Breakthrough Ideas (continued)
Indirect Competitors.
Everyone believes you should keep a sharp eye peeled for disruptive and discontinuous technologies and business plans. No one that I know of has told us how specifically to do it. If you know how, please teach me!
In the October 2002 issue of Wired, the renowned Nicholas Negroponte, founder of the MIT media lab, wrote, “Everything you assumed about telecommunications is about to change. Large wired and wireless telephone companies will be replaced by micro-operators, millions of which can be woven into a global fabric of broadband connectivity.” Negroponte certainly knows how to get your attention! According to Negroponte (pp. 118-119):
“Over the past 30 years, telecommunications has enjoyed three major changes, each a real epoch. The first in the ‘70s was digital. The second was packet-switching. The third was wireless. Each spurred some fundamental innovation. The first launched multimedia, among other things. The second, ‘always on’ connectivity. And, the third, functional mobility. …3G is too little too soon, with none of the attributes of a real generational shift. It is still voice-centric at a time when data usage is gaining fast, a conversion that 3G can nowhere fully accommodate. …By chance, the computer industry has been driving a parallel and seemingly unrelated initiative for wireless local networks, called 802.11. …Five years ago, I put a wireless LAN in my home in Boston. At the time it cost about $2000 for the base station and $500 for each device I wanted to connect. Today, it cost $120 and $50, respectively, and the price is dropping. As a result, this kind of networking is growing wildly, with a conservatively estimated 15 million connection in the US. But 802.11 systems – now available in a variety of flavors – do not stop at the walls of your home. …Think of a pond with one water lily, then two, then four, then many overlapping, with their stems reaching into the Internet. …Look at the numbers: 3G, in its most generous projections, will deliver data speeds of 1 megabit per second – in two years. Today, Wi-Fi commonly provides 11 megabits, offering up to 54 megabits. Which standard do you think will be adopted? …In the future, each Wi-Fi system will also act like a small router, relaying to its nearest neighbors. Messages can hop peer-to-peer, leaping from lily to lily like frogs – the stems are not required. You have a broadband telecommunications system, built by the people, for the people. …Three things make this peer-to-peer structure so interesting. First, its emergence and growth are viral. …Second, its performance increases with the number of nodes. …Third, there is concern about electromagnetic radiation. …Whatever the evidence, the topology of multi-hop networks needs less power, as the signals go only a short distance. One can assume that lower power means lower health risk. …Spectrum today is managed like real estate carefully parceled out by government. Recent high-priced auctions have established enormous and unrealistic prices for these properties. …Yet new ways of running the pond are emerging, because we can pack more and more intelligence into the water lilies and frogs. Using less power and at lower prices, wireless spectrum can be employed more efficiently. …What people have learned with Wi-Fi, and recent experiments with spread spectrum and CDMA is that we can rethink how we allocate spectrum. We can consider parts (maybe all of it) as a large commons. …To avoid a tragedy of the commons, akin to overgrazing, people need to work, for example, within power constraints. Fine: It’s like agreeing not to yell ‘fire’ in a crowded theatre. …A dirty little secret about 802.11b is that it can cover more than 20 kilometers with suitably directional antennas. Imagine reaching places that do not have sufficient commercial value to justify classic infrastructure. In these cases, the viral nature of unlicensed telecommunications becomes a major force of human development, transforming everything from education to entertainment, hospital to hiring halls. And won’t that make an astonishing splash.”
Who says that a world-renowned MIT scientist cannot also master “Gee Whiz” rhetoric! Not me, I practice the art myself, just not as well. Rhetorical mastery has always been part of the scientist’s game; we simply confuse the public by teaching what Hans Reichenbach termed the “reconstructed logic” of pure science, when the “logic-in-use” cannot dismiss the human need to compete or excel by simply doing your damndest to make your ideas fly and your experiments work. Unfortunately, I do not have time to critique the rhetorical devices thoroughly. Besides, I resonate to many of his themes, see its kernels of truth, and always admire watching a master at work. Otherwise, I would have given you a compact and less rhetorically powerful summary.
Negroponte admitted that CDMA and spread spectrum are at the heart of efficient use of the spectrum. This is so because CDMA offers a minimax solution to the problem of interference. What he does not say is: a competitor could choose to yell “fire” by jamming your Wi-Fi signal.
What he does not say is: although he does not mind that other people also use his basement Wi-Fi lily pad, AOLTime-Warner is bringing legal suits against those who use its services to connect their lily pads to it and then distribute proprietary content for free.
What he does not say is: CDMA2000 1X and 1XEV-DO at 450MHz can offer better coverage, far beyond 20 km, in the Australian outback because its government wants universal telecommunications capabilities to be available to its citizens living in stations where his 20km-frogs cannot jump the distances between these spread out lilies.
What he does not say is: many businesses and individual citizens do not want others to overhear their data conversations.
What he does not say is: what the plan is that coordinates and regulates this viral mass of overlapping lily pads that must produce co-channel interference.
What he does not say is: how to prevent that mutual interference? What he does not say is: how do you prevent the lilies from trying a simple-frog-solution: raising their “rib-bip” power levels a notch until all the croaking whispers become the equivalent of shouts of “fire!” in order to be heard in the increasingly noisy pond of massed lily pads.
What he does not say is: the tragedy of the commons may be repeated if his appeal to commonsense is not sufficient to change, if not human nature, then the human tendency to make decisions that further one’s own interests without regard for others’ interests.
What he does not do is: weigh the counterarguments. Let me make three, after I set the stage. As the article in Wired, which preceded Negroponte’s, said in its title, it is a “Long Road to Internet Nirvana.” Amen!
Brendan Koerner (p. 110) uses the familiar vehicle of tracing a hero’s journey, “Sky Dylan Dayton likes to live up to his Age of Aquarius name.” A highlighted quote: “Wi-Fi will be built into everything,” says Dayton, “Its like trying to imagine all the uses of electricity before it was invented.”
Koerner’s take on Dayton’s Boingo is that its hot spot business plan that asks for $75 a month won’t fly if the airports don’t let it in or if Microsoft or the Telcos jump in. He speculated that Dayton, who also founded EarthLink, knows that the Jackpot comes when, say, Sprint buys in, as it did for EarthLink. He concluded (p. 115), “The real EarthLink model may be simple – and brilliant: Generate some buzz, wait for the big players to get in the game, cozy up to a partner, and get out of the way.”
I agree with Dr. Alfred Chandler that new industries are founded by first-movers who commercialize a technology at home and internationally. Peer-to-peer networks are intentionally outside the world of business, seeking to undermine it or redefine it for variously interpreted “higher” or “lower” purposes. But, building industries requires an integrated learning base of organizational capabilities, which are repositories of knowledge and generative resources for renewal and advancement. Industry-builders use their first-mover advantage and profits to advance the enterprise and define the industry. So, first, I ask: Who is successfully commercializing (and with what business plan) Wi-Fi?
Remember that it takes a communication link to bring Internet data to Wi-Fi. Someone must supply and service that link before the Wi-Fi dream begins and becomes “a global fabric of broadband connectivity”. How do the customers overthrow the communication suppliers? Is it that a carrier-free network can spontaneously emerge if a company like, say, Intersil provides the microcomputer brains, which alone become sufficient, without any further augmentation, to power a virally emergent mass-market? Is it give a man a cheap lily pad and the world will become a lily pond? Will this work in India? Does it assume that once you have a standard like 802.11 and a “self-interest-free” process of extending it, then a value web, which has no central hub of value-added power, can form around allegiance to the standard itself and the seductive idea of peer-to-peer computing to supply a viral mass market? When does the standards war erupt that seeks proprietary advantages? Who has a business plan that works? With some answers and the ability to understand the strategy and the stepping-stones in this new dynamic path, I might want to invest myself. But now, I am blind and cannot foresee.
Second, I ask: what keeps a peer-to-peer network free from institutional control? Given history, it is plausible that a shakeout will occur if Wi-Fi is also in the midst of the telecom technology bubble. In fact, Wi-Fi business shakeouts are already underway as companies still seek a viable business plan. Who keeps Project Angel out? Aren’t the large companies, including the Telco’s, just waiting to see if this works before they come in to mange the business process, as they seem to be doing in Asia and Europe. If so, should we not wait to see who establishes competitive advantage? When does the government decide that your Wi-Fi is interfering with my commerce or my communications and step in, with its big regulatory boots to stomp on Wi-Fi dreams? Are the residual uncertainties still unbounded by what is necessarily a far less than clear view of the future of Wi-Fi?
Although I have difficulty seeing it clearly, however, I admit that Wi-Fi’s technology has a probable future. I simply suspect it will become another technology, perhaps a very significant one, within a stream of communication technologies, each having a cluster of competitive advantages that only partially overlap with one another. This is not to say that Negroponte’s vision is silly, but just that there are many residual uncertainties that lie between the present and a global broadband fabric of peer-to-peer networks. And, that it is exceptionally difficult to change regulated spectrum into an unregulated commons that won’t be trashed.
Third, even if European 3G is a straw man, then 3G CDMA still is not. Because the world has looked to Europe as the leading edge in mobile wireless, this European mindshare keeps critics of 3G from seeing how Qualcomm and Asia are shaping 3G’s future. The critics still act as if Europe fails, then 3G fails also.
If we return to the basic premise in Negroponte’s argument, it was, “Against this background of momentous progress, today’s wireless providers are about to make a small, almost irrelevant change, moving to the so-called third generation of wireless. …It is still voice-centric at a time when data usage in gaining fast, a conversion that 3G can nowhere fully accommodate.” Is this so?
The “background of momentous progress” created real epochs: first, digital; second, “always on” connectivity; third, functional mobility.
Yet, at too great length and with too much redundancy, I contend that Qualcomm provides digital connections, including multimedia packet-based connections, that are always on, and whose functional mobility makes them always with you. Moreover, voice remains a powerful source of human connection that still requires the functional mobility of wireless. And, as QChat illustrates, VoIP is coming to mobile wireless.
Furthermore, mobile “data usage is also gaining fast.”
Still further, the use of spread spectrum to solve issues of interference and spectral efficiency, taken together with other discontinuous advances, is sufficient to qualify 3G as a new epoch: mobile connections, always on, always with you, that are digital, packet-based, and continually advancing functionalities necessary for mobile communication, data applications, and wireless Internet.
To ask mobile communication to be as fast or even as cheap as fixed wireless designed for a network of computers virally grown into a peer-to-peer network is like asking an Emu to fly, when the Emu became adapted to a specific environment free of large predators. So, too is CDMA2000 optimized for mobile voice as 1X or mobile data as 1xEV-DO. Qualcomm contends that adaptive fitness requires separating the channels to make use of advanced coding that enables maximal spectral efficiency within separate voice or packet-data streams. It would sound foolish if I claimed that Wi-Fi couldn’t carry a frog’s croaking voice from one lily pad to the next. Everyone would quickly say “voice” or “mobility” is simply not Wi-Fi’s thing. Technologies, including mobile ones, are intentionally specialized to serve specific purposes.
Some dream of Jeannie with the light brown hair, I dream a scenario where Americans require faster mobile data streams because they have become so accustomed to fast Internet throughput at Wi-Fi hotspots or in peer-to-peer networks. [The bottom line: Qualcomm maintains that Wi-Fi is complementary to 3G, not a substitute for it.]
UltraWideBand. Another indirect competitor is ultrawideband (UWB) radio, which is reviewed by Erika Jonietz in the September 2002 issue of MIT Technology Review. Once again, commercialization and regulatory issues are prominent in UWB technology, which was derived by the military in the 1960’s as “radar that could see through trees.”
UWB emits extremely short bursts of radio waves, just billionth or trillionths of a second long. Each pulse is spread across an ultra wideband, covering up to several gigahertz of radio spectrum. Modulating some aspect of the pulse, its timing, amplitude, or polarity, transmits information. The radio system is “brain-dead simple to build,” working like a tuning fork. A semiconductor chip sends carefully timed electrical pulses to an antenna, which responds by sending radio waves at every frequency possible. The simpler circuit designs and pulsed transmission requires ultra low power. The interval between pulses is so narrow that it can avoid multipath interference, or where echoes are present, sum the multipaths. Admittedly, low power and little interference are delights that stimulate wireless wet dreams.
The FCC decision in February 2002 allowed UWB to be commercialized in unlicensed spectrum along side Bluetooth and Wi-Fi. According to Jonietz (p. 74, emphasis added):
“The good news here for companies deploying ultrawideband systems is that they will not have to pay for the spectrum. The bad news is that to assuage licensed service providers (like cell phone companies) who fear that ultrawideband might interfere with their slices of radio spectrum, the FCC put strict limits on the new technology. Consumer ultrawideband radios are permitted to transmit only very feeble power signals, at one thousandth of the power that personal computers are allowed to radiate just by being on, and only in specific frequency ranges: below 960 megahertz, between 3.1 and 106 gigahertz, and between 22 and 29 gigahertz. Practically this means that the new radios will be limited in either the distance they can transmit or the data rates they can achieve.”
Practically, this means that UWB is limited to personal area networks, meaning competition for Bluetooth.
One the one hand, proponents claim that the technology’s strength goes beyond data transfer to its unique ability to combine data transmission with location information to perform functions like collision avoidance, asset tracking, and firefighter tracking in burning buildings. On the other hand, “Sprint PCS, for example, conducted tests indicating that ultrawideband signals could lead to more dropped calls and even lower the number of calls the network could handle, meaning more busy signals.”
When, on both sides, you have credible scientists who are surrounded by companies with vested interests, it means either that the technology is still so immature that no one can “demonstrate unequivocal excellence to prove excellence,” or that expectations management is hard at work to hold off the next technology paradigm.
For both Wi-Fi and UWB, I have yet to put in the amount of work necessary to develop a truly informed opinion beyond my “stubborn?” or “wishful thinking?” belief that it is still too early to announce a potential winner in the discontinuous or disruptive substitution games. So, any Qualcomm investors are warned to do their own due diligence. Damn, it’s hard to predict what might be, will be, or is disruptive to the best-laid plans of mice and men. |
