Flipping Negroponte's Switch

Several years ago, noted telecommunications guru Nicho-las Negroponte posited that signals that historically traveled by wireless methods (television, for example) would soon be transported by landline technologies, and signals that historically traveled by landline methods (telephone, for example) would soon be transported by wireless technologies. This view is referred to as the Negroponte Switch because it suggests a reversal of traditional signal transport markets.

However, I believe that the ongoing globalization of communications markets forces a revision of Negroponte's original formulation.

The Roddy Revision Half of the world's population has never made a phone call. Emerging markets cover more than 60% of the Earth's population, yet they account for only 20% of the telephones worldwide. Moreover, these emerging markets have two to three times the economic growth rate of the United States, yet they have only one tenth the telephone penetration. Therefore, it is not surprising to see annual wireless subscriber growth of 80% per year in the Asia/Pacific and Latin American regions, despite recent economic slowdowns and currency difficulties in these areas. Because wireless is less expensive than landline to install and operate, significant wireless telecom opportunities exist for long-term business planners.

Once we focus on the world's growth markets of the next century, a particular deficiency in Negroponte's hypothesis becomes apparent. In most emerging markets around the world, there will never be a landline local loop to carry Negroponte's "reversed" traffic. Thus, not only will telephone traffic in emerging markets be largely wireless in nature, but so also will TV video, business data and high-speed Internet traffic. In my revision, I posit that the Negroponte Switch holds for developed markets only; in the rapidly growing emerging markets around the world, most communications signals will be transported by wireless technologies.

Wireless Internet Access & IPmedia My revision has specific implications for those who seek to improve the speed of Internet traffic in the local loop. We all are evaluating the implications of a 100-fold increase in Internet traffic over the last two years and hope to gain some share of this new business. The world of IPmedia -- text, music, voice, video and graphics carried over Internet protocol networks -- represents a significant revolution in both commerce and lifestyles. Our recent attention is riveted on achieving speed increases in the domestic landline local loop. However, my revision -- which takes into account a much larger share of the world's population -- predicts a new focus on high-speed broadband wireless techniques to reach homes and businesses.

It also forces us to acknowledge a broader definition of wireless markets -- whether they are 1-way broadcast, interactive video, high-speed Internet access, or mobile and fixed voice telephony. The landscape will include a variety of terrestrial and satellite technologies in myriad frequency bands. Thus, investments in LMDS spectrum in the United States represent strategic positions in wireless technologies with far greater long-term global potential than landline methods.

Ongoing efforts to develop third-generation wireless standards fit nicely into this new paradigm because the various proponents address these wider bandwidth markets. Every large telecom carrier and equipment company ultimately will confront the question: "Am I developing products and services for potential markets of 500 million people in the United States and Europe, or for potential markets of 3 billion people in the Asia/Pacific and Latin American regions?" In either case, wireless technology is a winner. In the long term, though, the law of large numbers will favor those who plan for the largest markets.