As Read on www.skyreport.com

By Paul Budde

While I love Wi-Fi, I also realize that I am one of the relatively few people that are using the service. And even I had occasion to report, after my recent trip to Europe, that I was unable to get an appropriate connection to Wi-Fi systems.

While Intel has been very successful in getting Wi-Fi chips into laptops, this chip is of little use to most lap-top users, since only a very small proportion of laptop owners carry them to cafes and hotels - less than 2 percent of all users can be classified as road warriors.

I have always maintained that wireless broadband has potential, but, from the beginning, I failed to see a good business case for the technology, beyond some excellent niche markets like hotels, airports, campuses, in-house, etc. Because of its limitations, Wi-Fi has never had the potential to venture into more lucrative models. And that's why Intel and others began, very early on, to develop the next generation of the technology, known as Wi-Max.

The big question is: Will Intel be able to break the back of the telcos and celcos and their vendors in order to open up the Wi-Max market?

For starters, the commercial introduction has been delayed from 2004 to 2005 - but that is nothing unusual in our industry. Wi-Max and other fixed wireless technologies have great potential to be able to break open the heavily guarded mobile and fixed telephone markets, but the operators who are trying to make inroads are extremely concerned about the backlash that could follow once the incumbents begin to retaliate. This also seriously hampers the financial aspect, as investment money is not forthcoming in large enough amounts to seriously roll out wireless broadband in competition with DSL.

The possibilities are great - you simply hook a small device on the outside of your house and your broadband connection is up and running. With a potential range of 50Km, Wi-Max could be particularly successful in regional areas, and this where BT is trialing its Wi-Max services in the United Kingdom.

Wi-Max can also handle VoIP, so a totally new access infrastructure is created, which could save billions of dollars in the desperately needed regional infrastructure upgrades. With Intel's support, most laptops could be fitted with Wi-Max chips before the end of the decade.

There is nothing to stop Intel (and others) including a Wi-Max chip in, for example, a mobile phone - or any other device for that matter. And, of course, this is what is really worrying the vested celco interests, as such a lethal combination could easily kill their 3G strategies.

On the other hand, non-mobile operators would love to use a technology like this. But, given their sworn alliance to the celcos, it will be difficult to find any of the mobile handset providers interested in cooperating with Intel.

However, market dynamics may change. We have reached the end of the lucrative mobile boom, margins are getting thinner, and a company such as BT has already divested itself of its mobile business.

Will others follow the BT example? I think so. This, of course, would create a totally new set of dynamics - dynamics that could propel Wi-Max and other wireless technologies right into the mainstream telecoms market - and this would make everybody sit up and take notice.

Paul Budde operates Paul Budde Communication, a global telecommunications and information highways consultancy and research company based in Australia. The company's Web site can be found at: »www.Budde.com.au. The e-mail address is: pbc@Budde.com.au. (Please note, opinions expressed in "Outside the Box" are that of the author and not necessarily of the editorial staff.)