“The whole handset business has transformed from being an extension of the network,” Vestberg said Tuesday in an interview with GigaOM before a media briefing in San Francisco about the future trends (covered here by Kevin Fitchard earlier) that the wireless networking equipment maker is poised to exploit. While Ericsson’s carrier customers may still be in denial about the shift in power from the network to the handset, Vestberg saw it happen firsthand while Sony Ericsson fell further and further behind, leading to a painful but necessary decision in October 2011.

“For us it was emotionally tough to drop it, but strategically it was easy.” Vestberg said. “When you start losing market share it’s really tough to gain it back, you need the product portfolio and presence in many markets.”

Now Ericsson is focused completely on its equipment business, helping carriers build out next-generation wireless networks that can accommodate the rapid shift from fixed desktop computers to mobile computers like smartphones and tablets. By 2017 the company expects that there were be 5 billion mobile broadband users, three times as many people as are using that technology today.

It expects that the concept of HetNets — vast, sprawling wireless networks made up of many different types of short-range and long-range radio technologies — will become a standard practice in the wireless networking business. We’ve covered the concepts behind HetNet quite a bit this year, but Vestberg doesn’t expect it to develop overnight.

“We don’t want people to believe that this is so simple,” he said, citing the complexities involved in making sure wireless networks of overlapping cells can operate reliably without interference and the commitment it takes to make sure there is enough backhaul to connect HetNets to the broader Internet.

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Wi-Fi offload has been a big trend in the last two years as operators try to defuse the data demands of their customers by shunting packets over to in-home, corporate or campus Wi-Fi networks. However, cellular operators have also been reluctant to give up control and the potential revenue associated with sending traffic across their cellular networks. With BelAir, which makes Wi-Fi access points already in use for city-wide Wi-Fi networks for wireline cable providers Comcast and Cablevision, Ericsson can give operators control and more capacity.

BelAir also has IP related to its equipment that makes it less obtrusive and can also create a larger Wi-Fi mesh network that more closely resembles a carrier’s cellular network. On a BelAir network it’s possible to configure it so moving from one hot spot to another is seamless and doesn’t require another sign on. This is great for consumers, who can use Wi-Fi on trains for example, but it’s also great for operators, because they can track a subscriber through the Wi-Fi network. As Kevin pointed out three weeks ago:

From Ericsson’s perspective BelAir’s technology may be an easy way for it to break into metro Wi-Fi without cannibalizing its core product line. By slotting its own cellular radios into BelAir access points, it can sell operators both Wi-Fi and cellular upgrades in a single package.

This is a good deal for both Ericsson and BelAir, and a resounding success for the idea of Wi-Fi offload. It seems crazy that only four years ago Verizon wasn’t allowing Wi-Fi radios on its handsets.

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The new Wi-Fi standard boosts wireless speeds three times over the current 802.11n radios — 433 Mbps per antenna — while also improving power efficiency up to six times, according to Broadcom. The company released its first 5G Wi-Fi chips last month at the Consumer Electronics Show. Benefits come in two forms: beamforming, which can steer signals toward a target, and a doubling of bandwidth per channel over today’s wireless technology, from 40 to 80 MHz.

Scott Bibaud, former EVP & FM, Mobile Platforms, at Broadcom, offers this additional explanation of the benefits 802.11ac will bring to all devices, and why carriers would be interested in getting this new Wi-Fi into handsets:

As cellular data plans slowly disappear and more wireless hotspots appear, smartphone owners are relying on Wi-Fi as a free or low-cost option. Carriers, too, have been building up their Wi-Fi hotspot capabilities in order to offload traffic from costly cellular networks. If consumers can get a more efficient, faster Wi-Fi radio that can help save on battery life, I’d say it’s a win all around.

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From the article:

And building new capacity isn’t cheap. Everyone — not just the first-class passengers — ends up paying for it. So prepare for higher cellphone bills. And in the meantime? Prepare to sit and wait. That call to Grandma might not get through until the congestion clears.

Other alternatives might be less palatable, especially to anyone who wants immediate downloading gratification. We could stay off the grid or utilize fewer data-intensive functions. Or we could put some traffic cops on the beat to regulate our data demands and limit the traffic snarls and bottlenecks.

But if you think Siri is somehow responsible for the data overload, you ain’t seen nothing yet. Siri is the first generation of interfaces that will make it seamless and easy for us to surf the web from anywhere, and on any device or vehicle. So the author’s problem is one that’s only going to get bigger. Thankfully, it has a solution — one which he seems to ignore.

Paul Farhi, the author of the piece, makes a couple of errors (or maybe omissions is kinder) that are worth pointing out to the policy wonks in D.C., especially as they contemplate bills that would gut the FCC’s ability to make spectrum policy in the U.S. for the sake politics. Onto the problems:

Siri as data hog

Siri, the natural language processing service Apple introduced on the iPhone 4S, doesn’t consume the data Farhi says it does in his article when he says, “Siri’s dirty little secret is that she’s a bandwidth guzzler, the digital equivalent of a 10-miles-per-gallon Hummer H1.” Siri consumes very little data in sending your voice back to the servers to figure out what you want the phone to do, but what it does is make it that much easier to surf the web. Farhi seems to understand this, but his first characterization is blatantly false. Siri isn’t guzzling data; she’s making it easier for us to do so. We’re the guzzlers.

The airwaves as highways

The second problem with the article is more complicated. Farhi uses the popular highways analogy for how we send cellular traffic and explains that building out more infrastructure takes time. (One reason is because it takes about 10 years on average to get spectrum into the hands of carriers thanks to the politics associated with spectrum auctions.) But what he misses, and what is crucial to his point, is that there is more than one set of wireless highways. There are multiple types of licensed airwaves that are used for everything from satellite radio to cellular, and there are unlicensed airwaves where data is currently sent using Wi-Fi, Bluetooth and soon, WiGig.

When we’re talking over the air, there’s not one single highway to get us from Point A to Point B; there are multiple spectrum bands, technologies and costs associated with them. In this age, using wireless is like engaging in multimodal commuting. You use cellular to drive to the train station and the high-speed rails of Wi-Fi fly downtown. Meanwhile, you’re sharing those rails and highways with thousands of other commuters in neighboring airwaves that are the equivalent of bikers, skateboarders etc.

We can keep Siri and still call grandma. Here’s how:

That’s where Farhi missed a big opportunity to tell D.C. that instead of focusing on cars and the single highway, it should look around at all the other technologies out there. Stop listening to the carriers, who actually do have spectrum they can deploy if they want to work a little harder and spend a little more, and start thinking about how Wi-Fi or white spaces broadband (Super Wi-Fi) can play a role in taking congestion off over the air data networks.

Passing a spectrum bill that allows for more unlicensed airwaves would be a start, as would leaving the FCC to deal with the highly technical issues surrounding spectrum auctions. Pushing the FCC to investigate special access fees would also help, as it might lower the rate of bringing a fiber pipe out to areas so ISPs can support large-scale Wi-Fi or white spaces networks. But first, we have to understand how the wireless and cellular networks work, so we can propose viable solutions instead of blaming applications that make our lives better for congesting our network.

Since many of those solutions will require action (or inaction) from Congress and the FCC, the Washington Post missed a golden opportunity to educate its readers about possible solutions and push the debate forward with mobile operators about using Wi-Fi more strategically, making it possible for rural areas to use unlicensed airwaves to create broad coverage areas without paying an arm and leg for a gigabyte and helping Congress understand how the industry actually works.

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The answer to this single question affects every home automation decision down the line because of compatibility. Choosing among ZigBee, X-10, Z-Wave, Insteon and others (I chose Insteon) dictates which compatible devices you can connect in your smart home. With so many choices, maybe a simpler approach is needed, and that’s exactly what Belkin is offering with its new WeMo product line.

Belkin introduced the WeMo products earlier in January, but I only recently realized they were Wi-Fi-based. Using a ubiquitous wireless standard is huge, assuming it works; the first products don’t arrive until March, so I haven’t tested them. A $49 outlet and $99 motion detector with outlet will be the first WeMo offerings, and you just plug in any electrical device you want to control to the WeMo product. The devices can then be controlled with a free smartphone app.

If Belkin’s WeMo products catch on, it means do-it-yourself home automation won’t be relegated to the early adopters and mobile geeks like me, because the technical question of a network protocol simply disappears. That’s important, because Belkin’s products are generally a plug-and-play system; the Wi-Fi modules are in the smart outlets or switches and they connect to the Wi-Fi network that’s likely already in the home.

In my case, using Insteon, I had to add a Wi-Fi access point to my home automation server; that allows me to interface with the “brains” of the system. But the system itself transmits data and commands through the Insteon solution: a separate 900 MHz wireless network that can also use my home’s electrical system to shoot information over the powerlines. For mainstream consumers, this is too much to deal with.

But when consumers hear something is compatible with Wi-Fi, it’s a network they’re already familiar with. They’re used to adding Wi-Fi objects to the home, whether its a television set, a tablet or a digital camera. For most people, Wi-Fi simply works in a “magical” sort of way, which is how Belkin is presenting the new WeMo products.

Does Wi-Fi already own the home as we said several years ago? Yes. Is Wi-Fi the best standard for home automation? That’s arguable, and I’m not sure I’d say yes. Other protocols have advantages in terms of power consumption, lower frequencies for better wall penetration and backup communication methods. But these options are an alphabet soup of acronyms and terms consumers don’t yet understand. Ask someone what Wi-Fi is, however, and I’d bet even a pre-schooler could tell you.

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China Mobile has a massive network of 700,000 GSM and 220,000 3G base stations built into towers throughout China’s vast landscape. The base station is easily the most expensive element of the wireless network, and as China Mobile looks to the next wave of wireless technology, LTE, it doesn’t want to repeat that enormous infrastructure investment by installing pricey hardware at the bottom of every tower. Instead, it’s looking for Intel’s help to move all of that network intelligence into the cloud, leaving only the radios and antennas at the cell site.

The Cloud-Radio Access Network (Cloud-RAN) isn’t the public cloud of Amazon Web Services. Rather it’s a private cloud run by each operator in local data centers, but the principle is the same. China Mobile could centralize an enormous number of now-distributed computing resources. That would not only save capital and operating costs, but it would also allow it to webscale the network’s biggest number-crunching requirement – converting the analog fuzz scooped out of the airwaves into digital ones and zeros the network can understand.

Using supercomputing principles to handle baseband processing means no longer having to build networks to meet peak demands at every tower. Cell sites usually see huge upticks in use at a few predictable times each day: during work hours in a business district, for instance, and mornings and evenings out in the suburbs. Outside of those peak times, that capacity just goes to waste. But with Cloud-RAN, operators can allocate capacity where and when needed, following the flow of network congestion from the suburbs to the central city and back again. By putting their base stations in the cloud, operators could drastically cut the processing power necessary to run the network as a whole – by some estimates as much as 40 percent.

Meet the Cloud-RAN players

Alcatel-Lucent, Nokia Siemens Networks have developed Cloud-RAN platforms of their own, giving them fancy names like lightRadio and Liquid Radio respectively. Meanwhile, chipmakers Texas Instruments and Freescale have both begun retooling their baseband designs for future cloud implementations. But Intel aims to take the concept one step further. Instead of merely relocating base stations to the cloud, Intel proposes using its multi-purpose Xeon processors to perform the same signal processing tasks that are now the purview of highly-specialized equipment.

In short, Intel wants to replace the big-iron wireless networks of today with what are essentially server farms that can be built and deployed for a fraction of the cost.

At a telecom industry conference last year, the GM of Intel’s Communications Infrastructure Division, Rose Schooler said that the telecom industry has been hobbled by its fixation on proprietary network interfaces, opaque platforms and a morass of complex signaling protocols – that’s code for telecom vendors not wanting to open up any more than wireless standards require. By adopting the more open standards of the computing industry, the wireless industry could innovate at the faster pace of computing, Schooler said.

Not surprisingly, the traditional telecom vendors think Schooler and Intel suffer from a case of wishful thinking. Freescale and TI have also tapped into computing architectures for their next generation of chip designs. Freescale uses IBM’s PowerPC, while TI has begun integrating ARM cores into its latest basebands. But TI hasn’t done away with the key proprietary component of its baseband designs: the digital signal processor (DSP). No matter what Intel claims, wireless networks are highly specialized creatures and therefore require highly specialized silicon, said Tom Flanagan, director of technical strategy for TI’s wireless base station infrastructure team.

“Its kind of naïve to think that you can replace this highly optimized technology with something general purpose and not lose anything,” Flanagan said in a recent interview. “We build that expertise into the hardware because hardware is exactly where it needs to be.”

For Intel to replicate base station with generic Xeon processors would require it to build many of its functions into software, and doing baseband processing through software is a highly inefficient way to run a network, Flanagan said.

What are Intel’s chances?

To build a wireless network business, Intel doesn’t just need to battle the established telecom vendors, it has to make the case for Cloud-RAN to the wireless carriers. Last year at CTIA, Verizon CTO Tony Melone was dismissive of the new cloud architectures emerging at the show, saying that they were neat design concepts, but hardly ready for prime time. Verizon Wireless is the world’s most aggressive carrier when it comes to LTE and implementing new network technologies, so Melone’s lack of endorsement is telling.

Another obstacle is the enormous backhaul capacity that a Cloud-RAN architecture would require. Sending raw unprocessed radio frequency data over the network to a cloud data center would require much more bandwidth than a copper or microwave backhaul link could provide. That means fiber is the only way to support Cloud-RAN, and no operator has fiber links to all of its cell towers.

But if Intel lands a contract with China Mobile it may not have to worry about other customers. An LTE deployment from China Mobile could eventually scale to more than a million cells, translating into a heck of a lot of high-end chip sales. Intel, however, faces competition from the incumbents on that front as well. Intel has been working with on China Mobile’s Cloud-RAN project since its inception, but recently the carrier began testing Alcatel-Lucent’s lightRadio technology as well.

Given the decline of its core PC business, Intel needs to find new markets for its X86 processors and figures that the wireless industry is ripe for the picking. But its attempts to break into other aspects of that industry have flopped. Intel has tried for years to challenge ARM’s dominance in the mobile computing market with its Atom processors, but the X86 architecture’s notorious power problems have kept handset makers disinterested. Only earlier this month did Atom start showing life. Most recently Intel has been trying to position its processors as a means of making dumb femtocells and picocells smart.

I’ll give Intel one thing. It’s tenacious. With every wireless initiative fail – note WiMAX – it immediately launches another. And where it can’t develop a wireless technology on its own, it buys a company that can. Cloud-RAN could be a key turning point for Intel or another flop, but we’ll probably have to wait several years to find out. While China Mobile is trialing LTE now, its commercial rollout could be as far away as 2014.

Dice image courtesy of Flickr user alancleaver_2000

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The problem isn’t congestion, it’s a stagnation.

A study Friday noted that the top one percent of wireless users consume half of all the data. Meanwhile, Public Knowledge on Friday launched a web site designed to help consumers understand their data caps. On Thursday Leap Wireless’ CEO said the company would begin offering data sessions in addition to its regular tiered data plans. Under that scenario a user might buy a data plan just like he would buy pre-paid minutes on an as-needed basis after reaching his cap. All these bits of news are linked by one key problem: wireless data is in high demand, but it’s also expensive to deliver.

And the tension between what consumers want from their wireless networks and what operators want to give them is leading to stories that harp on congestion, new pricing models and consumer advocacy around high-priced plans. But it’s time to stop trying to address that tension solely with new types of rate plans, and customer education. If we want wireless data to become ubiquitous and deliver on the promise of connectivity, the industry needs to address its costs and educate consumers on those costs in a transparent way.

Part of the problem is just a matter of physics — airwaves can only carry so many bits per hertz — but other aspects of the high cost are related to policy and the reluctance of the industry to embrace, or even talk about, technologies that will help them deliver wireless at a lower price per bit. Right now, sending a bit over the cellular airwaves costs a lot more money than it does to send that same bit over fiber or even DSL. How much more depends on if you are in a populated city or out in rural America (it also depends on if you are in America) as well as the type of network the bit is sent over (i.e., LTE, CDMA or HSPA). But broadly speaking it’s at least 200x more expensive to use cell networks according to analyst Chetan Sharma. He estimates that number will drop over time to 100x, but clearly that’s still a huge disparity.

Not all bits are equal (or as expensive). So let’s rethink the network.

Fortunately, not all data has to travel over the gilded cellular pipes. Smart consumers already use Wi-Fi networks for streaming video and movies, but ideally this will become more automated. This means operators must include Wi-Fi in their networks, and actively shunt certain types of traffic to those networks when available. In short, we need application-aware wireless networks that send traffic to the cheapest, but most appropriate network the application can use and the consumer will accept.

This means when I stream YouTube videos, my carrier routes me over to Wi-Fi if it’s available but my email and voice calls stay on 3G if the Wi-Fi is weak. As a consumer I would advocate Wi-Fi as the default network with carriers switching me over to a cellular plan only when absolutely necessary, much like upstart Republic Wireless tries to do. Buying cell phone plans becomes a little more complicated, perhaps involving a short questionnaire that a consumer fills out ranking what types of traffic he needs to get instantaneously versus the traffic he is willing to compromise on.

This new type of plan also means that consumers may have to accept lower quality service for streaming video, might end up paying for access to a carrier Wi-Fi network and will need to accept their operators monitoring the applications they use. There’s a role for developers here in building tools that help consumers see exactly what their operators are doing, and the FCC should stay active in enforcing the spirit of the network neutrality rules. I have a hard time believing that carriers could behave well enough for me to trust them with something like this — just look at their historical stances on Wi-Fi, or the recent questions around Google’s Wallet service on Verizon’s network, but something has to give and I don’t think it will be the operators.

We want what we want. Until we have to pay for it.

CTIA says ladies like their mobile data.

Despite the cost of wireless plans, we want and will use wireless data. On Friday, the CTIA put out a study noting how women use the wireless network for an increasing amount of stuff. And articles offering a word of caution about viewing the Superbowl on your mobile phone get that while it may make you bust through your data cap, people will watch bits of a big game on the go. That very idea was unthinkable a few years ago, but mobile has changed our surfing, shopping and even our TV watching habits.

Carriers have moved forward in delivering faster networks that can deliver between 5 and 12 Mbps down — enough for video, voice and even the most demanding web services — but their current cost models don’t match up with the usage expected and advertised on the networks they’re building. Consumers look at carriers’ pricing, their marketing (which shows customers streaming video on their phones) and their comments in the press about high costs for mobile data and congestion, and recognize that carriers are not telling the whole truth. If network resources are such a precious commodity, then why not price data so it costs more at peak times? Or why even encourage video on the LTE network?

But when will that disconnect between the ease of using a service and the high cost of that service start to change or curtail consumer behavior? In short, when will a user suddenly think, “Maybe I shouldn’t use my phone for this, right now?” In a mobile-first world, will wireless become a second-class access technology, or will carriers adapt their networks and their cost structures in time?

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FCC Chairman Julius Genachowski

Ignoring the threats by Congress to kill off white spaces, on Thursday, the Federal Communications Commission green-lighted commercial operations of the first networks and devices to tap into the airwave gaps between TV broadcasts, potentially setting off a whole new wave of innovation in unlicensed wireless broadband access akin to that produced by Wi-Fi.

The FCC is starting out small with operations limited to Wilmington, N.C., beginning Jan. 26. The commission wants to ensure there are no interference problems between new white space networks and the wireless microphones that currently access the spectrum at big performance venues.

Mics and broadband devices will essentially be sharing the airwaves, so the FCC has set up a database, run by Spectrum Bridge, (see disclosure below), where concert venues or theaters can register their events. Any white spaces devices accessing those airwaves will periodically check in with that database, which would then assign those device channels not being used for performances.

The FCC also approved the first white spaces device, a radio receiver from Koos Technical Services designed to provide a last-mile link for outdoor surveillance cameras and telemetry systems. It may not be as sexy as a tablet, but commercial gadget makers won’t start building devices until white spaces are fully tested and become a viable frequency band nationwide.

FCC Chairman Julius Genachowski certainly didn’t downplay the significance of the launch in his statement today:

With today’s approval of the first TV white spaces database and device, we are taking an important step towards enabling a new wave of wireless innovation.  Unleashing white spaces spectrum has the potential to exceed even the many billions of dollars in economic benefit from Wi-Fi, the last significant release of unlicensed spectrum, and drive private investment and job creation.

White spaces could be used to create a form of Super Wi-Fi, greatly expanding the number of cheap or even free wireless access options on the market. White spaces advocates have said the airwaves not only could be used to build greatly expanded public hotspots, but also as the primary broadband connection for homes in rural communities and as the connective glue linking smart grids together.

The technology still faces some obstacles. Broadcasters’ channels are interleaved with white space channels, so TV stations worry new, unlicensed, wireless broadband services will interfere with their transmissions. Performers are concerned their wireless mics won’t be protected even with the database in place. But the biggest threat could be Congress, which is reluctant to agree to creating any more unlicensed frequencies.

The House passed a spectrum bill last week that would prevent the FCC from designating any future TV spectrum it gets from broadcasters for unlicensed use. Instead, they would have to turn those airwaves into mobile broadband licenses, which they would then auction off to the highest bidder. As my colleague Stacey Higginbotham wrote last week, such a move from Congress, while predictable, could stifle innovation:

In the end this could cost consumers, in the form of higher mobile broadband bills, and stymie the mobile app ecosystem as bandwidth becomes more expensive and is controlled by carriers. In general Congress isn’t trying to utterly crush the tech industry, but it is hard for it to give up the potential billions that auctioning off that spectrum to the highest bidder would entail. As taxpayers, we too should ask ourselves if unlicensed spectrum and more players getting licensed airwaves is worth the loss of a few billion in potential revenue in the government coffers. Unfortunately, few people will think of the debate in these terms.

Disclosure: Spectrum Bridge is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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That means rapid data transfers up of to 500 Gigabits per second (current Ethernet cables in data centers are generally 1, 10 or maybe 40 gigabits per second) and less mess with physical cables. Of course, every switch at the top of a rack would have to get a radio card slotted into it, and there’s also the matter of putting reflective panels on the ceiling for the wireless signals to bounce off of. The top of the servers would also need some kind of signal-absorbing surface so the signals don’t continually bounce around the data center. From the article:

To maximize the bandwidth and reduce interference between signals, it needs to be focused into narrow beams that require a direct line of sight between endpoints. “Any obstacle larger than 2.5 millimeters can block the signal,” she says.

One way to prevent the antennas from blocking each other would be to allow them to communicate only with their immediate neighbors, creating a type of mesh network. But that would further complicate efforts to route the data to the appropriate destinations, says Zheng. Bouncing the beams off the ceiling directly to their targets not only ensures direct point-to-point communication between antennas but also reduces the chances that any two beams will cross and cause interference. “That’s very important when you have a high density of signals,” she says.

While it sounds kind of out there, the researchers hope to build a prototype data center to try the idea out. Mark Thiele, the EVP of data center technology at Switch Communications’ SuperNAP data center, says the research is worth following as low-latency networking inside the data center can be a bottleneck today for applications that range from financial trading to trying to move gigantic data sets around.

The choice of 60 GHz for the data center is possibly inspired. Intel is one of several chip firms pushing 60GHz for consumer use, under the WiGig brand. This means the chips would be cheap. Additionally at 60 Ghz, signals deteriorate rapidly, which sucks if you want to transmit data over long distances, but is a boon if you are worried about someone standing outside the data center trying to eavesdrop on the data you are transmitting. However, using wireless, especially wireless with somewhat persnickety propagation limits (can’t travel far, requires line-of-sight between endpoints), means that data center technologists will suddenly have to learn a different type of network engineering, skills more familiar to their brethren setting up base stations in the cellular world.

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