Ericsson’s self-serving prediction

Ericsson Chief Marketing Officer Johan Bergendahl is predicting that as Mobile Broadband takes off (and it is growing faster than mobile or fixed telephony ever did), Wi-Fi hotspots will become as obsolete as telephone booths. The reasoning is simple – As more and more cellular subscribers start using wireless broadband otherwise known as Wireless WAN (WWAN) technologies (e.g CDMA2000 EV-DO, HSPA/HSDPA/HSUPA, WiMAX, LTE) and it becomes available in many areas, WiFi hot spots will no longer be needed. In fact, Bergendahl says that “Hotspots at places like Starbucks are becoming the telephone boxes of the broadband era”.

This is driven by a couple of factors:
1) Availability of devices – More and more wireless broadband devices are becoming available. There are WWAN PCMCIA cards that fit in laptops, WWAN routers, and even WWAN embedded in laptops. Apparently, Ericsson recently signed a deal to put HSPA in some Lenovo notebooks, but HP and Dell already offer laptops with CDMA2000 (e.g. for Verizon Wireless service) and HSDPA (e.g. for AT&T service) built-in.
2) Declining prices and cost – the price and costs of wireless broadband is still high compared to WiFi, but is decreasing. Bergendahl says that in countries such as Austria, Denmark, and Sweden, the average price for a mobile broadband subscription is only €20 ($31) per month. Also, PCMCIA WWAN cards are pretty cheap now, and broadband built into computers will likely go the same route as they become more popular.
3) Coverage – coverage is becoming pretty good – in the U.S., both Sprint Nextel and Verizon Wireless already cover more than 300 million pops with their EV-DO broadband network and AT&T covers more than 160 cities. Indoor coverage issues can be resolved through femtocells.

There are still some issues to be resolved: “Industry will have to solve the international roaming issue,” Bergendahl said. Another problem is that competing cellular carriers use a different technologies. Verizon Wireless, Sprint Nextel, Alltel and U.S. Cellular use cdma2000 EV-DO while AT&T uses W-CDMA (e.g. HSPA/HSDPA/HSUPA), and then there’s WiMAX as well. In contrast, WiFi is a unified standard.

What’s most interesting here is that this is not just a prediction. It is a subtle attempt to manipulate – See WiFi and mobile broadband compete against each other to a large extent in the sense that they both provide IP transport or Internet Access. Ericsson doesn’t have a strong position in WiFi, but has a very strong position in mobile broadband, especially in HSPA/HSDPA/HSUPA, so it tends to benefit immensely when WiFi is no more and cellular broadband covers the world. This is largely a self-serving, hope-filled prediction.

Like any technology, one day WiFi will fade away. Especially when we move from today’s 3G mobile broadband to 4G mobile broadband (e.g. LTE). Till then WiFi will continue to be just fine, thriving in its niche market. Take this prediction with a grain of salt.