The magazine of the Melbourne PC User Group Wireless Australia 2005 Peter Lange |
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Peter Lange attended the Wireless Australia 2005 conference and exhibition at the beginning of March and shares some of his impressions with PC Update |
It was amazing to see how much bigger this event was in 2005 compared to last
year's equivalent, the Australian Wireless Summit 2004. See report in PC Update,
April 2004. There were close to 1000 attendees this year compared to 300 a year
ago, 35 exhibitors this year compared to five. The number of presentations given
in the same two-day time frame was much higher and Day 2 had to be split into
two parallel streams. Not unexpectedly, this year the event was held at a bigger
venue, the Sydney Convention & Exhibition Centre. All of this clearly shows a
rapidly growing interest in wireless technologies and applications in Australia.
Where Is the Growth Coming From?
Not only are the conferences about Wireless technology growing, the industry
itself has taken off. After several quiet years following the dot-com and
telecom bust of 2001 there is much catching up to do.
- Telecom companies again have budgets available to upgrade their ageing
infrastructure
- The Australian economy, among others has been healthy, so businesses and
consumers are happily spending
- Technologies and service offerings have matured and ground-breaking new technologies have become available
Michael Zimmerman of Technology Venture Partners (TVP), Australia's largest specialist technology venture capital firm, confirmed this view. TVP has seen the amount of venture capital flowing into Information and Communication Technology (ICT) companies rise by 8% during 2004, the first increase in 3 years, with investments in wireless companies rising by more than 50% during the same period.
On the other hand, there are some significant saturation effects. The proliferation of mobile phones is a glaring example. Market penetration has reached 80% which means that four out of five Australians have a mobile phone and this figure relates to the entire population - including the very young and the very old -so the penetration of the addressable market is even higher. Mobile penetration has already exceeded 100% in some other countries (with many people having more than one phone).
When there is nobody left to buy, where will growth come from in saturated markets? It can only come from new technologies and new devices; companies offering more services and applications and people are willing to part with their money to have them. Therefore the technologies in which venture capitalists such as TVP are most interested in financing include anything that is capable of increasing both the usage and the average revenue per user (ARPU).
Confusing Variety
Which wireless technology or service is the right one? Broadband is booming in Australia because prices have come down and the available technologies are clearly defined. It's mainly DSL, cable where cable TV networks are available, and satellite access for users in remote locations. The problem with the take up of wireless broadband so far has been the confusing variety of technologies and service offerings.
Mobile data services, including Web browsing and checking your e-mail, have been available over the mobile phone networks for years, but at high cost and the painfully slow speed of 9.6 kbit/s. This improved with the introduction some time ago of General Packet Radio Service (GPRS) which offers data rates of up to 171 kbit/s. GPRS is considered a 2.5G technology, half way between conventional second generation (2G) and third generation (3G) mobile technologies.
As one of the first in the world, the first 3G service in Australia based on WCDMA technology (UMTS) was launched by Hutchison in 2003, offering up to 2 Mbit/s, comparable to wired DSL-based services. The other mobile networks in Australia are all expected to launch 3G services during 2005, with Telstra having signed a network sharing agreement with Hutchison and a similar deal having been struck between Optus and Vodafone. Several networks are also contemplating the introduction of EDGE (Enhanced Data Rates for GSM Evolution), yet another 2.5G technology, offering up to 384 kbit/s.
Telstra claims it had the first 3G service in Australia when it launched its CDMA 1xRTT network in December 2002, but this technology is mostly considered 2.5G at best, offering up to 144 kbit/s. An upgrade to EVDO technology last year lifted the speed limit to 1 Mbit/s, something which deserves the name 'broadband', even though Telstra's definition of this term starts at 128 kbit/s as Ted Pretty, Managing Director for Technology and Innovation reiterated at the conference.
While EVDO stands for "Evolution Data Optimised", other 3G technologies were designed to carry ordinary voice calls as well as data traffic. So far, the service providers have been struggling to identify and develop mobile services other than voice - services in which the customers are interested and for which they are willing to pay.
Generally one can say at this time that the greater the potential maximum data rate of a service, the more limited is its geographical reach in Australia. So the choice for consumers is a trade-off between speed and the required mobility.
WiFi Is Going Mainstream
WiFi or Wireless LAN technology has been around for several years, offering much greater speeds than any
of the mobile data technologies: 11 Mbit/s, 54 Mbit/s and up to more than 100 Mbit/s. Originally designed for Local Area Networks as the name suggests, intended to provide wireless coverage within a house or office, WiFi is also being used for public Internet access by dozens of service providers in Australia.
As Shara Evans of market research company Telsyte pointed out in her presentation, most of these are small regional, even micro-sized operators for whom WiFi is the only affordable technology available to provide such a service. But WiFi has some significant shortcomings for public wide- area applications - its coverage range is very small and it depends on line-of-sight for greater distances.
However, it has been adopted by a number of larger players to provide public "Hotspot" services, including some who were present at the conference, eg. Azure Wireless, BigAir, SkynetGlobal, Xone and even Optus and Telstra - the latter announcing at this conference the completion of blanket WiFi Hotspot coverage in the Sydney and Melbourne CBDs.
For the past several years it had appeared doubtful whether anyone could ever make money providing public WiFi access, but David Gold, CEO of Azure Wireless, thinks the market is now ready. He underpinned that point with the company's revenue graph which also delivered the explanation for the change in the market. Coinciding with Intel's introduction of the Centrino chip in 2003, Azure's business began to skyrocket. The Centrino chip has put WiFi on board the new notebooks as a standard feature, making broad masses of users aware of the wireless networks around them and interested in using them.
The revenue chart of D-Link, one of the world's leading manufacturers of WiFi equipment, bears amazing similarity to Azure's, as presented by David Gold. It has the same steep rise starting in 2003, taking the company into the ranks of those with more than one billion US$ in revenue in 2004. US-based D-Link was represented at the conference by its CEO, Steven Joe, who pointed out another important factor for the increasing popularity of WiFi since 2003. Security concerns have successfully been addressed by the manufacturers, enabling the technology to enter the business market.
Typically, business users are the early adopters of technologies but in sharp contrast to that, most of the initial growth of WiFi was fuelled by private consumers using it for wireless home networking.
Unwired, WiMAX...
Unwired Australia launched its wireless broadband service last year and covers most of Sydney at this stage, with other cities and regional centres to follow. With pricing plans only a few dollars above comparable DSL plans (the 'mobility premium'), the company claims to be signing up 17% of all new broadband users in Sydney already, even though other industry observers estimate Unwired's share to be closer to 10% since Telstra has made major efforts to close DSL 'black spots' in the city (areas where DSL is unavailable). The technology currently used by Unwired provides data rates of up to 1 Mbit/s, but Unwired plans to migrate to WiMAX technology by 2006/2007, as the company's CTO Eric Hamilton described at the conference. WiMAX is capable of data rates of up to 70Mbit/s and has the advantage of being an open standard, in contrast to the technology currently used by Unwired, which is pro-prietarily owned by one company, US-based Navini.
Both technologies, however, have a significant advantage over WiFi by achieving a much greater coverage range per base station, typically several kilometres, making them feasible for wide area applications. Unwired covers most of Sydney with only a little over 70 base stations.
Being a relatively cheap technology, WiMAX is now emerging as a serious competitor to the wireless data services offered by the mobile networks, making the mobile phone companies fear for the viability of their huge investments into 3G licences and technology. And it has the potential to attack the very core business of both the mobile and fixed telephone networks: Voice. VoiP (Voice over Internet Protocol) technology enables WiMAX to act as a wireless replacement for a conventional telephone line, and the mobile variety of the standard, expected to be fully ratified by 2005/2006, will seriously threaten the mobile networks - especially when Intel starts putting WiMAX chips into notebooks from 2007 and even smaller devices like PDAs become WiMAX-enabled as well.
Will WiMAX Kill all Other Technologies?
No. WiFi with its superior data rate will continue to have its use in local area networking (LAN) and can actually serve as a high-speed extension of a WiMAX connection to a home or office.
The mobile network operators will come under serious pricing pressure from WiMAX, but they will continue to roll out new technologies as well, with HSDPA (High Speed Download Packet Access) already on the horizon as the next step after 3G, offering data rates of 10 to 20 Mbit/s. And most of them will probably join the WiMAX bandwagon by adding that technology to their existing nationwide mobile networks at relatively low cost, as already they have added WiFi Hotspots to their transmitter sites.
Last not least, wired technology will always have advantages over wireless, offering greater speed paired with greater reliability and security. ADSL2 services offering 12 Mbit/s have begun to appear in Australia, and Telstra has started to equip its exchanges with ADSL2+ technology. This will push the limit of what can be provided via a conventional old copper telephone line to 24 or even 45 Mbit/s. Eventually, more and more homes will be connected by fibre optic instead of copper lines which will multiply the available bandwidth yet again.
Who needs so much bandwidth? Don't worry, we all will. Who could have imagined only a few years ago that most homes will have any kind of broadband connection at all? New services and applications will be developed and a continuing drop in the price for bandwidth will make us want them. To what extent wireless will challenge wired technologies will still depend upon the identification and development of services that users really want to have while they are on the move, and for which they are willing to pay a mobility premium.
About the Author
Peter Lange has worked as a consultant in the wireless telecommunications industry for over 15 years, helping clients worldwide to plan, build and optimise wireless and mobile telecommunications networks.
E-Mail peter.lange@netcontel.com .
Reprinted from the April 2005 issue of PC Update, the magazine of Melbourne PC User Group, Australia
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