November 24, 1999
Business World
Let's All Panic
About the Wireless 'Gap'
By HOLMAN W. JENKINS JR.
If there is a last-mover advantage in wireless, the U.S. has it nailed.
We now have reassuring testimony on this point from various Silicon
moguls, for whom the world never moves fast enough. Oracle's Larry
Ellison, in Tokyo the other day, congratulated Japan and Europe for
imposing wireless standards by fiat, as opposed to our domestic
cacophony.
Bill Joy of Sun Microsystems echoed this denunciation of the home of the
brave at a recent trade show, saying: "The U.S. has done a particularly bad
job by creating too much competition."
Microsoft's Steve Ballmer contributed his two billion cents: "The U.S. is the
most far-behind wireless market in the world," he announced in Japan last
month.
Oh good. If there's one thing worse than no standard, it's a premature
standard.
All of the above are contributors to the producer price index, selling stuff to
people who sell stuff to consumers. Naturally these guys are excited by the
prospects of wireless e-commerce. It'll mean much bigger markets for their
software and services when portable phones become portable Web
browsers and electronic wallets.
But since somebody has to pick up the tab for building the required
wireless networks, it's worth asking whether the technology exists to give
consumers services that consumers will be willing to pay for. Going first is
not always the wisest move. Ask Iridium, whose once-visionary satellite
service is now in bankruptcy. Apple pioneered the palmtop with Newton,
and where is Newton now?
For that matter, people think Macintosh was somehow defeated by
Windows. Macintosh was defeated by DOS, because DOS allowed
computer users to do useful work. Wireless data holds great promise, but
are enough of the pieces in place to do useful work?
One necessary component is reliable voice recognition. The incurably
stylish may not mind pecking at a tiny keypad, but pocket e-commerce will
really fly when sites can respond verbally to verbal requests. Anybody who
has observed the reliability factor of computerized directory assistance
knows this problem is far from being licked. The best applications today
understand the customer 98% of the time, with a vocabulary of 30,000
words.
Battery technology is another hurdle--wireless data will be a big deal when
handhelds can be "always on."
Wireless data has enjoyed an early take-off in Europe and Japan, but only
because conventional phone service is mediocre and overpriced. Flat-rate
wireless access to the Web, even with a minuscule screen and keypad,
sounds pretty good when the fixed-line carrier charges by the minute.
Yes, foreigners are ahead in demonstrating Web applications for smart
phones, but the key word is demonstrating. Demonstration projects are a
good way to find out what doesn't work and what consumers won't pay
for once the novelty wears off. Alan Kessler of PalmPilot points out that
simplicity is what puts the "mass" in mass market.
But it seems especially weird to be congratulating the Europeans and
Japanese when they're busy junking their government-imposed standards in
favor of a new standard developed here, amid our "too much competition."
It turns out that code division, which uses higher math to splatter the
message across a broad spectrum and then reassemble it, commits fewer
errors and makes better use of the airwaves than the various time division
technologies adopted overseas.
Notice, first of all, that it took code division a while to prove itself. Though
it lately has come on strong, time division, the format adopted by AT&T
Wireless, still has more customers in the U.S.
Second, because we dragged our feet for so long, the real virtues of
software as the universal solvent have been allowed to emerge. Now,
thanks to a deal hammered out in a U.N.-sponsored nerd shop this month,
handset makers will be able to deliver phones compatible with all major
standards.
Without a little messy competition, we wouldn't have worked out these
beauties. Some gripe the future would have come sooner if Sweden's
Ericsson and Qualcomm of the U.S. had been forced to settle a patent
squabble. Ericsson was a key champion of the European standard and has
never forgiven entrepreneurial Qualcomm for daring to invest the money to
show a better way.
But their baby fight was probably a blessing in disguise. It gave the industry
an excuse to refrain from its favorite addiction, throwing money at assets
just to keep them out of one another's hands.
Take the U.S. spectrum auctions, which raised a great gob of money for
the politicians. The auctions were structured to excite fears of being left
behind, not to mention the hope of making a killing on a "scarce" resource.
Since then, spectrum prices have plunged. The value proposition for
consumers just wasn't there. Now the FCC is bickering with Congress
over whether it will be allowed to reclaim spectrum sold to companies that
have since plopped into bankruptcy. So far, the answer is "no," because
the buyer waiting in the wings, Craig McCaw, gave soft money to
Democrats but not Republicans.
The last round of auctions saw licenses go for as little as $1. Now the
wireless hype is starting up again and so is the spending.
WorldCom's Bernie Ebbers has agreed to pay an arm and a leg to get his
hands on Sprint's mobile network. Last week Vodafone of Britain
launched a nearly unprecedented hostile bid for Mannesmann of Germany.
The latest offer values Mannesmann's continental customers at an
astronomical $6,000 a head, four times what anybody was paying for
mobile subscribers just a week ago.
The Silicon Valleyites are getting their wish: Panic spending will speed the
deployment of new technology, even if we can expect a few Iridium-like
meltdowns in the process.
Naturally this doesn't apply to Microsoft, which has thrown billions of
investment dollars at cable, satellites, fixed wireless and mobile to spur
sales of software. For everyone else, money still doesn't grow on trees.
We're spending ours where we should, bringing broadband to the home
and office. The U.S. has hardly shot itself in the foot. Wireless technology
still needs time to mature without government trying to impose artificial
certainty on the future.
As always, the real money will not be in the gadgets but in the higher-value
services that flow along the new infrastructure. When you can find a
European Amazon, Disney, Yahoo or AOL, let us know.
|
