Addiction to Broadband

by Neale Martin published April 23, 2007 in Telephony Telephony

I was an hour early for my meeting and drove around looking for a hotspot. It only took a couple of minutes to locate a Panera Bread and settle in with a cup of coffee and a bagel while I answered e-mails and researched a writing project using their free Wi-Fi. I avoided the Starbucks across the street because it charges for wireless access. Of course, I could have done much of the same work on my Treo 700, but I don't like the form factor if I have to read or write more than a couple of lines. I'm considering getting a data card, but I'm not sure if I need it.

This familiar scenario illustrates the state of the wireless broadband market — lots of choices reflecting very different business models. As various companies invest billions to build and expand broadband wireless networks, these decisions will determine who wins and who loses.

At the heart of this battle — which will fundamentally alter the way we live, work and play — are the habits we develop to communicate. And our communications habits are formed based on two components: our goals and the reinforcement/punishment we receive in trying to fulfill those goals. I'm old enough to remember waiting until after 11 p.m. when the rates went down to make a long-distance phone call. However, in an era of competition, providers must think about their approach to the market and how they reward/punish their customers.

As with most other technological revolutions, the winner will not necessarily employ the best technology, but will develop a business model that users will adopt for habitual use. Currently, this means deciding between the various flavors of 3G and Wi-Fi on either a handset or laptop. We can already see users developing preferred methods of access, depending on their needs and perception of value.

How much will users pay to have constant access to broadband anywhere? Currently, wireless providers are charging $60 per month, which restricts the market to business professionals and those using the service for primary broadband access. While growth is picking up, there are millions of people who routinely access Wi-Fi on college campuses, in coffee shops, at airports and more places every day.

Complicating the competitive landscape is the push for even faster networks. Sprint will invest billions to deploy a nationwide WiMAX network to deliver dramatically faster access, enabling even more applications. Does this position Sprint ahead of the pack, or will customers have any use for even more wireless throughput?

The reality is that countless segments will emerge over the next several years for each of these models. Corporations will prefer to pay for the security and reliability provided by nationwide carriers building out near-ubiquitous coverage. College students will believe that free Wi-Fi is a right and will seek out the cafes and shops that provide it. But what habits of access will the majority of the market develop? Whose network will they choose?

Wireless carriers need to appreciate that the speed and size of the broadband wireless adoption curve is a product of three factors: price, availability and ease of use. To get customers to develop communication habits around 3G instead of Wi-Fi (or WiMAX), they should pursue a speed x volume approach. Remove barriers as quickly as possible. Avoid the traditional model of pricing for early adopters — instead pricing to the capacity of the network. Get as many people on the network as quickly as you can. Habits are forming now.

Be your customers' habit — not their choice.