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Sprint to meet WiFi halfway

All your base stations will belong to them

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There was a time when the cellular networks fought tooth and nail to keep every packet of data running through their masts.

But now there are just too many pipes to choose from. With the take-up of WiFi hotspots and no less importantly, the first PMG phone from Siemens, the carriers must make way. The combination of wireless and broadband makes an attractive alternative to wired homes and small businesses - there's even an open source VoIP project called Bayonne - and thanks to PMGs there are even more tricky combinations.

With a personal mobile gateway - a Bluetooth device such as Siemens' new phone can use landlines when you're indoors, and switch to the GSM/GPRS when you're outside range of the PMG.

Comments by Sprint PCS chairman Len Lauer in the current issue of Business Week suggest that he knows this.

"In 18 months to two years, some mobile-phone traffic could go through the private Wi-Fi network and onto the IP network, and that's somewhat of a threat," he said. However since Sprint already provides IP services, it would be well positioned to gather any lost revenue.

Indeed, and it's often overlooked too that the carriers' billing systems give them an incumbent advantage. Lauer also points out that no one has figured out how to make money from WiFi hotspots. They probably never will.

The beauty of the carrier model is that it amortizes investment over many millions of users over a long period of time. It's several factors more efficient than peppering the landscape with 802.11 base stations - and who's going to line them up on freeway off-ramps? - while battery-guzzling WiFi devices will always be more cumbersome and less efficient than phones. Meanwhile the carriers only need to increase voice usage slightly on their more efficient 3G networks and the investment will have been rewarded. 3G is already VoIP.

However such practicalities appear to be overlooked in the current mania. We appear to be in a replay of the dot.com era, when businesses which didn't make money and had little hope of ever making money, were hyped to the skies, such was the desire to sweep away the old order. The future is going to be pretty interesting as it is, without such hype.

And as Lauer hints, the future is more likely to belong to vast cartels of consolidated telcos, rather than a bold generation of upstarts. Is that such a bad thing?

Not necessarily - and not if it's the recipient of enlightened regulation. (You can read Lauer's obligatory bitch about number portability at the end of the Business Week article.)

No, the real value - and wealth - comes from the services that we use, not from fighting over the plumbing. The last thing the USA needs - it's already handicapped by three incompatible air interfaces (GSM, CDMA, IDEN) - is another infrastructure war.

The full interview can be found here. [Thanks to Mobitopia for the link] ®

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