Wireless Tower of Babel is set to collapse
When Herbert Hoover was U.S. secretary of commerce, he did the nation a great service: He standardized everything - the size of nails, the width between rails on the railroad and so on. This reduced the inventory levels that companies had to keep, increased volumes, drove down prices and helped the U.S. maintain hegemony over the commercial world. Probably the last positive thing Big Government has done.
Today's wireless industry could learn from Hoover. What we have in wireless today is a Tower of Babel: a bunch of incompatible approaches, communicating with one another, mainly by rumor - which means not at all.
We have always let the market decide. If any standard can win over the largest volume, then that standard becomes the de facto standard - and we don't have to worry about a de jure standard. Remember Sony's Betamax vs. Panasonic's VHS? The market winner wins.
Except, every once in awhile, it helps having somebody - hell, anybody - be the tiebreaker. Maybe you noticed that NTT DoCoMo took a $10 billion stake in AT&T Wireless. AT&T was using the Time Division Multiple Access (TDMA) standard, but it will (surprise!) move to the Global System for Mobile communications (GSM) standard and eventually to the third-generation (3G) wireless standard that NTT DoCoMo currently is testing. If you are among those people who think that NTT DoCoMo would like to buy AT&T Wireless one day, you can see the logic of both companies adhering to the same standard.
Usually if one company does one thing, its competitors will do the opposite, but not in this case. Cingular Wireless will follow AT&T Wireless and drop its support of TDMA. TDMA was a great technology - in its time, and its time is up. In a world where data is king, TDMA was voice only.
Last year also marked Deutsche Telekom's purchase of VoiceStream. Until AT&T Wireless's announcement last December, VoiceStream was the only major U.S. carrier to favor GSM. Deutsche Telekom, like all of Europe, will move from GSM to the Wideband Code Division Multiple Access (W-CDMA) standard. Understand that 12 months ago, no U.S. vendor was supporting GSM. Now we have three major carriers, two of which have been influenced by post, telegraph and telephone administrations - and money (Cingular isn't owned by a foreign carrier). What is interesting is that the venture capital industry hasn't really backed companies in the 3G area. That may change.
The rest of the major U.S. players (Sprint, Alltel, Verizon) are lining up behind CDMA. Now understand that most users couldn't give a damn if we went GSM, CDMA or bushel basket. All we really want is great national coverage. We aren't really concerned with date rates because we haven't bought into higher date-rate applications.
In addition to the carriers going CDMA and those migrating to GSM, you have Nextel, which is an intriguing company. Nextel is an outlier in the wireless standards territory - it has an 800-MHz service, which is a different spectrum than AT&T, Cingular, Sprint and everyone else. Nextel runs on yet another standard, called integrated Digital Enhanced Network (iDEN), which has one distinctive advantage: a "push to talk" feature that businesses love because it is the ultimate in hands-free dialing - it's like using an intercom, allowing a user to go office to office.
Given these three digital wireless standards - CDMA, GSM and iDEN - the U.S. will be moving to digital and abandoning analog, right? Uh, no. There is still a lot of money tied up in analog systems, so they may be around for a long time. Meanwhile, the European carriers have ponied up $150 billion to bring a new, improved version of 3G to Europe so that some day you can watch video on your cell phone.
My guess is that 2.5G will suffice in this country. Every standard that is expensive and overhead-laden seems to fall by its own weight (remember Open Systems Interconnection?), and 3G is in this category.
As screwed up as the wireless situation is in the U.S., the Europeans are going to be even more screwed up. But in the U.S., it's not just equipment manufacturers competing against one another - two of the carriers (AT&T Wireless and VoiceStream) will be influenced by foreign PTT agendas.
Where's Herbert Hoover when we need him?
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Anderson is senior managing director of Yankeetek, a Cambridge, Mass., venture incubator. He is also chairman of The Yankee Group and the William Porter Distinguished Lecturer at the Massachusetts Institute of Technology. He can be reached at
Read more of Anderson's Yankee Ingenuity columns.
