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Friday, November 05, 2004

3G technology & ISDN - Ominous Parallels

For all the hype concerning 3G, some are now suggesting that it's too difficult, too slow and too expensive -- reminding them of another failed "broadband" technology: ISDN . In the dialup days, ISDN was supposed to be the savior for the home worker. However, all it really offered was an always on connection that was just a bit faster than dialup. The speeds were marginally faster, but it was incredibly difficult to get working properly. The pricing was well beyond what many considered reasonable and no one in the industry really wanted to push it very hard because they were afraid it would cannibalize other aspects of their business.
There are some parallels to the 3G world. Nokia (of all companies) is saying that enterprises just aren't that interested in 3G. A combination of the slower, but more established and cheaper GPRS, combined with Wi-Fi hotspots has many enterprises wondering what the benefit of 3G really is for their employees. It's a bit faster than GPRS and EDGE, but still has high latency. The pricing, in many cases, is still atrocious as operators focus on squeezing as much as possible out of the early adopters. Wi-Fi hotspots have the advantage on speed by a long shot, and in many cases on price. Operators are upgrading to 3G (and beyond) not just to increase data speeds, but also to increase capacity. Also, it's clear that 3G is the upgrade path where the operators are heading. ISDN always seemed like a side business for providers rather than their next generation core offering.

Still, there are lessons to be learned from this. 3G providers need to realize that the competition is broader than they think. ISDN providers often saw it as competing against even more expensive T1 lines and simply let DSL and cable modems take over the business. 3G has competition coming from a variety of directions, including 2.5G technologies, Wi-Fi hotspots and a variety of wireless broadband options that are being deployed every day. The marketing needs to rely on more than just "3G is faster" because that's not true in the eyes of many customers. They know that they get higher speeds at home or using Wi-Fi, so if 3G's claim to fame is speed alone, it's not going to get very far. For the time being, 3G has ubiquity and mobility on its side -- but neither are sustainable in the face of some upcoming competitors.

Instead of focusing on speed, or specific applications that users may or may not want, 3G providers need to provide real, compelling value to customers. This includes reducing the price and recognizing that 3G is a platform on which developers need to be encouraged to build the applications and services that really add value and make 3G connections valuable. 3G is unlikely to repeat ISDN's slow march towards obscurity, but there are enough parallels to make the lessons worth repeating.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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