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The Path to the 4G Wireless Era

  • “Cellular radio is not so much a new technology as a new idea for organizing existing technology on a larger scale.”
  • George Calhoun, author

Just as many of us are getting up to speed on our 3G phones and what they can do, buzz is already starting to develop around 4G wireless. 1G, 2G, 3G, 4G, WiFi, WiMax. Is this just technobabble, or do you really need to be aware of these? My answer is an emphatic yes, especially given the less-than-stellar track record of both individuals and companies at anticipating the impact of technology on our lives and organizations. We do not have to look back very far to see where the best “experts” missed the signals of change or possibly even overvalued them for an emerging technology area. Many technologies take years before they have a significant impact on markets or consumers. It took almost three decades before the Internet’s potential to disrupt the retail market was realized, as shown in Figure 1.2. Yet along the road are many carcasses of companies that overinvested in what they thought was a “sure thing” during the Internet bubble, only to find out that consumers weren’t ready to change.

Figure 1.2

Source: IDC Internet Commerce Market Model, Version 9.1

Figure 1.2 The delayed payoff of e-commerce3

Another example is biotechnology, where the promise of genomics-based medicine has been around for many years. DNA was discovered in 1953, and the first gene sequencing was done in 1972. Yet the mapping of the Human Genome was not completed until over 30 years later, in 2003. The biotech industry reached $23 billion in 2000, rising to $50 billion in 2005 despite $350 billion invested.4 Many unexpected social, political, and technical hurdles caused biotech to take much longer than expected to deliver significant benefit to the healthcare market. Many investors, including governments, placed a lot of chips on the promise of genetically engineered drugs, only to find out that they were not ready for prime time.

Much like the delayed payoff of e-commerce and the market impact of biotechnology, the evolution of wireless has been hard to predict. Back in 1947, when the first cellular concept was proposed at Bell Labs, no one could have imagined the global wireless revolution that would be sparked decades later by this new technology. As with lots of other nascent technologies, large players, such as the FCC and AT&T, failed to see the potential, as evidenced by the following account:

  • “First, AT&T underestimated how important wireless communications would become. At the time of the break-up in 1984, AT&T relied on a report by McKinsey, a consultancy company, which claimed there would be fewer than 1 million wireless phone users by 2000. In fact, there were 740 million. Cellular technology was then spotty—calls were often lost, the signal short and the power used by devices high—so AT&T declined to enter this small market. Until, that is, 1994, when it paid $11.5 billion for McCaw Cellular, which became AT&T Wireless and was sold last year for $41 billion.”
  • The Economist, January 2005

You can see how AT&T may have developed this myopic point of view. First-generation cellular, or 1G, was defined by bricklike bag phones with bulky car antennas (see Figure 1.3). They were limited to niche professional users, hardcore road warriors, and safety-conscious consumers. When driving in North America, you could travel through vast expanses where the device did not work. At the time, mobile phones were huge and expensive ($1,500 or more), and service also was expensive and not available everywhere.

Figure 1.3

Figure 1.3 A typical 1G “brick phone”

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