge. That's bad for consumers, who will suffer more of the same frustrations that old-school cell customers have come to know so well. After all, it's tempting for companies to create proprietary technologies and push them, hoping to take over an entire space. In fact, much of the hype you hear these days basically amounts to crosstalk between warring companies, each struggling to boast more loudly than the next about its own species of wireless. Should one company win, establishing a Microsoft-like stranglehold, then obviously that company will do very well.
On the other hand, it might be argued that a standards battle is a shortsighted—and costly—strategy, in which almost everybody is bound to lose. By agreeing to adhere to a single standard, companies would place themselves in what would be a more competitive and dynamic marketplace, but also, potentially, a bigger marketplace.
7. What about security and privacy issues?
Think about this: The Federal Communications Commission has mandated that wireless carriers implement positioning systems, so that if a cell phone user needs to dial 911, the caller's precise location can be traced. Now imagine landing at an airport and suddenly every local advertiser from Arnie's Steak House to Xanadu Tires is peppering your poor phone with ads. Call it air spam.
Big Brother and spammers aside, each wireless technology has its own Achilles' heel, which can allow bootleggers to mount an airborne assault, stealing service or sensitive information. Some security experts say designers of 802.11b chose a relatively weak cryptographic scheme, letting determined hackers gain access. "A laptop in a briefcase or a monitoring station in a parking lot can pick up a lot," says Steven Bellovin of AT&T Research and one of the industry's most respected security experts. "One stolen laptop or one disgruntled ex-employee can make the encryption useless." One researcher, using a laptop, wireless card, and a global-positioning receiver, mapped his Palo Alto neighborhood, exposing unsecured wireless networks. "In hotels I've picked up corporate 802.11b networks, without even trying to," says Bellovin.
8. Which companies are hot right now?
"Hot" is a relative term in the wireless sector these days. Many companies have seen their share prices evaporate into the same thin air as their technology. Though usage is growing—Jupiter Research estimates a market of 110 million cell-phone users in the U.S. at the end of 2000 (up from 85 million in 1999)—shares of companies like Nokia and Motorola saw year-end drops of 30 percent and 60 percent, respectively, from their 52-week highs.
Still, some companies are enjoying buzz, notwithstanding their beaten-down stocks. The Stamford, Connecticut–based i3 Mobile delivers customized information to data-ready cell phones, PDAs, or pagers. Offering content from such stalwarts as ABCNews.com, ESPN.com, and Dow Jones, the company has distribution agreements with the likes of Verizon Wireless and AT&T. Other Wall Street favorites include Research in Motion, which produces the popular BlackBerry pagers and handhelds, and OmniSky, which provides cellular data modems for Palms and Pocket PCs.
9. All right, so how can a person get filthy rich off of all this?
If you're investing, you might want to look toward the "arms dealers" of the industry. Microsoft sold arms for the PC revolution. Network-routing giant Cisco and server shop Sun sold arms for the Internet revolution. John Bensche, a wireless analyst at Lehman Brothers, thinks the tower makers are the way to go when it comes to wireless. Among his favorites: American Tower (AMT), SBA Communications (SBAC), Crown Castle International (TWRS), and SpectraSite Communications (SITE). All of these companies build, own, lease, or manage wireless and broadcast communications towers. Without their extensive network of hulking towers and in-building facilities, the only message your cell phone will display is of the "No service" variety. "They're going to win no matter what happens," says Bensche.
10. Which companies will be tomorrow's leaders?
No doubt, the wireless industry will go through the same consolidation that the Internet industry has, but some analysts have a relatively clear vision of the future wireless big guns. In short, think carriers. Companies like Verizon, AT&T Wireless, Sprint PCS, Cingular, Nextel, and VoiceStream—which is to say, all the major wireless network operators—will have a tremendous amount of power. For one thing, they'll have complete say over what information goes over their "pipes." If an e-commerce site, day-trading service, or anything else wants to be accessible to mobile users, guess who they'll have to talk to? It's comparable to the situation in cable television, where carriage on the right systems can make or break a new channel. Furthermore, wireless networks aren't regulated like the wireline providers—the Baby Bells—by the FCC. That means they're not subject to government stiff-arming, and thus enjoy tremendous control and bargaining power when it comes to their networks. It's not hard to envision a situation in which everything a consumer bought through a wireless device simply showed up on his phone bill. This would give carriers what would amount to a giant cut of the business traditionally handled by credit card companies. And that's not hype.
