The Gilded Future

>From political speech writer for such notables as Nelson Rockefeller and >Richard Nixon to independent researcher and writer to 1986 White House >Award for Entrepreneurial Excellence recipient and International >Engineering Consortium Fellow, George Gilder has traveled down a road that >has brought him to the high-tech arena. In his current position as >president of Gilder Technology Group, he provides research and consulting >on emerging technologies. He also is a senior fellow at the Discovery >Institute.

During his time as an independent researcher and writer, Gilder delved into topics that speak to the heart of society. He explored the causes of poverty and wealth, and his examination of the inner workings of successful entrepreneurs led him to high-technology fields and, thus, telecommunications.

In his 1989 book, "Microcosm," Gilder examines the roots of electronic technologies. He then wrote "Life After Television," a prophesy of the future of computers and telecommunications and takes the subject a step further in his newest book, "Telecosm," in which he explores the future of telecommunications.

In a time when the wireless industry is almost growing too fast for its britches and certainties of what the future holds are few, Gilder has formed several unwavering opinions. He speaks passionately of CDMA as the technology upon which the wireless industry ultimately will ride into the next century. He believes that both LMDS and satellites will play important roles in the wireless future, and he believes strongly in the link between wireless and IP.

Although it is natural to desire to know the future, Gilder cautioned that it is ludicrous to look too deeply into the crystal ball.

"Wireless is coming on like gangbusters now," Gilder said. "You have to understand what's happening now to comprehend how wireless is going to change everything."

CDMA Just when the intense battle over second-generation air interface standards waned and the three U.S. technologies coincided, if not as one big happy family, at least in relative peace, talk of third-generation standards began. With Europeans opting for a CDMA format, it would seem that all roads lead to CDMA, or almost all of them. Ironically, the United States' largest carrier doesn't buy into that plan, and according to Gilder, AT&T's residual TDMA weakens the CDMA position. However, according to Gilder, the fact that Europeans selected a form of CDMA was an amazing turn of events and a step in the right direction.

"The Europeans just fanatically hated CDMA," Gilder said. "I used to debate feminists, and I'm telling you, debating GSM people was more intense and more irrational and more emotional than debating Germaine Greer. ... They hate CDMA, and they've completely capitulated. It's an amazing, incredible turnaround."

The GSM camp may have lost a battle, but it by no means has lost the war. By threatening an incompatible form of CDMA, that camp has placed itself in a negotiating position.

"They're being coy about 125kHz of the channels, little details that clearly are a negotiating system."

He added, however, that negotiation simply is part of the process -- part of a business situation.

"We can appraise the negotiating positions of the two sides, and what Ericsson has is a huge market of GSM phones around the world with customers galore, and what Qualcomm has is the technology, and some sort of accommodation will have to be reached," he said.

Although Gilder said the claims will be reconciled and ultimately there will be a single CDMA standard for the next generation, progress will be gradual. Groups will generate interim standards, and legacy standards will persist.

"You never put a cap on technology and say 'now wideband CDMA is the standard,' and all the world has to throw away all of their old equipment and eschew all new ideas and succumb to this one technology," he said "so it's always a dynamic situation."

And in a dynamic situation, smart radios will be useful. Gilder suggested that programmable radios will play an instrumental part in ushering in the new technology that will live alongside legacy equipment. Instead of hard-wired air interfaces, software air interfaces can be downloaded in real time with the radios, so they are customizable to the relevant air interface.

INTERNET ACCESS While the wireless industry is grappling with air interface standards, IP standards are emerging. The Internet is undeniably hot right now, especially in the United States, and has drastically changed how society functions. Although it is difficult to see how the Internet's use will evolve over the next 10 years, Gilder adamantly believes that carriers should tie themselves to it rather than some other medium such as television or exclusive voice service. Carriers should make the Internet accessible to people wherever they are.

"Almost everything is going to IP, including voice at some point," Gilder said. Voice just becomes another form of data, increasingly to be joined by images of various kinds and Internet access."

Any company that doesn't catch that wild ride will be missing the boat, he said.

Gilder cited Qualcomm's pdQ phone with its megabit modem as a product that would help galvanize wireless use. The pdQ phone and communicator incorporates a Palm III organizer and can connect to the Internet wirelessly at faster-than-T1 rates so that you can plug your notebook computer into the phone and have a T1 connection to the Internet.

"All of a sudden wireless turns the tables and becomes a superior access technology rather than an inferior one. The pdQ phone is the first really elegant implementation of a PC-in-a-cell-phone form factor, and I think that it is going to take off in the next two years to be a ubiquitous product."

LAST MILE As PCS and cellular carriers work toward offering higher-speed data applications to mobile subscribers, point-to-multipoint wireless carriers are gearing up to offer last-mile or quarter-mile services to businesses. Some watchers predict tough competition from the RBOCs, which offer their own high-speed data services. Nonetheless, Gilder is convinced that companies such as Teligent and WinStar can offer their services more cheaply and efficiently.

Although he didn't dismiss LMDS' line-of-sight issues as engineering challenges, Gilder said those tasks are less onerous than securing rights of way, digging under streets or climbing into culverts and manhole covers.

"These connections for most American cities are just hugely more efficient because they are so much cheaper and easier to roll out than fiber links that entail rights of way and deployment underground and then optoelectronic conversion and cable links of all of the offices in the office building," he said.

The fiber optics explosion can mean only great things for wireless as well. It's the chicken-and-egg idea.

"The more fiber penetrates, the more opportunities (there are) for wireless access. If you're going to have a huge explosion of wireless access, including, say, video teleconferencing through your Palm Pilot or pdQ phone to your notebook screen, that's a huge amount of bits, and you're going to need the explosion of fiber-optic capacity in the backbone to handle the increase in bits that the new wireless access tools will make possible."

INFORMATION SKYWAY Although satellite companies have endured numerous setbacks and skepticism, Gilder is convinced they will play out their roles in the wireless theater with style. Setbacks have included deployment mishaps, such as Globalstar's loss of 12 satellites when the Russian rocket exploded, delayed launches and failed satellites. Other setbacks have been on the supply side, such as a shortage of Iridium phones, along with confusion among Iridium's operators about price and service launch as well as skepticism about business plans. Questions still exist about how much better Iridium will work than an existing suitcase-size satellite telephone, which offers crackling reception through higher-altitude satellites.

Nonetheless, satellite networks such as Teledesic, Globalstar and Iridium will allow wireless connectivity anywhere in the world rather thanjust in optimal parts of America. Although Gilder acknowledged the higher cost of satellite service, he said it's a matter of perspective.

"If you're an oil man in the jungle, then a buck a minute is cheap."

Although not all of the current satellite players will survive, he said there are enough potential users to support a thriving satellite industry. Although usually the first to market has the advantage, Gilder said in this case, Iridium might be too costly for long-term survival.

"Frankly, I think Iridium is too rich a system, but they are way ahead of everybody else in getting deployed, so they will pioneer this market," Gilder said. "But I think like many pioneers, they will end with some arrows in their back because they have a very expensive, narrowband system that is really exclusively for voice."

REPLACEMENT, NOT SUPPLEMENT Whatever his thoughts on the Internet, CDMA, satellites and LMDS, Gilder offered one piece of advice for wireless carriers: It is imperative to regard yourself as a replacement for wireline systems, not a supplement or complement. Although these wireless systems will not replace wireline systems immediately, he said that such a business plan and orientation, which assumes that the market for wireless telephony is the 7 billion people in the world, is the right approach.

"That vision is going to yield successful companies in the future, while the vision that motivates the old-style cellular industry -- to cherish your mobility premium above all else -- is a big mistake, and I think those companies are going to fail," Gilder said. "The companies that really see their market as the world will succeed."

Visionaries are gifted with the ability to see beyond the surface -- to see possibilities where others see limitations and to see success where others see failure. The following men are George Gilder's visionaries:

* Irwin Jacobs & Andrew Viterbi -- "The guys who have really changed the whole scene at a time when vision was absolutely critical, because they had no money and no customers, were Jacobs and Viterbi. They developed the Qualcomm CDMA standard, got it through and made it work, proving its capability around the world, and then when GSM adopted CDMA technology for its next generation, it was the final triumph."

* Craig McCaw -- "He knew enough to get out of cable TV and enter the cellular phone business, and he also has been a spearhead of Teledesic, which is a huge visionary project, and his Nextlink and Cable Plus are using wireless in ingenious ways to circumvent the RBOCs. Nextel has been a very good vertical application. I think it is clear that of the visionaries in wireless, McCaw is a paramount one."

* Ron Carney -- "Ron Carney has been a leader in the smart radio movement for some time. He invented the basic technology at Harris and spun it out into AirNet and has started a company called Tantivy, which offers wireless Internet access at 114-200kb/s. Carney is a brilliant engineering genius."

As various segments of wireless move forward, Gilder predicted three specific companies will lead the way.

"Teligent is focused and ambitious. The company seems to have its act together better than WinStar, which is distracted with all of its other services and its operations as a CLEC. WinStar is doing too many things, so it can't focus on the huge opportunity in wireless data to businesses. That's why it seems that Teligent is going to burst ahead of them."

"Sprint PCS has really focused and done an excellent job in functioning in PCS alone at 2GHz and demonstrating that CDMA works."

"I like Globalstar. They had a really bad experience with 12 of their satellites blowing up, but they have a very elegant and good system. They are the best of the LEOs for telephony and low-data-rate data."