Forget trying to build a wireless Internet business with any idea of serving people in their homes or businesses. In general, wireless technologies don’t work as well as the hard-wired options. Wireless Internet service will succeed where wireless technology holds an advantage.
Wireless broadband technology has three advantages over landlines:
- It is ubiquitous.
- It can be rapidly deployed for a far lower initial capital outlay.
- It excels at delivering the same bit stream to many people at the same time.
Future success will come where business plans maximize one or more of these advantages, and three opportunities stand out:
- Rural and other underserved areas. Once the demand for broadband service in rural areas catches up with that found in urban and suburban regions, 4G or similar technologies will be an excellent way to address that market. However, over the long run, business plans will have to provide for at least a partial transition to wired facilities, otherwise wireless companies will see their best customers cherry picked by landline players eager to take a free ride on the money invested to build this market. Without a transition to landline service, this opportunity is only good for the near to medium term. One source of assistance (or danger!) is the potential for government subsidies. It’s nice to have someone help with the bills, but the market-distorting effects can be substantial and dangerous.
- Broadcasting. Take one signal and deliver it, maybe even sell it, to thousands and even millions of people at once. Sounds a lot like television. Unfortunately for entrepreneurs, this opportunity is largely spoken for – by television stations. They’re slowly learning how to maximize the value of their digital bandwidth. One growing market segment is mobile viewers. Expect to see mobile telecom and media companies save their own bandwidth by integrating broadcast signals into devices and service offerings. It was a nice idea while it lasted, though.
- Mobile Internet and the Internet of Things. A coke machine and a commuter have some things in common. Both can be hard, if not impossible, to reach with wired Internet service (although I expect some kind of a data over powerline solution will eventually take care of the coke machine). And both lean towards relatively thin stream applications – credit card transactions for the coke machine, and email and simple web-based activities for the commuter (assuming the bulk of mobile rich media needs are handled by broadcast delivery and on-board storage). The mobile user, in particular, will be a long term growth opportunity as small form factor devices multiply and the range of applications and services grows.
Try to launch a wireless broadband business that goes head to head with the landline players or isn’t fundamentally built around exploiting the inherent advantages of wireless technology, and you’re swimming against the tide. And the tide won’t change, ever. But build it on the competitive advantages that wireless does enjoy, and you still have a shot at a winnable business case.