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The Unwiring Begins

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DQI Bureau
New Update

Nicholas Negroponte, founding director, Me-dia Lab, MIT, in his book Being

Digital had theorized that the information being ex-changed over wires, would in

future come through the airwaves and the reverse would also hold true. He

reasoned that bandwidth in the wires was infinite but airwaves didn’t give us

that luxury. And it was therefore important to conserve it for communicating

with objects and beings that moved. It’s time to examine if the Negroponte

Switch has been flicked on.

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Some estimates say that in as many as 97% of homes in the US, coaxial brings

in the television. So in retrospect, we can easily say that Negroponte was right

in the crystal ball gazing, for the switch is at work as far as television is

concerned in both developing and developed markets, with varying degrees of it

having happened.

Dig a little below the surface and one realizes the far-reaching impact of

the Negroponte Switch. While we know that computing and communication have

converged, it’s just a matter of time that connectivity to the network will be

ubiquitous. And this is not what Morpheus had in mind when in the Matrix, he

said, "The Matrix is everywhere."

On a brightly lit Tokyo street in the Shibuya district, the one thing that

catches the eye, apart from the hustle-bustle of the traffic and the huge neon

signs, is the mass of Japanese youth that’s constantly pecking on their

next-generation mobile phones. One among them is answering an e-mail from his

girlfriend. Cut to another scene: somewhere in the US far away from the Tokyo

traffic, a young executive waiting at the Denver airport lounge is vigorously

typing into his notebook. This executive

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dressed in not-so-formal attire is typing into his notebook, answering e-mail

from his boss.

The mobile phone and notebook will drive the new paradigm of computing. This

new paradigm of mobile computing will have two actors playing the lead role,

both performing different but equally important roles. This is because the word

‘wireless’ connotes different meaning for different people. For some it

means the ability to have access to information and services from the Internet

on their cellphones, while to others it’s the convenience to surf the Net on

their notebooks while on the run. Whatever the meaning, it definitely means one

thing: ubiquity of connectivity.

Falling Prices



The last year spelt good news for notebooks in India. First, the year

witnessed a growth of nearly 50% over the previous year and the average price

point dipped below Rs 1 lakh. It stood at around Rs 85,000. This meant that the

notebook was moving beyond the purview of the corporate user, with professionals

across smaller towns in the country being aggressively targeted as prospects.

And therefore it comes across as no surprise that these falling prices led a

huge volume jump (see chart: The Indian Notebook Market).

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The

Unwiring Forces
Falling Prices
The average price of a notebook stood at Rs 85,000 last year and

the dip continues, now even faster
Fully loaded cellular

phones are coming cheaper too!
Other associated

equipment, like Wi-Fi cards, and Wi-Fi access points, are now much

cheaper


Better Infrastructure
A greater number of

telecom players offer better services at lower price points




Increased Usage
Uptake of services by businesses and end-users has been driven by

falling prices and appropriate applications

Vendors too rediscovered the magic of pricing. Every passing day, newspapers

and magazines are inundated with offers from vendors about ever lower prices.

The magic number for the notebook sellers now is Rs 50,000. Many of them have

joined the race to reach it faster and better than the rest. In fact, Acer has

been able to break that too by offering a Celeron-based notebook at a sub-50k

price point. Other biggies like IBM and HP are not too far behind. HCL’s

aggressive distribution of Toshiba notebooks at competitive prices for a diverse

set of users also deserves a mention here.

The mobile computing revolution in the country is being acted upon by another

positive wind of change–the marked improvement in telecommunication

infrastructure. The end user today has a number of options available to connect

to the Net. The CDMA service provider is in the race, competing with the

fixed-line service provider to help the customer, not to forget the local

cablewallah who offers broadband over the cable.

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But that still tethers the notebook on to a desk. Will the notebook be

really mobile?







And the answer lies in a contraction that has the fancy of the entire world

today–Wi-Fi.

Wi-Fi promises to break the chains that bind the notebook. And interestingly

it has caught the eye of service providers and vendors alike.

It’s not Just Hype



Wi-Fi or 802.11b uses unlicensed radio spectrum to enable computers within a
short distance of a few meters to share an 

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In India too, the coffee bars and the cafes have been the innovators and hotels and convention centers are now joining the race to go hot

Internet connection. The area

covering a few square meters around the base station is what is a hotspot. Base

stations are springing up all over the place. Gartner Dataquest estimates that

15 million Wi-Fi adapters for computers and 4.4 million base stations were sold

in 2002. While most of these went to private organizations for their local area

networks, the activity for public hotspots is also touching a near frenzy. Hotel

lobbies, airport lounges, convention centers, universities, coffee bars, and

even homes boast of being hot today. In the US, just about 1,000 hotels offered

Wi-Fi in 2002, and the number is expected to swell to 25,000 by 2007. IDC also

estimates that globally the number of hotspots will touch 85,000 by 2004. A

well-known network of hotspots is the one operated by T-Mobile that covers over

2,000 Starbucks coffee bars in the US alone.

Intel also plans to ‘facilitate’ 1,000 hotspots in the country in 2004.

Bharti Infotel has also announced Wi-Fi package along with its DSL service for

Touchtel users in the states of Delhi, Haryana, Tamil Nadu and Karnataka. The

service is primarily targeted at the SME and homes, and will enable Internet

speeds of up to 128 kbps. The company is looking at taking the Wi-Fi network

public in its second phase, after a certain customer base has been established.

So it comes as no surprise that Bharti is working very closely with Intel to

promote the adoption of newer technologies and develop applications for

wireless. And then of course, the government has taken note too. While the

802.11b has been de-licensed for indoor usage, the government is looking at

extending it not only for outdoor commercial usage but is also considering to

ease restriction for the 802.11a and the 802.11g standards.

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However, we need to look at a canvas that goes beyond just Wi-Fi. The bigger

picture is wireless.

The Application is King



Wireless has the potential to dramatically change the way businesses

interact with not only their customers and suppliers but also the way the

business processes are aligned. So can it then be a matter of coincidence that

Radio Frequency Identification 

(RFID) is catching the attention of one and many.

The Internet has, for the first time, offered the luxury of entering into a

dialogue with the customer, though the promise of mass-customization is still

unfulfilled. Wireless can help companies access customer information in real

real-time. With so many companies already running CRM software, the reduction in

information float–the time taken for information to reach the user from the

point of collection–will aid better customer service and faster response (see

sidebar: Think Business Processes).

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According to Prof. Ranjay Gulati of the Kellogg School of Management,

"Wireless data is unique in its ability to combine personalization and

enrichment to create powerful end-user applications." Personalization goes

beyond mass customization and depends on the degree to which the data available

is time- and location-sensitive. So simply surfing the Web is just seeking

static information that can be customized to a certain extent, based on a few

simple parameters. So Web page customizations are not real personalizations.

Enrichment, on the other hand, is the degree of relevance of the information to

the user, coupled with the level of interactivity. For instance, an auto part

salesman armed with a wireless device can access not only his e-mail but also

gets a fix on the inventory level of a requested component from the nearest

warehouse. This serves as a perfect example of wireless data that is highly

personalized and comes with a high degree of enrichment.



A

similar trend is expected in India. Intel is looking at facilitating

1000 hotspots in 2004. Sify is another player upbeat about hotspots.

The Second Lead Actor



The cellphone of the future will be as power-packed as the PC of today and

connectivity to the Internet will be freed from the shackles of the connecting

wire (it has already happened to an extent). The global population of mobiles is

growing by leaps and bounds. An example to this effect will help amplify the

identification of this trend. Sometime around the middle of last year, Taiwan’s

transportation and communication ministry announced that the cellphone

penetration in the country had crossed the 100% mark. In a country populated by

22.3 million people, it boasted 22.6 million cellular phones. Considering that

just over 20% of the Taiwanese population is under the age of 14, a fair number

of them have more than a phone each. And the fixed-line penetration stood at

57.7%, indicating that a greater number of Taiwanese had a cellphone. What you

see in Taiwan is nothing but the reverberations of a global trend. According to

the numbers released by International Telecommunication Union, the global

population of cellphones crossed the fixed-line numbers this year (see chart:

World Telephone Subscribers). And this’s a trend that’s being echoed in

India too.

The Cell in India is Rocking



According to the Cellular Operators’ Association of India, the subscriber

base stood at 20.72 million in November 2003, having more than doubled from 9.73

million around the same time last year. Interestingly, the growth rate in

cellular penetration in the four metros paled in comparison to the growth that

the rest of the country witnessed. The average usage also went up from 200

minutes per month last year to 290 minutes per month in 2003. The domain of the

cellular phone is moving beyond just voice; this year also saw a substantial

jump in revenues that accrued to service providers from short messaging services

(SMS).

According to Mobinet–a biannual study conducted by AT Kearney and Judge

Institute of Management, to map the usage of mobile phones–SMS has attained a

mass-market usage. This trend is quite clearly reflected in the Indian market

too. The last year saw a much larger number of users sending messages, thus

sending the SMS contribution to the ARPU up at nearly 4%, as reported by

Voice&Data. The next step in this evolutionary process will be to use the

cellphone for more than voice and text.

And this is where an Internet-enabled (IE) device makes its entry. IE devices

come with WAP, GPRS, i-Mode or any other technology platform that allow it to

access Internet-based content and services. According to a report from In-Stat/MDR,

IE device shipments will increase from approximately 430 million in 2002 to

approximately 760 million in 2006, at a CAGR of 15%.

The growth will be led by mobile handsets, which will sell in much higher

volumes than alternative IE devices like PDAs. The worldwide penetration of IE

phones today stands at 43%, at an impressive CAGR of 37%. In addition to the

ubiquity of IE handsets, drivers like pent-up demand for wireless applications,

and the availability of exciting new products features and services will

catalyze the demand.

Relooking the Assumptions



Many of us look at the future wearing lenses of the past. When the telephone

was replacing the telegraph, a large number of people thought it was just a

talking telegraph. Why? Because it used the same wires. But the telephone turned

out to be something entirely different. Today, we seem to be looking at the

mobile Internet the way we have viewed the fixed-line Internet. While the exact

form of the mobile Internet may be difficult to visualize today, service

providers will need to create and market compelling services that encourage

adoption of new users (see sidebar: Lessons from i-Mode). It will be services

that will ultimately decide whether a potential user becomes an actual user. And

of course, it’s not a question of whether this boom will come, it’s only a

matter of ‘when’.






Mohit Chhabra in New Delhi

Unwiring India: Wi-Fi? Just say no, says the government

Most of the unwiring of India is happening through the mobile phone

– GSM for voice, and CDMA for voice and data.

That’s a little bit to

do with the low usage of notebook PCs in India, where less than 3% of

annual PC sales are notebooks, adding up to less than 200,000 of them

installed. Last year, over 1.5 million CDMA handsets sold in India; mobile

subscribers jumped 97%, mobiles overtook fixed lines in Delhi, and 7 of 10

phone connections was a GSM or CDMA mobile.

But it’s mostly to do

with government regulations that have stopped the growth of Wi-Fi in

India. Rules that say: No Wi-Fi outdoors without a special license (which

will take months), and only 802.11b indoors without a license (allowed

since 2002).

In fact, even when

"opening up" the 2.4 GHz spectrum, government regulators took

the trouble of specifying "802.11b, indoor use". So 802.11g, the

newer technology which uses the same frequency, is presumably disallowed.

Which kind of puts the

brakes on public hot-spot plans.

One alternative is CDMA,

a viable alternative even indoors, say at home, given its low cost (40

paise a minute from Reliance, over 100 kbps). In fact, in a pilot project

sponsored by Intel, five Shatabdi trains are plying to and from Delhi with

Internet access on two coaches – connected by Reliance CDMA connections.

There is some hope that

sense will prevail in 2004, and a little bit more of Wi-Fi will be opened

up in India–at least the entire 2.4 GHz spectrum, indoor and outdoor, if

not the 5 GHz spectrum. But there isn’t a great deal of hope. The first

step allowing 802.11b happened after Negroponte spoke to the then IT

minister Pramod Mahajan. Today’s IT minister, who appears to have little

time for IT (busy as he has been with disinvestment, and more recently,

telecom), is unlikely to be very worried about whether Wi-Fi happens or

not in India.

Prasanto K Roy

Lessons from i-Mode



DoCoMo’s proprietary 2G/3G mobile-Internet platform i-mode was launched in February 1999. It has attracted approximately 40 million subscribers in Japan and 1 million outside Japan. International users now use i-mode services via

GSM networks in Belgium, France, Germany, the Netherlands, Spain and Taiwan.More than 72,000 Internet sites use the platform to provide a diverse array of content, including stocks, weather, news, telephone numbers, dining, entertainment, shopping, tickets, games and more. I-mode boasts of a lion’s share of Japan’s mobile Internet market. Some estimates put the share in the 60% range. According to ITU, 81% of subscribers in the country browse the Internet on their mobile phones.Apart from e-mail, i-mode offers compelling content, which attracts more users, and therefore more content, thus creating a cycle that can be best referred to as virtuous. While Internet users are not used to paying for content, mobile users pay for services.

Barring

the exception of USA, cellular phones outnumber PCs by a huge

margin. So the future of connectivity to the Net will be as much

driven by the cellular phone as the notebook or the desktop.

Apart from e-mail, i-mode allows users to access information based on data volume, not connection time. So while it is easy to pay, the content and services are equally attractive.

One of the most popular applications for both 2G and 3G i-mode users is multimedia e-mailing. Subscribers to 2G i-mode can use camera-equipped phones to take and transmit images. And 3G users can also e-mail video clips.



Incidentally, i-mode’s 2G services enjoy equal favor with the young and the not-so-young. 53.2% of the users of this service are aged 39 or under, while only 42.8% are above 39. But the user profile of its 3G service tells a different story, with nearly 71% of the users falling in the 39-or-under category. And 44% of the user population of the 3G service are aged below 30. The huge population of prepaid customers in India can work to the advantage as even teenagers now have access to cellphones.In the words of Joe Manget, vice-president, Boston Consulting Group, "In Europe and Asia, many people commute to work on public transport, and like to use their mobile phones while they are on the move."

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