More Static for 3G

Pity the telcos. Or scorn them for their bad investments. Remember the billions they pumped into 3G, that supposedly transformative technology that would have us all downloading Matrix sequels over our wristwatches and holding videophone conversations with grandma? All that’s beginning to look a little bit moot as another wireless technology, faster and much cheaper than 3G, gains popularity.

Playing spoiler is a wireless Internet access system called Wi-Fi that is increasingly available in airports, restaurants, hotels, subway stations and other public places. Originally intended for use in private home and office networks, Wi-Fi (which stands for wireless fidelity) isn’t as sophisticated as 3G cellular. The small, stand-alone Wi-Fi transmitters that pass information between computers and the Internet have a range of about 90 m; you can’t roam far from a base station without losing the connection. But blazing speeddata zips along at 11 megabits per second, more than five times faster than the transfer rate of planned 3G systemsmakes Wi-Fi a practical way for commuters to download their e-mail while waiting for an airplane, a train or a client.

If it continues to spread, Wi-Fi could capture up to one-third of the revenues mobile carriers had hoped to get from corporate 3G users, according to some industry analysts. Portable computer makers now sell many models with built-in Wi-Fi capabilities (the technology is also referred to as Wireless LAN, for local-area network, or as 802.11b). Setting up a network takes no license and no special skills. A simple base station costs as little as $300.

Grassroots Wi-Fi access points, called “hot spots,” are already spreading throughout Asia. Hong Kong’s Rosedale Hotel, for example, wanted to market itself as a cyberboutique. Last year the establishment spent a mere $650 to install Wi-Fi and now gives wireless broadband service away to guests. In Singapore, networking giant Cisco systems has helped put hot spots in A&W Restaurants, shopping plazas and at the city’s convention center. In Japan, NTT Communications has announced it intends to sprinkle Wi-Fi base stations around the countrya move that observers say could pickpocket revenue from sister company NTT DoCoMo’s pioneering 3G network.

The appeal seems obvious to those who have tried it. “My students look at this new technology with such awe and admiration,” says Lee Kook Heon, a Ph.D candidate and teacher at South Korea’s Sahmyook University who uses Wi-Fi to retrieve visual aids from the Internet during classes. “It’s easy to use. I would prefer it over [3G].”

Wi-Fi won’t make 3G obsolete. It’s impractical to blanket a city with hot spots. In Asia, access is provided by a hodgepodge of private businesses and independent operators, some offering it for free, others charging small fees. Nevertheless, some think that mobile network operators would be foolish to ignore it. Carriers “can roll out [Wi-Fi] services much quicker than 3G,” says Shamir Amanullah, program leader at marketing consultancy Frost & Sullivan in Kuala Lumpur. “3G networks cost up to $1 billion to set up and that won’t give them lots of pricing flexibility.”

South Korea, home of some of the most advanced and popular wireless data services, has already caught on. In February, Korea Telecom (KT), the nation’s largest telecommunications company, started selling Wi-Fi access in addition to its regular cell-phone service. The company has installed 1,000 access points in major cities and plans to put in thousands more. Competitor Hanaro Telecom has installed another 450 access points in places such as Burger King restaurants. “Koreans are used to high speed Internet in their homes and offices,” says Hahn Won Sic, managing director of the fixed-mobile convergence business team at KT. “Now they want to be able to get it everywhere.” It could transpire that Wi-Fi is used by only a small group of communications-crazy customers. So far, KT and Hanaro combined have signed up fewer than 300 users. But KT is forecasting 3.6 million Koreans will by using the networks by 2005. South Korean telcos are betting on Wi-Fi, and hoping that the next broadband message appearing on their wristwatches doesn’t describe a new, killer technology.