Getting 3G back on track

Summary:The world's telecommunications industry is at a crossroads: It has just transferred some $100 billion to the public for the right to use additional airwave spectrum to provide people with next-generation telecommunications services.

The only problem is that the very same public has given little indication of needing any of the new services envisioned for that spectrum.

Right now it looks like the public will take the $100 billion, thank the industry very much, and go spend the money on something else. In short, the wireless industry may have put the cart before the horse.

So what went wrong, and how can we get 3G back on track? We first need to examine two fundamental and classic fallacies.

It seems trivial to state that building successful products requires you to think about the value that customers would get -- essentially, the "Why buy it?" But despite the triviality, we stumble on this problem again and again.

In the wireless industry, people routinely ask what types of applications will require the higher bandwidth offered by 3G, assuming this line of reasoning will reveal the "killer application." The answers include things like mobile videoconferencing, simply because this kind of application is a hog for costly 3G airtime.

But have you ever met a person who went around frantic about not having access to mobile videoconferencing? If you have met such an individual, and then explained how costly it would be per minute, you might find that their pain was not so bad after all.

All this is not to say that no one will use mobile videoconferencing. But we're talking about a limited and specialised group of people with a particular need. In other words, don't expect a mass market anytime soon.

Because consumer use of a product is so much more visible, there is a classic tendency to first seek consumer adoption for a new technology. When you figure billions of consumers will buy your product or service, the numbers clearly add up more quickly than if you count only on the 1,000 largest global enterprises.

However, conventional notions about consumer adoption rates for new technology actually rest on a fallacy. Sony did not go straight to consumers with the compact tape technology that ultimately became the Walkman. The company originally sold the product to recording studios. That, in turn, validated the need and helped fund the subsequent consumer development of the Walkman. The PC followed a similar adoption path. It became a widely used consumer device only after two decades of computer use by businesses.

Successful technology companies nearly always get their start by gradually learning to serve the specific, high-value requirements of corporations. Horoscopes, stock quotes and weather reports may be wildly popular with consumers, but they never convinced people it was time to buy and use WAP phones.

Special business applications built for mobile devices are in use all over the world, though they may not be very visible, because they don't appear in your living room. Still, these services save businesses millions of dollars every month and represent real value that we, along with our partners, get to share in.

So what's the answer? Simply negate the two fallacies and combine them, and the picture becomes a bit clearer: Think "business value" first, "consumer technology" later.

It turns out that we have spent 30 years automating the back ends of our businesses to the point where new gains are not coming as rapidly as before. However, the front end of our enterprises -- that is, the roughly 40 percent of employee hours spent away from a desk, or those that should be -- have so far been virtually un-penetrated by software. What's more, the software we use remains mostly disconnected and thought of as an extension of the desktop.

Third-generation technology is wonderful. It is the highway system that will finally give us reliable access to the mobile frontier of a new world. However, just as the first roads were built for commerce and military -- not private transport -- a successful 3G network will have to be built for businesses first.

The potential value to be created from innovative business applications is staggering and could translate into trillions of dollars in savings flowing back to the industry, eventually contributing to making 3G sufficiently economical for consumers to benefit as well.

But it's up to us, the wireless industry: Will we conclude that because fast cars require the fastest roads, we need to make lots of sports cars? Or will we realise that businesses have a real need to haul goods to grow their market and our economy, and that solid roads can help accomplish that goal if we make great trucks?


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