22-03-2011, 12:42 PM
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Wireless Internet Access: 3G vs. WiFi
Abstract
This paper compares and contrasts two technologies for delivering broadband wirelessInternet access services: "3G" vs. "WiFi". The former, 3G, refers to the collection of thirdgeneration cellular technologies that are designed to allow mobile cellular operators tooffer integrated data and voice services over cellular networks. The latter, WiFi, refers tothe 802.11b wireless Ethernet standard that was designed to support wireless LANs.Although the two technologies reflect fundamentally different service, industry, andarchitectural design goals, origins, and philosophies, each has recently attracted a lot ofattention as candidates for the dominant platform for providing broadband wirelessaccess to the Internet. It remains an open question as to the extent to which these twotechnologies are in competition or, perhaps, may be complementary. If they are viewed asin competition, then the triumph of one at the expense of the other would be likely tohave profound implications for the evolution of the wireless Internet and service providerindustry structure. The goal of the qualitative discussion of these two technologies is toprovide a more concrete understanding of the differing worldviews encompassed by thesetechnologies and their relative strengths and weaknesses in light of the forces shaping theevolution of wireless Internet services.
I. Introduction
The two most important phenomena impacting telecommunications over the pastdecade have been the explosive parallel growth of both the Internet and cellular telephoneservices. The Internet brought the benefits of data communications to the masses withemail, the Web, and eCommerce; while cellular service has enabled "follow-meanywhere/always on" telephony. The Internet helped accelerate the trend from voicecentricto data-centric networking. Data already exceeds voice traffic and the data sharecontinues to grow. Now, these two worlds are converging. This convergence offers the1 This most recent draft was prepared by William Lehr, without the benefit of a final review from LeeMcKnight.3G vs. WiFi Lehr & McKnightPage 2 of 18benefits of new interactive multimedia services coupled to the flexibility and mobility ofwireless. To realize the full potential of this convergence, however, we need broadbandaccess connections. What precisely constitutes "broadband" is, of course, a movingtarget, but at a minimum, it should support data rates in the hundreds of kilobits persecond as opposed to the 50Kbps enjoyed by 80% of the Internet users in the US whostill rely on dial-up modems over wireline circuits, or the even more anemic 10-20Kbpstypically supported by those cellular providers that even bother to offer data services.While the need for broadband wireless Internet access is widely accepted, there remainsgreat uncertainty and disagreement as to how the wireless Internet future will evolve.The goal of this paper is to compare and contrast two important technologies thatare likely to play important roles: Third Generation Cellular ("3G") and Wireless LocalArea Networks ("WLAN"). Specifically, we will focus on 3G as embodied by the UMTSand WCDMA standards versus the WLAN technology embodied by the WiFi or 802.11bstandard, which is the most popular and widely deployed of the WLAN technologies. Weuse these technologies as reference points to span what we believe are two fundamentallydifferent philosophies for how wireless Internet access might evolve. The formerrepresents a natural evolution and extension of the business models of existing cellularproviders. These providers have already invested billions of dollars purchasing thespectrum licenses to support advanced data services and equipment makers have beengearing up to produce the base stations and handsets for wide-scale deployments of 3Gservices. In contrast, the WiFi approach would leverage the huge installed base of WLANinfrastructure already in place in many government, university, and corporateenvironments and the supporting industry of equipment makers.In focusing on 3G and WiFi, we are ignoring many other technologies that arelikely to be important in the wireless Internet such as satellite services, LMDS, MMDS,or other fixed wireless alternatives. We also ignore technologies such as BlueTooth orHomeRF which have at times been touted as potential rivals to WiFi, at least in homenetworking environments. Moreover, we will not discuss the relationship betweenvarious transitional, or "2.5G" cellular technologies such as GPRS and 3G, nor will wediscuss the myriad possibilities for "4G" cellular technologies. While all of these areinteresting, we have only limited space and our goal is to tease out what we believe areimportant themes/trends/forces shaping the industry structure for next generation wirelessservices, rather than to focus on the technologies themselves. We use 3G and WiFi asshorthand for broad classes of related technologies that have two quite distinct industryorigins and histories.Speaking broadly, 3G offers a vertically-integrated, top-down, service-providerapproach to delivering wireless Internet access; while WiFi offers (at least potentially) anend-user-centric, decentralized approach to service provisioning. Although there isnothing intrinsic to the technologies that dictates that one may be associated with onetype of industry structure or another, we use these two technologies to focus ourspeculations on the potential tensions between these two alternative world views.We believe that the wireless future will include a mix of heterogeneous wirelessaccess technologies. Moreover, we expect that the two worldviews will converge such3G vs. WiFi Lehr & McKnightPage 3 of 18that vertically-integrated service providers will integrate WiFi or other WLANtechnologies into their 3G or wireline infrastructure when this makes sense. We are,perhaps, less optimistic about the prospects for decentralized, bottom-up networks –however, it is interesting to consider what some of the roadblocks are to the emergence ofsuch a world. The latter sort of industry structure is attractive because it is likely to bequite competitive, whereas the top-down vertically-integrated service-provider modelmay – but need not be -- less so. The multiplicity of potential wireless accesstechnologies and/or business models suggests that we may be able to realize robustfacilities-based competition for broadband local access services. If it occurs, this wouldhelp solve the "last mile" competition problem that has bedeviled telecommunicationspolicy.
II. Some background on WiFi and 3G
In this section, we provide a brief overview of the two technologies to help orientthe reader. We will discuss each of the technologies in turn.
A. 3G
3G is a technology for mobile cellular service providers. Mobile cellular servicesare provided by service providers that own and operate their own wireless networks andsell cellular services to end-users, usually on a monthly subscription basis. Mobile serviceproviders use licensed spectrum to provide wireless telephone coverage over somerelatively large contiguous geographic serving area. Historically, this might haveincluded a metropolitan area. Today it may include the entire country. From a usersperspective, the key feature of cellular service is that it offers (near) ubiquitous andcontinuous coverage. That is, a consumer can carry on a telephone conversation whiledriving along a highway at 100 Km/hour. To support this service, cellular operatorsmaintain a network of interconnected and overlapping cellular base stations that hand-offcustomers as those customers move among adjacent cells. Each cellular base station maysupport users up to several kilometers away. The cell towers are connected to each otherby a backhaul network that also provides interconnection to the wireline Public SwitchedTelecommunications Network (PSTN) and other services. The mobile system operatorowns the end-to-end network from the base stations to the backhaul network to the pointof interconnection to the PSTN (and, perhaps, parts thereof).The first mobile cellular services were analog. Although mobile services began toemerge in the 1940s, the first mass market mobile services in the U.S. were based on theAMPS (Advanced Mobile Phone Service) technology. This is what is commonly referredto as first generation wireless. The FCC licensed two operators in each market to offerAMPS service in the 800-900MHz band. In the 1990s, cellular services based on digitalmobile technologies ushered in the second generation (2G) of wireless services that wehave today. These were referred to as Personal Communication Systems (PCS) and usedtechnologies such as TDMA (Time Division Multiple Access), CDMA (Code DivisionMultiple Access) and GSM (Global System for Mobile Communications). From 1995 to1997, the FCC auctioned off PCS spectrum licenses in the 1850 to 1990 MHz band.CDMA and TDMA were deployed in the various parts of the U.S., while GSM was3G vs. WiFi Lehr & McKnightPage 4 of 18deployed as the common standard in Europe. The next or Third Generation (3G) cellulartechnologies will support higher bandwidth digital communications and are expected tobe based on the UMTS (Universal Mobile Telecommunications System) or WCDMA(Wideband CDMA) technologies.The chief focus of wireless mobile services has been voice telephony. However,in recent years there has been growing interest in data services as well. While dataservices are available over AMPS systems, these are limited to quite low data rates(<10Kbps). Higher speed data and other advanced telephone services are more readilysupported over the digital cellular 2G systems. The 2G systems also support largernumbers of subscribers and so helped alleviate capacity problems faced by older AMPSsystems in more congested environments. Nevertheless, the data rates supportable over2G systems are still quite limited, offering only between 10-20Kbps. To expand the rangeand capability of data services that can be supported by digital cellular systems, serviceproviders will have to upgrade their networks to one of the 3G technologies. These cansupport data rates of from 384Kbps up to 2Mbps, although most commercialdeployments are expected to offer data rates closer to 100Kbps in practice. While this issubstantially below the rates supported by the current generation of wireline broadbandaccess services such as DSL or cable modems, it is expected that future upgrades to the3G or the transition to 4G cellular services will offer substantially higher bandwidths.Although wireline systems are likely to always exceed the capacity of wireless ones, itremains unclear precisely how much bandwidth will be demanded by the typicalconsumer and whether 3G services will offer enough to meet the needs of mostconsumers.Auctions for 3G spectrum licenses occurred in a number of countries in 2000 andthe first commercial offerings of 3G services began in Japan in October 2001. Morerecently, Verizon Wireless has announced "3G" service in portions of its serving territory(although this is not true-3G service)
.B. WiFi
WiFi is the popular name for the wireless Ethernet 802.11b standard for WLANs.Wireline local area networks (LANs) emerged in the early 1980s as a way to allowcollections of PCs, terminals, and other distributed computing devices to share resourcesand peripherals such as printers, access servers, or shared storage devices. One of themost popular LAN technologies was Ethernet. Over the years, the IEEE has approved asuccession of Ethernet standards to support higher capacity LANs over a diverse array ofmedia. The 802.11x family of Ethernet standards are for wireless LANs.WiFi LANs operate using unlicensed spectrum in the 2.5GHz band. The currentgeneration of WLANs support 10Mbps data rates within 300 feet of the base station.Most typically, WLANs are deployed in a distributed way to offer last-few-hundred-feetconnectivity to a wireline backbone corporate or campus network. Typically, the WLANsare implemented as part of a private network. The base station equipment is owned andoperated by the end-user community as part of the corporate enterprise network, campus3G vs. WiFi Lehr & McKnightPage 5 of 18or government network. In most cases, use of the network is free to end-users (subsidizedby the community as a cost of doing business, like corporate phones).Although each base station can support connections only over a range of a fewhundred feet, it is possible to provide contiguous coverage over a wider area by usingmultiple base stations. A number of corporate business and university campuses havedeployed such contiguous WLANs. Still, the WLAN technology was not designed tosupport high-speed hand-off associated with users moving between base station coverageareas (i.e., the problem addressed by mobile cellular systems).In the last two years, we have seen the emergence of a number of serviceproviders that are offering WiFi services for a fee in selected local areas such as hotels,airport lounges, and coffee shops. Mobilstar, which declared bankruptcy during the latterhalf of 2001, was one of the leaders in this area. In addition, there is a growing movementof so-called "FreeNets" where individuals or organizations are providing open access tosubsidized WiFi networks.In contrast to mobile cellular, WLANs were principally focused on supportingdata communications. However, with the growing interest in supporting real-timeservices such as voice and video over IP networks, it is both possible and increasingly thecase that voice telephony services are being offered over WLANs.
III. How are WiFi and 3G same
From the preceding discussion, it might appear that 3G and WiFi addresscompletely different user needs in quite distinct markets that do not overlap. While thiswas certainly more true about earlier generations of cellular services when compared withwired LANs or earlier versions of WLANs, it is increasingly not the case. The end-userdoes not care what technology is used to support his service. What matters is that both ofthese technologies are providing platforms for wireless access to the Internet and othercommunication services.In this section we focus on the ways in which the two technologies may bethought of as similar, while in the next section we will focus on the many differencesbetween the two.
A. Both are wireless
Both technologies are wireless which (1) avoids need to install cable drops toeach device when compared to wireline alternatives; and (2) facilitates mobility.Avoiding the need to install or reconfigure local distribution cable plant can represent asignificant cost savings, whether it is within a building, home, or in the last miledistribution plant of a wireline service provider. Moreover, many types of wirelessinfrastructure can provide scalable infrastructure when penetration will increase onlyslowly over time (e.g., when a new service is offered or in an overbuild scenario). Newbase stations are added as more users in the local area join the wireless network and cellsare resized. Wireless infrastructure may be deployed more rapidly than wireline3G vs. WiFi Lehr & McKnightPage 6 of 18alternatives to respond to new market opportunities or changing demand. These aspectsof wireless may make it attractive as an overbuild competitor to wireline local access,which has large sunk/fixed costs that are more susceptible to the homes passed than theactual level of subscribership. The high upfront cost of installing new wireline last-milefacilities is one of the reasons why these may be a natural monopoly.Wireless technologies also facilitate mobility. This includes both the ability tomove devices around without having to move cables and furniture and the ability to staycontinuously connected over wider serving areas. We refer to the first as local mobilityand this is one of the key advantages of WLANs over traditional wireline LANs. Thesecond type of mobility is one of the key advantages of cellular systems such as 3G.WLANs trade the range of coverage for higher bandwidth, making them more suitablefor "local hot spot" service. In contrast, 3G offers much narrower bandwidth but over awider calling area and with more support for rapid movement between base stations.Although it is possible to cover a wide area with WiFi, it is most commonly deployed in alocal area with one or a few base stations being managed as a separate WLAN. Incontrast, a 3G network would include a large number of base stations operating over awide area as an integrated wireless network to enable load sharing and uninterruptedhand-offs when subscribers move between base stations at high speeds.This has implications for the magnitude of initial investment required to bring upWLAN or 3G wireless service and for the network management and operations supportservices required to operate the networks. However, it is unclear at this time which typeof network might be lower cost for equivalent scale deployments, either in terms ofupfront capital costs (ignoring spectrum costs for now) or on-going network managementcosts.
B. Both are access technologies
Both 3G and WiFi are access or edge-network technologies. This means theyoffer alternatives to the last-mile wireline network. Beyond the last-mile, both rely onsimilar network connections and transmission support infrastructure. For 3G, the wirelesslink is from the end-user device to the cell base station which may be at a distance of upto a few kilometers, and then dedicated wireline facilities to interconnect base stations tothe carrier's backbone network and ultimately to the Internet cloud. The local backhaulinfrastructure of the cell provider may be offered over facilities owned by the wirelessprovider (e.g., microwave links) or leased from the local wireline telephone serviceprovider (i.e., usually the incumbent local exchange carrier or ILEC). Although 3G isconceived of as an end-to-end service, it is possible to view it as an access service.For WiFi, the wireless page link is a few hundred feet from the end-user device to thebase station. The base station is then connected either into the wireline LAN or enterprisenetwork infrastructure or to a wireline access line to a carrier's backbone network andthen eventually to the Internet. For example, WiFi is increasingly finding application as ahome LAN technology to enabling sharing of DSL or cable modem residential broadbandaccess services among multiple PCs in a home or to enable within-home mobility. WiFiis generally viewed as an access technology, not an end-to-end service.
Wireless Internet Access: 3G vs. WiFi
Abstract
This paper compares and contrasts two technologies for delivering broadband wirelessInternet access services: "3G" vs. "WiFi". The former, 3G, refers to the collection of thirdgeneration cellular technologies that are designed to allow mobile cellular operators tooffer integrated data and voice services over cellular networks. The latter, WiFi, refers tothe 802.11b wireless Ethernet standard that was designed to support wireless LANs.Although the two technologies reflect fundamentally different service, industry, andarchitectural design goals, origins, and philosophies, each has recently attracted a lot ofattention as candidates for the dominant platform for providing broadband wirelessaccess to the Internet. It remains an open question as to the extent to which these twotechnologies are in competition or, perhaps, may be complementary. If they are viewed asin competition, then the triumph of one at the expense of the other would be likely tohave profound implications for the evolution of the wireless Internet and service providerindustry structure. The goal of the qualitative discussion of these two technologies is toprovide a more concrete understanding of the differing worldviews encompassed by thesetechnologies and their relative strengths and weaknesses in light of the forces shaping theevolution of wireless Internet services.
I. Introduction
The two most important phenomena impacting telecommunications over the pastdecade have been the explosive parallel growth of both the Internet and cellular telephoneservices. The Internet brought the benefits of data communications to the masses withemail, the Web, and eCommerce; while cellular service has enabled "follow-meanywhere/always on" telephony. The Internet helped accelerate the trend from voicecentricto data-centric networking. Data already exceeds voice traffic and the data sharecontinues to grow. Now, these two worlds are converging. This convergence offers the1 This most recent draft was prepared by William Lehr, without the benefit of a final review from LeeMcKnight.3G vs. WiFi Lehr & McKnightPage 2 of 18benefits of new interactive multimedia services coupled to the flexibility and mobility ofwireless. To realize the full potential of this convergence, however, we need broadbandaccess connections. What precisely constitutes "broadband" is, of course, a movingtarget, but at a minimum, it should support data rates in the hundreds of kilobits persecond as opposed to the 50Kbps enjoyed by 80% of the Internet users in the US whostill rely on dial-up modems over wireline circuits, or the even more anemic 10-20Kbpstypically supported by those cellular providers that even bother to offer data services.While the need for broadband wireless Internet access is widely accepted, there remainsgreat uncertainty and disagreement as to how the wireless Internet future will evolve.The goal of this paper is to compare and contrast two important technologies thatare likely to play important roles: Third Generation Cellular ("3G") and Wireless LocalArea Networks ("WLAN"). Specifically, we will focus on 3G as embodied by the UMTSand WCDMA standards versus the WLAN technology embodied by the WiFi or 802.11bstandard, which is the most popular and widely deployed of the WLAN technologies. Weuse these technologies as reference points to span what we believe are two fundamentallydifferent philosophies for how wireless Internet access might evolve. The formerrepresents a natural evolution and extension of the business models of existing cellularproviders. These providers have already invested billions of dollars purchasing thespectrum licenses to support advanced data services and equipment makers have beengearing up to produce the base stations and handsets for wide-scale deployments of 3Gservices. In contrast, the WiFi approach would leverage the huge installed base of WLANinfrastructure already in place in many government, university, and corporateenvironments and the supporting industry of equipment makers.In focusing on 3G and WiFi, we are ignoring many other technologies that arelikely to be important in the wireless Internet such as satellite services, LMDS, MMDS,or other fixed wireless alternatives. We also ignore technologies such as BlueTooth orHomeRF which have at times been touted as potential rivals to WiFi, at least in homenetworking environments. Moreover, we will not discuss the relationship betweenvarious transitional, or "2.5G" cellular technologies such as GPRS and 3G, nor will wediscuss the myriad possibilities for "4G" cellular technologies. While all of these areinteresting, we have only limited space and our goal is to tease out what we believe areimportant themes/trends/forces shaping the industry structure for next generation wirelessservices, rather than to focus on the technologies themselves. We use 3G and WiFi asshorthand for broad classes of related technologies that have two quite distinct industryorigins and histories.Speaking broadly, 3G offers a vertically-integrated, top-down, service-providerapproach to delivering wireless Internet access; while WiFi offers (at least potentially) anend-user-centric, decentralized approach to service provisioning. Although there isnothing intrinsic to the technologies that dictates that one may be associated with onetype of industry structure or another, we use these two technologies to focus ourspeculations on the potential tensions between these two alternative world views.We believe that the wireless future will include a mix of heterogeneous wirelessaccess technologies. Moreover, we expect that the two worldviews will converge such3G vs. WiFi Lehr & McKnightPage 3 of 18that vertically-integrated service providers will integrate WiFi or other WLANtechnologies into their 3G or wireline infrastructure when this makes sense. We are,perhaps, less optimistic about the prospects for decentralized, bottom-up networks –however, it is interesting to consider what some of the roadblocks are to the emergence ofsuch a world. The latter sort of industry structure is attractive because it is likely to bequite competitive, whereas the top-down vertically-integrated service-provider modelmay – but need not be -- less so. The multiplicity of potential wireless accesstechnologies and/or business models suggests that we may be able to realize robustfacilities-based competition for broadband local access services. If it occurs, this wouldhelp solve the "last mile" competition problem that has bedeviled telecommunicationspolicy.
II. Some background on WiFi and 3G
In this section, we provide a brief overview of the two technologies to help orientthe reader. We will discuss each of the technologies in turn.
A. 3G
3G is a technology for mobile cellular service providers. Mobile cellular servicesare provided by service providers that own and operate their own wireless networks andsell cellular services to end-users, usually on a monthly subscription basis. Mobile serviceproviders use licensed spectrum to provide wireless telephone coverage over somerelatively large contiguous geographic serving area. Historically, this might haveincluded a metropolitan area. Today it may include the entire country. From a usersperspective, the key feature of cellular service is that it offers (near) ubiquitous andcontinuous coverage. That is, a consumer can carry on a telephone conversation whiledriving along a highway at 100 Km/hour. To support this service, cellular operatorsmaintain a network of interconnected and overlapping cellular base stations that hand-offcustomers as those customers move among adjacent cells. Each cellular base station maysupport users up to several kilometers away. The cell towers are connected to each otherby a backhaul network that also provides interconnection to the wireline Public SwitchedTelecommunications Network (PSTN) and other services. The mobile system operatorowns the end-to-end network from the base stations to the backhaul network to the pointof interconnection to the PSTN (and, perhaps, parts thereof).The first mobile cellular services were analog. Although mobile services began toemerge in the 1940s, the first mass market mobile services in the U.S. were based on theAMPS (Advanced Mobile Phone Service) technology. This is what is commonly referredto as first generation wireless. The FCC licensed two operators in each market to offerAMPS service in the 800-900MHz band. In the 1990s, cellular services based on digitalmobile technologies ushered in the second generation (2G) of wireless services that wehave today. These were referred to as Personal Communication Systems (PCS) and usedtechnologies such as TDMA (Time Division Multiple Access), CDMA (Code DivisionMultiple Access) and GSM (Global System for Mobile Communications). From 1995 to1997, the FCC auctioned off PCS spectrum licenses in the 1850 to 1990 MHz band.CDMA and TDMA were deployed in the various parts of the U.S., while GSM was3G vs. WiFi Lehr & McKnightPage 4 of 18deployed as the common standard in Europe. The next or Third Generation (3G) cellulartechnologies will support higher bandwidth digital communications and are expected tobe based on the UMTS (Universal Mobile Telecommunications System) or WCDMA(Wideband CDMA) technologies.The chief focus of wireless mobile services has been voice telephony. However,in recent years there has been growing interest in data services as well. While dataservices are available over AMPS systems, these are limited to quite low data rates(<10Kbps). Higher speed data and other advanced telephone services are more readilysupported over the digital cellular 2G systems. The 2G systems also support largernumbers of subscribers and so helped alleviate capacity problems faced by older AMPSsystems in more congested environments. Nevertheless, the data rates supportable over2G systems are still quite limited, offering only between 10-20Kbps. To expand the rangeand capability of data services that can be supported by digital cellular systems, serviceproviders will have to upgrade their networks to one of the 3G technologies. These cansupport data rates of from 384Kbps up to 2Mbps, although most commercialdeployments are expected to offer data rates closer to 100Kbps in practice. While this issubstantially below the rates supported by the current generation of wireline broadbandaccess services such as DSL or cable modems, it is expected that future upgrades to the3G or the transition to 4G cellular services will offer substantially higher bandwidths.Although wireline systems are likely to always exceed the capacity of wireless ones, itremains unclear precisely how much bandwidth will be demanded by the typicalconsumer and whether 3G services will offer enough to meet the needs of mostconsumers.Auctions for 3G spectrum licenses occurred in a number of countries in 2000 andthe first commercial offerings of 3G services began in Japan in October 2001. Morerecently, Verizon Wireless has announced "3G" service in portions of its serving territory(although this is not true-3G service)
.B. WiFi
WiFi is the popular name for the wireless Ethernet 802.11b standard for WLANs.Wireline local area networks (LANs) emerged in the early 1980s as a way to allowcollections of PCs, terminals, and other distributed computing devices to share resourcesand peripherals such as printers, access servers, or shared storage devices. One of themost popular LAN technologies was Ethernet. Over the years, the IEEE has approved asuccession of Ethernet standards to support higher capacity LANs over a diverse array ofmedia. The 802.11x family of Ethernet standards are for wireless LANs.WiFi LANs operate using unlicensed spectrum in the 2.5GHz band. The currentgeneration of WLANs support 10Mbps data rates within 300 feet of the base station.Most typically, WLANs are deployed in a distributed way to offer last-few-hundred-feetconnectivity to a wireline backbone corporate or campus network. Typically, the WLANsare implemented as part of a private network. The base station equipment is owned andoperated by the end-user community as part of the corporate enterprise network, campus3G vs. WiFi Lehr & McKnightPage 5 of 18or government network. In most cases, use of the network is free to end-users (subsidizedby the community as a cost of doing business, like corporate phones).Although each base station can support connections only over a range of a fewhundred feet, it is possible to provide contiguous coverage over a wider area by usingmultiple base stations. A number of corporate business and university campuses havedeployed such contiguous WLANs. Still, the WLAN technology was not designed tosupport high-speed hand-off associated with users moving between base station coverageareas (i.e., the problem addressed by mobile cellular systems).In the last two years, we have seen the emergence of a number of serviceproviders that are offering WiFi services for a fee in selected local areas such as hotels,airport lounges, and coffee shops. Mobilstar, which declared bankruptcy during the latterhalf of 2001, was one of the leaders in this area. In addition, there is a growing movementof so-called "FreeNets" where individuals or organizations are providing open access tosubsidized WiFi networks.In contrast to mobile cellular, WLANs were principally focused on supportingdata communications. However, with the growing interest in supporting real-timeservices such as voice and video over IP networks, it is both possible and increasingly thecase that voice telephony services are being offered over WLANs.
III. How are WiFi and 3G same
From the preceding discussion, it might appear that 3G and WiFi addresscompletely different user needs in quite distinct markets that do not overlap. While thiswas certainly more true about earlier generations of cellular services when compared withwired LANs or earlier versions of WLANs, it is increasingly not the case. The end-userdoes not care what technology is used to support his service. What matters is that both ofthese technologies are providing platforms for wireless access to the Internet and othercommunication services.In this section we focus on the ways in which the two technologies may bethought of as similar, while in the next section we will focus on the many differencesbetween the two.
A. Both are wireless
Both technologies are wireless which (1) avoids need to install cable drops toeach device when compared to wireline alternatives; and (2) facilitates mobility.Avoiding the need to install or reconfigure local distribution cable plant can represent asignificant cost savings, whether it is within a building, home, or in the last miledistribution plant of a wireline service provider. Moreover, many types of wirelessinfrastructure can provide scalable infrastructure when penetration will increase onlyslowly over time (e.g., when a new service is offered or in an overbuild scenario). Newbase stations are added as more users in the local area join the wireless network and cellsare resized. Wireless infrastructure may be deployed more rapidly than wireline3G vs. WiFi Lehr & McKnightPage 6 of 18alternatives to respond to new market opportunities or changing demand. These aspectsof wireless may make it attractive as an overbuild competitor to wireline local access,which has large sunk/fixed costs that are more susceptible to the homes passed than theactual level of subscribership. The high upfront cost of installing new wireline last-milefacilities is one of the reasons why these may be a natural monopoly.Wireless technologies also facilitate mobility. This includes both the ability tomove devices around without having to move cables and furniture and the ability to staycontinuously connected over wider serving areas. We refer to the first as local mobilityand this is one of the key advantages of WLANs over traditional wireline LANs. Thesecond type of mobility is one of the key advantages of cellular systems such as 3G.WLANs trade the range of coverage for higher bandwidth, making them more suitablefor "local hot spot" service. In contrast, 3G offers much narrower bandwidth but over awider calling area and with more support for rapid movement between base stations.Although it is possible to cover a wide area with WiFi, it is most commonly deployed in alocal area with one or a few base stations being managed as a separate WLAN. Incontrast, a 3G network would include a large number of base stations operating over awide area as an integrated wireless network to enable load sharing and uninterruptedhand-offs when subscribers move between base stations at high speeds.This has implications for the magnitude of initial investment required to bring upWLAN or 3G wireless service and for the network management and operations supportservices required to operate the networks. However, it is unclear at this time which typeof network might be lower cost for equivalent scale deployments, either in terms ofupfront capital costs (ignoring spectrum costs for now) or on-going network managementcosts.
B. Both are access technologies
Both 3G and WiFi are access or edge-network technologies. This means theyoffer alternatives to the last-mile wireline network. Beyond the last-mile, both rely onsimilar network connections and transmission support infrastructure. For 3G, the wirelesslink is from the end-user device to the cell base station which may be at a distance of upto a few kilometers, and then dedicated wireline facilities to interconnect base stations tothe carrier's backbone network and ultimately to the Internet cloud. The local backhaulinfrastructure of the cell provider may be offered over facilities owned by the wirelessprovider (e.g., microwave links) or leased from the local wireline telephone serviceprovider (i.e., usually the incumbent local exchange carrier or ILEC). Although 3G isconceived of as an end-to-end service, it is possible to view it as an access service.For WiFi, the wireless page link is a few hundred feet from the end-user device to thebase station. The base station is then connected either into the wireline LAN or enterprisenetwork infrastructure or to a wireline access line to a carrier's backbone network andthen eventually to the Internet. For example, WiFi is increasingly finding application as ahome LAN technology to enabling sharing of DSL or cable modem residential broadbandaccess services among multiple PCs in a home or to enable within-home mobility. WiFiis generally viewed as an access technology, not an end-to-end service.
