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New Telecom Quarterly

Page391070-3683/96/$3 1996 Technology Futures, Inc.

DrivingForcesinWireless

DataCommunicationsRon A. Haberkorn, Ph.D. and Paul E. Nikolich

Dr. Ron Haberkorn, a principalengineer at Steinbrecher Corporation,is working on the design of a publicindoor microcell cellular base station.Before joining Steinbrecher, he initiateda wireless communications program atRacal Datacom, Inc. He spent several

years at Mitre Corporation where heheaded up the Advanced EHF SatelliteTerminals project. From 1980 to 1985,Dr. Haberkorn was at the Francis BitterNational Magnet Laboratory at MITwhere he helped set up the Magnetic

Resonance Imaging (MRI) Center. Dr. Haberkorn received hisPh.D. from MIT for his thesis on solid state nuclear magneticresonance (NMR) spectroscopy. He completed an MSEE degreefrom Boston University in Communications and Signal Processing

Mr. Paul Nikolich is an advisorymember of technical staff responsiblefor Advanced Technology Develop-ment for Racal Datacom. He has over15 years experience in the communica-tions industry developing technologies,products, and standards. His interests

are focused on the development ofemerging local loop access technolo-gies such as wireless, high bit ratesubscriber lines, and, most recently,CATV modems and their interface tocustomer premise LANs. He is actively

involved in the establishment of LAN data communicationsstandards as the vice-chair of the 802.3 (Ethernet) working group ofthe IEEEs Project 802. Mr. Nikolich received his B.S. and M.S.degrees in engineering from Polytechnic University in Brooklyn,New York.

The objective of this paper is to present anoverview of the driving forces which affect the

wireless data communications industry. Thiseffort will concentrate on several applications andrelate them to some sample markets. The marketdriving forces will be identified and discussed. This

work will focus on wide area network (WAN) applica-tions for which wireless data communications providesuitable solutions. In particular, this article willconcentrate on terrestrial radio-based systems and willonly touch briefly on satellite systems.

The field of wireless data communications is verybroad and, in the short space available, only a verysmall segment can be adequately addressed. As a

result, local area networks (LANs), while a significantmarket in their own right, cannot be addressed. It ishoped that this article will provide a concise yetthorough overview of the WAN market and thecorresponding forces which are shaping its future,particularly in the United States.

We will first put this work in context by presentinga general overview of wireless communications. This

will include an overview of the technologies whichenable the services and equipment features that satisfy

end-user requirements. The regulatory and standardsenvironment will be discussed next, as it is a funda-

mental force which defines many of the services whichcan be made available to the end users.

A general market profile will be presented whichwill include a discussion of several major applicationsfor wireless data communications technology. Someexamples of significant industries which can make useof these applications will be discussed and character-ized. The market will be further characterized in termsof the equipment and service providers. The capabili-ties delivered to the end users is highly dependent onthe types of services available, as well as the equip-ment needed to implement these services.

Finally, the future trends in the market will besummarized, and the forces which seem to be shapingit will be identified and discussed.

The wireless data communications market hasbeen shaped by a number of independent forces(shown in Figure 1) which have come together to formthe market as we know it today. These forces willcontinue to operate and will affect the market todiffering degrees in the future. First and foremost,there exists an end-user community which has both

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Figure 1Summary of Key Requirements, Enabling Technologies, and Regulatory and Standards

Environments for Wireless Communications

Source: Haberkorn & Nikolich

business and personal needs for untethered communi-cations. This community has arisen because of thealmost ubiquitous reliance on personal computers foralmost all aspects of business life, as well as anincrease in the use of the PCs at home for everythingfrom maintaining personal finances to education andentertainment. The increased sophistication of thedata communications between computers has mademany tasks trivial and even automatic, tasks which

were, only a few years ago, laborious and demandingof a great deal of precision. This has led to similarapplications being carried farther and farther afield,

with the net result that the end users are demandingnetworked capabilities away from the office as well.The demands for this increased mobility now require atetherless connection for much of the communications.

The technologies which have enabled manufactur-

ers to realize these capabilities are the same technolo-gies that have driven the computer and communica-tions industries for the past several decades. Theseinclude advances in Very Large Scale Integration(VLSI), microprocessors, digital signal processing, andnetworking protocols and software as well as newdevelopments in cellular radio system engineering. Inaddition, the integration of wireless communications

with the Public Switched Telephone Network (PSTN)and the development of methods for sending data over

this medium are just now starting to evolve. This willlead to explosive growth in the use of wireless net-

works for data communications as part of the wide-spread usage of copper, fiber, and wireless media forthe delivery of data and telephone services in devel-oped countries.

With the deregulation of the telephone industry, inparticular in the United States, and because of increas-ing demand for wireless data services, regulators havehad to develop regulations which encouraged andeven mandated a competitive environment as newspectrum was allocated for these services. In addition,new standards are being developed which will furtherencourage competition for services. However, in someareas, such as the United States for example, theproliferation of standards and proposed standards hascaused some consumer confusion with a resultant

damping effect on the market. In Europe, the GlobalSystem for Mobile Communications (GSM) standardshould have the opposite effect and increase themarket.

Wireless Communications Overview

Figure 2 illustrates an overview of the variouswireless services either currently available or plannedfor the near future. These services can be broadlyclassified into two groups based on whether or not the

Business and Personal Needs

- Mobility

- Access to Information

- Widespread Use of Personal Computers

- Increased Dependence on Networking

- Business Value to Having Network

Technical Capabilities

- VLSI and Microprocessors

- Networking Technology

- Cellular System Engineering

- Digital Signal Processing

- Integration of Wireline and Wireless Services

Enabling Regulations

- Spectrum Availability

- Competition

Standards

- AMPS, CDPD, IS54, IS95

- GSM, DECT, TAC, NMT

- Mobitex

Wireless

Communications

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Figure 2Overview of Wireless Data Communication Services


services are provided by satellite. Satellite services aregenerally provided by spacecraft in geosynchronousorbit. These consist of most of the wide area paging

services as well as the INMARSAT and VSAT type ofservices. In addition, there are all the broadcast andtelephone trunking services which are currentlyprovided. Low earth orbit satellites are just nowstarting to be fielded, and they will certainly providesome interesting communications services.

There are a number of providers of wireless localarea networking (LAN) equipment that end users buyand operate. These systems generally have ranges ofless than 500 feet and are generally confined to smallareas such as buildings. The data rates obtainablefrom these systems are typically much higher than the

wide area network systems; certain implementations

attain bit rates in excess of one Mb/s.The wide area services can be divided into two

sectors which have different forces operating on them.Private radio networks operate in a non-cellularenvironment. Therefore, without the high degree ofspectrum reuse typical in cellular systems, private radionetworks do not have the ability to accommodate the

large number of users that the cellular systems can.The forces operating on private radio systems aredifferent than public radio systems such as cellular.

For example, the initial fixed cost is important whenconsidering investing in a private system, whereasoperating cost dominates the cellular investmentanalysis.

In Figure 3, an overview of the infrastructureneeded for wireless data communications is shown.Common to each of the technologies is the require-ment for a modem capable of broadcasting at theappropriate frequencies. For the case of cellularinfrastructure, protocols used with these modems mustbe capable of accommodating the frequent signaldrop-outs which are experienced on these channels

with a mobile platform. The cellular phone communi-

cates with the base station, which is connected to themobile telephone switching office (MTSO) via wireline. These MTSOs are responsible for managing theconnections with the base stations and for the connec-tion to the PSTN. Cellular Digital Packet Data (CDPD)systems operate similarly except that, since this is a

WirelessData

Services

Terrestrial

Satellite

Wireless LANs

Private Packet Networks

Circuit-Switched Cellular

Packet-Over-Cellular

Specialized Mobile Radio

Personal CommunicationServices

Geosynchronous Orbit

Low Earth Orbit

- Radio- Infrared

-Ardis, RAM Mobile Data, Paknet

- Any Cellular Provider

- Any CDPD Provider

- Nextel, Racotek

- Paging Services

- Emerging Service

Unidirectional

Bidirectional - INMARSAT, VSATs

- Orbcomm, Iridium - Emerging Services

Private RadioNetworks

PublicSwitchedTelephoneProviders

Paging Services - POCSAG

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Figure 3Overview of Wireless Data Communication Infrastructure


packet protocol, the data is handled differently at theMTSO than normal voice cellular signal.

The packet radio services such as Ardis and RAMMobile Data require that the appropriate modem isattached to the portable computer or other data deviceso that the air link can be established to the basestation. The data routing is then accomplished overthe service providers data network, and the data isdelivered to the customers end site. Satellite commu-

nications operate in much the same way except thatthe satellite serves as an intermediate relay point. Inthe case of INMARSAT, connection can then be madeto the PSTN. Other satellite systems can go directly tothe user equipment from the ground station.

Regulatory/Standards Environment

The regulatory environment is governed by thefour basic classes of standards and regulations asshown in Figure 4.

REGULATORYThe national and international regulatory bodies

(ITUR Radio Regulation Board) have the biggesteffect on the wireless market for WANs. The laws andregulations which are put in place by these organiza-tions are mandatory, and failure of a service providerto adhere to them can result in punitive sanctions.These bodies allocate the radio spectrum which mustbe used and regulate the operational parameters such

as power limits, bandwidth, etc. These are the basicresources for wireless data communications, and theydefine fundamental limits on the capabilities of thesystem such as capacity, data rates, and channelavailability, as well as the growth of the systems.

The current trend by many regulatory agencies,such as the Federal Communications Commission(FCC) in the United States, is toward allocating spec-trum in such a way as to encourage or even mandate

Laptop Satellite Modem

Cellular

Phone

CDPD Modem

Packet Radio

GroundStation

Mobile TelephoneSwitching Office

BaseStation

CDPDNetwork

Private or PublicData Network

Laptop

Laptop

Laptop

BaseStation

Public SwitchedTelephone Network

Modem &

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competition for wireless services. This has had abeneficial effect for the consumer in that pricing foranalog cellular services has become very reasonable.The biggest disadvantage is that, because of theintense pricing pressures, service providers will mostlikely not be profitable for many years until there is amuch larger customer base.

The spectrum allocated for cellular telephony andpacket radio in the United States is in the 800 MHz to1,000 MHz radio band. To encourage competition, theFCC has divided the cellular spectrum into an A

spectrum and a B spectrum. The same serviceprovider is not allowed to have a license for both the

A and B spectra in the same trading area. Therefore,the FCC has guaranteed that, for every trading area,there will be two service providers for cellular tele-phony using a common standard.

The 1,850 MHz to 2,200 MHz band has beenallocated for Personal Communication Services (PCS)and is currently being auctioned off in the UnitedStates by the FCC. Similar rules will apply to this bandto ensure that there are multiple service providers ineach service area. However, the FCC has not man-

dated any standard, preferring instead to let themarketplace decide on the most advantageous tech-nique.

The magnitude of the radiated power is alsolimited by the regulatory agencies for both safetyreasons as well as to control the interference betweenneighboring transmitters. Power constraints have theeffect of limiting the maximum data rates as well as thedistance from the base station over which effectivecommunications can take place. These factors directly

affect the number of base stations required as well asthe number of subscribers and the data throughput

which can be supported.

OFFICIAL STANDARDSThe purpose of the various national and interna-

tional standards bodies such as the InternationalStandards Organization (ISO) or the InternationalTelecommunication Union (ITU) is to sanction the

various standards which guarantee the interoperabilityof equipment regardless of manufacturing origin.These standards are publicly-available formal docu-ments, but generally adherence to them is voluntary.In many cases, it is the consumer who demandsadherence to these standards in order to be able to usehis equipment among several service providers.

Examples of these types of standards published in theUnited States under the auspices of the AmericanNational Standards Institutes (ANSI) Telecommunica-tions Industry Association (TIA) body are:

The Advanced Mobile Phone Service (AMPS)standard for cellular service.

The Time Division Multiple Access (TDMA) stan-dard, IS54.

The Code Division Multiple Access (CDMA) stan-dard, IS95.

In Europe, an example of this is the GSM standard

for digital cellular telephony. Formal standards arecontinually being developed, e.g., the Joint TechnicalCommittee (JTC) PCS air interface standards currentlyin development in the United States.

CONSORTIAConsortia are formed by groups of equipment or

service providers and generate open standards notsanctioned by any of the standards organizations.Therefore, these standards are informal documents andadherence is voluntary. Once again, the consumer isthe main driving force for adherence to these stan-dards. Examples of these types of standards are theCellular Digital Packet Data (CDPD) standard which

was generated by the CDPD Forum or the Mobitexstandard which is maintained by the Mobitex Opera-tors Association.

PROPRIETARYProprietary implementations are generally not

publicly available, but are developed and maintainedby equipment or service providers. This type of

RegulatoryLaws

Mandatory

Official

Standards

Open, Formal

Voluntary

Consortia

Open, Informal

Voluntary

Proprietary

Closed

Formal & Informal

Figure 4Four Classes of Standards and Regulations


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standard is more prevalent in the wireless LAN arenawhere the customers are not so concerned withinteroperability of equipment from many manufactur-

ers. These systems operate within the allocated radiospectrum and within the prescribed limits of power,bandwidth, etc.

Market Forces

According to John Mazzaferro of JAM Enterprizes,the size of the wireless data communications market iscurrently at about $2 billion in total revenues. It isexpected to grow at greater than 50% per year and isexpected to reach over $7.8 billion by the year 1999.This includes the revenues from all data services andequipment, including satellite revenues which is about25% of this market. Other market surveys predictanywhere from a factor of three to six growth in the

wireless communications market by the year 2000 fromthe 1993-1994 levels. Another observation whichindicates that the wireless market is poised for anexplosive growth is the fact that, in the United States,there were more new cellular subscriber lines initiatedthan wire subscriber lines in 1993. The question nowis what forces will shape the future of this industry.

The wireless data communications market can bebroadly divided into four segments:

End users.

Equipment manufacturers. Service providers. System integrators.

In many cases, a single company may perform thefunctions of several segments. Each of the segmentshas their own unique set of driving forces.

END USERSEach of these segments is highly interdependent

but, ultimately, the end users needs must be satisfiedat an affordable price in order for the market todevelop successfully. The principle requirements

which must be met to satisfy the end users needs are:

Coverage. Convenience. Capacity (number of users). Cost. Reliability. Speed. Security. Safety.

The issues related to each of these requirementsare heavily dependent on the type of application theend user is trying to implement. These applications

can be classified into the following broad categories:

Electronic Messaging and Dispatch. Transaction Processing. Remote Data Access. Remote Monitoring.

Table 1 attempts to map these market types intovarious vertical markets and to identify the key enduser requirements which will drive the use of wirelesscommunications for these applications.

Electronic Messaging and Dispatch. Typicalmarkets for this application are messaging and paging

services, as well as dispatching service personnel suchas field service or package delivery services. Charac-teristic of these applications is the need for personnelin the field to receive small amounts of informationperiodically such as service call assignments, reroutinginstructions, etc. In some applications, the area whichneeds to be covered is extremely large, spanningcontinents or oceans, and for these cases, satellitenetworks are usually the most logical choice. How-ever, the messaging and dispatch applications stillaccount for almost half of the cellular and the packetradio markets.

Transaction Processing. This market centers

around applications such as easily relocatable point-of-sale terminals where the terminal accesses a centraldatabase in frequent short messages to complete atransaction such as credit card verification. For theseapplications, security is one major consideration. Theapplications themselves are usually routine andtherefore lend themselves to a high degree of automa-tion. This results in a simple convenient user interface.Systems such as the Paknet X.25 Radio Data Networkare needed to satisfy these requirements.

Remote Data Access. The market for the remotedata access application is field service personnel whoneed access to databases of repair manuals, theexecutive who demands access to his office computer

while on travel, etc. This is a major growth area forwireless communications, as the technology andinfrastructure are just now reaching a level of maturityto support these markets The utility of these applica-tions is the access provided to the personnel to verylarge databases and timely access to databases thathave frequently-changing information. In addition,there is growing interest in leveraging the skills of

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highly-trained personnel at remote locations such as intelemedicine. In this case, even imagery will betransmitted from the remote location. This is a severetechnical constraint as the power which can betransmitted must be limited for safety and interferencereasons, and therefore the distance will be limited.

Remote Monitoring. Remote monitoring applica-tions have typically infrequent, low data throughput

requirements but are difficult to access. Examples ofthis are pipeline monitoring, gas and electric meterreading, etc. The monitoring of sites located in remoteaccess environments is probably best addressed bysatellite technology; however, even within urbanenvironments, there could be efficiencies obtained bymonitoring utility meters at homes via a wirelessnetwork. The principal driving force for this applica-tion will be the cost of the equipment compared with

Table 1Comparison of Market Types, Vertical Markets, and End User Requirements

Market Types Vertical Markets End User Requirements

Electronic Messaging and Dispatch Field Service Low Data RateEmergency Services Low Duty CyclePackage Delivery Services Wide Coverage AreaShipping Convenient to UseTrucking Reasonable Cost

Transaction Processing Point-of-Sale Small Amount of Data per TransactionCredit Card Verification Infrequent AccessBanking High Security is MandatoryToll Collection Convenient to Use

Low Cost

Remote Data Access Telemedicine Fast Data TransferExecutive Send/Receive ImagesField Service Access to Repair Manuals/DocumentationSales Access Price/Availability DataInsurance Adjusters Place Orders at Customers SiteReal Estate Convenience is Major Issue

Reasonable Cost

Remote Monitoring Traffic Low Data Rate per SitePipeline Potentially Large Number of SitesUtility Meters Essentially One-Way Communications

Large Coverage AreaLow Cost


the cost of personnel or the tariff structure of the localpublic phone carrier.

Equipment Providers

As can be seen from Figure 3, for the wirelesssystem to be useful and operate properly, several typesof equipment must be in place together with the

associated application software. The manufacturers ofthese items can be broadly classified into three classes:

(1) Base Station/MTSO Equipment.(2) End User Equipment.(3) Application Software.

The base station and MTSO contain all the equip-ment needed to communicate with the end user and to

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perform the switching functions needed to route thedata to the other wireless users or to the wirelineinfrastructure. This equipment represents the largest

investment that a service provider must make in orderto provide wireless communications services. As thecoverage area is increased or additional subscribers areadded, in general, more equipment must be purchasedand the costs recovered through user fees. For aprivate radio network, a single user shoulders theentire burden of this cost for his service. The cost ofthis equipment is a significant driving force behind thedevelopment of new protocols which either allow theuse of less expensive equipment and/or allow thesame equipment to accommodate more subscribers.

A good example of this is in the United States,where cellular carriers are considering the use of two

digital alternatives to the current AMPS system. Theseare the TDMA standard and the CDMA standard. Thepredictions for TDMA indicate that, for a very modestinvestment, a single AMPS channel can accommodateat least three times the number of subscribers andperhaps as many as 10 times the number. Similarly,CDMA proponents are making claims of at least a 10-to 20-fold increase in the number of subscribers thatcan be supported. Each system is currently beingtested in various areas of the United States, and theresults will certainly influence the purchase of largeamounts of equipment. In addition, the emerging PCSbroadband CDMA market will offer further opportuni-

ties for equipment vendors, as an entire infrastructurestill has to be built.

The trend in end-user equipment is for smaller,lighter weight for ease of carrying, better powerefficiency for longer battery life, and lighter weightbatteries, as well as easy push-button operation. Inaddition, the trend is toward higher levels of integra-tion of all end user equipment. For example, by theturn of the century, laptop computers will doubtlesshave integrated wireless modems which can be usedon several systems. Many pundits have predicted thatthe personal digital assistant will become ubiquitousand will include all personal communications, bothdata and voice, integrated in a single pocket-size unit.

Whether or not this level of integration is everachieved, it is certainly true that end users will onlyuse wireless data communication if it is convenientand useful. This means that a significant driving forcefor the use of wireless data communications is to havea well-integrated solution for whatever data device isneeded for the particular application.

SERVICE PROVIDERSAs indicated in Figure 2, service providers fall into

two main categories: cellular services providers and

packet radio network providers. The packet radionetwork providers, for the purpose of this discussion,are the system operators like Ardis and RAM MobileData. This distinction is more historical at presentsince cellular providers are also beginning to offerpacket services. Ardis and RAM Mobile Data eachown a portion of the spectrum in the United States,and they have optimized their systems and pricingstructures to satisfy end users with short bursty com-munications requirements.

Cellular providers, however, based their dataservices on circuit switch techniques as this fit in well

with their voice service offerings. With the increased

interest among end users for wireless data and theanticipated explosive growth of this market, cellularproviders are adapting their systems to more easilyaccommodate data communications in a cost-effectivemanner.

CDPD efforts are geared to transferring data in apacketized manner over the existing AMPS infrastruc-ture, and this will certainly compete directly withprivate radio network operators. In addition, therehave been some discussions to incorporate dataservice features in the new TDMA and CDMA stan-dards. This could have the effect of taking customersaway from private radio network providers. This is a

key driving force for cellular data communications, asit will significantly impact the rate structure which thecellular service providers must establish in a way that

will make it more cost effective for the end user.

SYSTEM INTEGRATORSCertainly in the near term, a system integration

facilitator will be a necessity for the end user. Themarket for wireless data services at the present time is

very confusing, and the integration of the end usersapplication with the wireless service is not straightfor-

ward. The extent to which this is provided by serviceproviders and equipment manufacturers or softwaredevelopers will greatly affect the rate at which wirelessservices are adopted by the end users.

Summary

The market forces driving the expansion of thewireless data communication industry are ultimatelythe end users desires to make their organizationsmore efficient and to offer new or enhanced services

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for the lowest price possible. As illustrated in Figure 5,the market is expanding because end users seeopportunities to make their own product offerings

more efficient, to expand into new areas with en-hanced products, and to make better use of theirpersonnel for more efficient operation. The opposingforces are the high cost of equipment, the limitedresources of the radio spectrum, the cost of providingthese services, and the pace at which new applicationsoftware can be written or existing application soft-

ware can be modified to take advantage of wirelesscommunications media. For example, as the cost ofequipment and service is decreased, the market willexpand as it becomes more cost effective to delivernew and enhanced services.

The driving forces which will reduce the cost of

services are affected by current efforts to increase thecapacity of the systems through more efficient use ofspectrum (i.e., TDMA, CDMA, and CDPD developmentefforts), decreasing the costs associated with thepurchase and operation of the base station and MTSOequipment, as well as the increased amount of spec-trum which is becoming available (i.e., the PCSspectrum auctions now occurring in the United States).One force which may be impeding the market expan-sion in the United States is the number of protocols

currently under development. This will cause con-sumer confusion and will also require, at least for thenear term, different modems depending on what

service area the user is in.The cost of end-user equipment will continue todecline as the applications become better defined.This will occur through the use of higher levels ofintegration, and the ability to adapt to multiple proto-cols. Also, as the market expands, the cost of equip-ment will be further reduced due to increased produc-tion volume. Initially, the multiple protocols will be ahindrance, but eventually modems will be developedthat will be able to transparently adapt to whateverprotocol is supported by the service provider in thearea.

Applications programs are potentially the biggest

driver. These will ultimately define the degree towhich wireless data communications are useful to theend user. In particular, there will doubtless be onekiller application which causes rapid market expan-sion. The result of this will be to make it cost effectivefor other applications to take advantage of the wirelessmedia, further increasing the market. There has beenmuch speculation on what this killer application willbe, yet, to date, it remains to be defined.

Figure 5Wireless Data Communication Market Forces


Wireless DataCommunications

Market

AffordableServices

More Efficient

Operations

Better Product

Delivery

EnhancedProduct Offering

Cost of End Use rEquipment

- Miniaturization- Integration with User I/O- Multiple Protocols- Ease of Use

Cost of Se rvices- Throughput limitations- Capacity limitation- Cost of Base Station

and MTSO Equ ipment- Additional Spectrum

Application Software De velopmen t- More Efficient Use of Wireless Media with Current Applications- New and Enhanced Features to Make Business/Operation More Efficient

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