CES Trend #2: Is 2008 finally the year for 4G mobile?

Scott Fulton, BetaNews: Every year at CES time, we revisit the topic of when or whether the United States will finally catch up with the rest of the world in mobile wireless broadband. Why do we keep butting up against the same roadblocks year after year?

For our #2 trend on the countdown, we ask whether this time, the telcos and service providers at CES are finally getting the formula down for the next great evolution of services. To start, I'd like to bring in former Gartner analyst, and our CES analyst here all week, Sharon Fisher.

Sharon, we noted earlier that this year, the platform is more important than ever before especially when compared with the gadget, which is usually the big draw. And I'm thinking this may be an actual sign of progress. I've always been a believer in constructing the platform before you try to sell the device. The reason we don't have 4G phone service all over this country is because we don't have the platform for it.

Sharon Fisher, BetaNews Senior CES Analyst: Right. When you're talking about something like that, where there's a network required, you do kinda need the network first. And nobody has the critical mass yet. Formats and gadgets come and go, but bandwidth is really useful.

What I saw was a lot of convergence. Internet on your phone, TV on your phone, Internet on your TV...

Scott: And that convergence sorta hangs in space without the platform.

Sharon: Or without standards, at least.

Scott: So I was a little gratified to see more attention being paid directly to WiMAX as a platform.

Sharon: Oh, for sure. I'm really looking forward to that and I hope Sprint can pull it off.

Scott: And what's more, I was really surprised to see Sprint -- of all companies -- taking a stand on that. Sprint!!! That's like saying Bill Richardson is leading in South Carolina! They've been through hell this past few years, and customer appreciation is right down there alongside Sen. Craig.

Sharon: Well, perhaps they've seen the light.

Scott: This new CEO has been like a blast of Maalox for these guys.

Sharon: It was good to see they're sticking with WiMAX even after the other guy left.

Scott: My thoughts about that, though: This country's telcos still have a massive investment in 3G phone technology. Which is not all that bad, but it's not everywhere.

Sharon: Tell me about it.

Scott: And what's worse, it hasn't yet amortized. When analysts like In-Stat say they see customers adopting 4G handsets steadily until 2012, my feeling is, customers don't build platforms. If they did, we'd all be running .NET right now.

Sharon: It's not the customer's job!...Oh, wait, I see what you're saying. You mean there's more to platforms than customers. On the other hand, a platform without customers doesn't mean anything, either.

Scott: Yea, you can't exactly wait until everybody owns a 4G phone and then build a transmitter.

Sharon: The winner will be the vendor who hits the sweet spot of the biggest platform given the largest number of customers.

Scott: And suddenly it looks like Sprint has a real chance at that.

Sharon: It depends on where they build out. It would be a shame if they just covered the same territory that is already well served, and left the rural areas open again. On the other hand, they have to go where the people are. Given the transmission capability of a WiMAX transmitter, though, it would be interesting to compare the cost of buildout to one of a 3G network.

Scott: One interesting sign I read earlier this week: For the first time in this country, our telcos' investment in 3G base stations declined for 2007.

Sharon: Oh, that is interesting.

Scott: A sign that tells some that we're beginning the changeover. There could be some economic factors in play.

Sharon: The upcoming election could play a factor as well. It's easy for me to imagine that the party of Al Gore, should they win, might decide that building a new phone and data infrastructure would have enough economic benefits to be worth investment.

Scott: In other words, the nation's data infrastructure could be driven more through government involvement.

Sharon: The US is massively behind most of the rest of the world in both phone and data capability. If we don't want the rest of the world to eat our lunch, we need to catch up.

Scott: But is government involvement necessarily the solution?

Sharon: It would help reduce the competition between vendors for different platforms. The government could say, this is the platform. We have this money for it. And everyone would go for that one platform. As Scott McNealy used to say, all the wood behind one arrowhead.

Scott: Now, that's very similar to what's going on in Europe with mobile digital TV. The EU is saying, we're going with DVB-H, and that's that.

Sharon: Right. The United States of Europe.

Scott: You can either be on board with us, or you can go to someplace where the market lets you shoot it out with everyone else...the US.

Sharon: And there's disadvantages to that mode of thinking -- I haven't seen anyone use OSI lately over TCP/IP -- but the reason we have TCP/IP in the first place is because of government investment.

Scott: So there you have one example. The Defense Dept. said we go with IP protocol, and we did.

Sharon: In case of a nuclear attack, remember.

Scott: Do you think if the government had instead Let the Market Decide, as is our policy now, we would ever have had an Internet?

Sharon: Nope. We'd have IBMnet and CDCnet and Unisysnet and...

Scott: Microsoft.NET

Sharon: I remember doubting how well the Internet could sustain itself without government investment, in fact. How well a commercial Internet would work. Some pundit I am.

Scott: Well, you managed to find us anyway. Now, I realize that while I tend to view the glass as half-full, others tend to view me as half-something else. Meanwhile, our Ed Oswald doesn't exactly share my enthusiasm about 4G. Ed, what half of the story am I missing?

Ed Oswald, BetaNews: Scott, while there will likely be much to-do about 4G in the coming year, especially with Sprint moving forward with its WiMAX plans, I find it somewhat difficult to say 2008 will finally be the year that we will see 4G technologies take hold.

One has to look no further than the current state of the US wireless market. Several carriers, most notably T-Mobile, have not even made it to 3G yet. Others -- such as Verizon and AT&T-- are offering 3G services, but even here it has not reached a critical mass.

The iPhone, which is arguably the cornerstone of AT&T's offerings, will not have a 3G-compatible phone until at least mid-year. I would be more apt to argue that 2008 will finally be the year of 3G -- when these services move out of the more business-centric usage it has now and into the mainstream.

It's no question that faster data is quickly becoming a need for the mobile consumer. With the iPhone turning the mobile Web on its head by offering close-to-desktop rendering of Web pages, people are going to want the faster data rates that come with it.

Other applications, like streaming audio and video and VoIP, also need these faster wireless speeds. But the market needs to catch up first before we even consider 4G.

It's somewhat sad that we're still talking about 3G at this point, over a half decade since it became available. But the simple fact is too many providers took too long to implement their high-speed wireless data strategies, and that has essentially held back the rest of the industry.

Scott: And thanks, Ed, for citing that famous phrase from Shakespeare, "Much To-Do About 4G." Next, we'll find out whether Jackie Emigh agrees with you.