GoingWimax.com recently caught up with John Dooley from the Jarvinian Venture Fund. It is a venture capitalist enterprise that promotes emerging wireless technology companies He provided insight into the future of wireless technology.
What research methods are used to determine which companies to invest in?
Many venture capital funds are infamous for waiting to see what deals come over-the-transom. For wireless investing, traditional passive deal flow strategies are simply not an option.
Jarvinian takes a very active approach to sourcing investment opportunities. We spend our time and resources searching patent applications, monitoring network provider technology trials, and continually expanding our direct reach into both corporate and academic research programs. In short, we feel it is crucial to be a very deep-rooted part of the industry that we are investing in.
Unlike fiber optic networks that enjoy virtually unlimited potential capacity, wireless networks have only a small and finite amount of radio-frequency spectrum with which to deliver their services. For example, a single piece of fiber-optic cable slightly thicker than a human hair can hold a few million times the bandwidth typically allocated to a major wireless provider.
Additional wireless spectrum allocations are, at best, band-aid solutions for capacity. Even if we could deploy all frequencies that are technically viable for urban network operation, it would still represent only a very small fraction of that necessary to satisfy demand over the coming decade. Instead, the long-term solution will be found in new technologies that recycle limited spectrum resources in ways that exponentially expand network capacity and reliability.
Jarvinian is most excited by technologies that allow wireless networks to operate with the stability and scalability of their fiber-based counterparts.
With major carriers choosing sides, how do you determine which technology to invest in WiMax or LTE?
The long term viability of either standard is another matter, which will ultimately be decided by how well LTE or WiMAX networks will be able to recycle scare spectrum to multiply capacity. Obviously, LTE has a genetic advantage in this regard and will be easier to integrate into existing cellular architectures. WiMAX, in contrast, will face a tougher road if providers are not very disciplined in the initial build-out.
As investors, we are watching this rivalry with great interest. However, we feel that the most significant infrastructure and component technologies will have applicability to networks and user devices supported by either standard. Thus, our view is that investment in 4G enabling technologies should be viewed largely from a standard agnostic perspective.
Where do you see the development of wireless technology going and what do you think 2010 will be?
2010 is going to be an exciting year for wireless, which I feel will bring the challenges of the coming decade into very clear focus.
By the end of next year, we will see a global user population moving rapidly towards saturation. We will also see significant penetration by mobile devices that have the capacity to greatly accelerate aggregate demand for bandwidth.
As new 4G systems come online and begin to service a critical mass of broadband users, the difference between data rates in the lab and those in real world coverage environments will become painfully apparent. I believe that 2010 will mark the beginning of a collective realization by providers that business models based upon theoretical network capacities cannot be serviced in real-world application, and the technology to bridge the gap between the bandwidth that users demand and our ability to supply that bandwidth in an economic fashion does not currently exist.
Over the coming year and beyond, the development of wireless technology will take many paths. However, the most critical area of development will relate to the economical and reliable multiplication of network capacity.
There will be no single technology solution to this problem. Rather, we believe that there will be innumerable incremental advances. On the infrastructure side, we see smart antenna, filtration, and intelligent network optimization technologies being critical. On the handset side, the antenna technology has to get a great deal better in order to combat the inherent uplink limitation of these systems. Small improvements in frequently overlooked areas will have massive impacts on large-scale network functionality.
What restrictions do you see in the development of LTE and WiMax?
There will be regulatory challenges and market challenges, as there always are in wireless or any part of the telecom industry. However, the greatest restrictions will come from fundamental gaps in the technology. I must sound like a broken record. However, the most imposing of these gaps relate to the finite nature of radio-frequency spectrum and the inherently chaotic wireless medium over which services are delivered.
Our industry and the users it serves expect LTE and WiMAX to approximate the functionality of wireline networks, whose fiber backbones are infinitely scalable and inherently impervious to interference. The wireless medium enjoys neither of these luxuries. The user demand is definitely there for both standards to flourish. In most cases, the capital to build-out is also very much there. It is the technology that is not quite there.
What impact has the recession had on development of wireless technology?
Going forward, it is certain that global wireless subscribership will become nearly universal, regardless of macroeconomic conditions. Yet, far less certain is the level of broadband capability that these new users will enjoy. While the economics of network access have clearly evolved to a point where they are largely immune to the effects of the business cycle, the economics of fundamental research and development have not.
The myopia of many large wireless infrastructure companies means that internal development programs are the first part of the organization to be compromised by fiscal pressures. Thus, many looming technological problems in the industry are not being properly addressed. From our perspective, the true effect of the current recession will be felt in the coming years, when critical technologies are not available due to a lack of research funding in today’s market.
When will fast mobile internet be reasonably priced and available to everyone?
If you were to ask the same question about voice and basic data capability (what we might call 2.5G today) a decade ago, it is very unlikely that the answer would be 2009, or even 2019. Even the most optimistic amongst us cannot help but be astonished by the ability of wireless technology to take root in emerging markets and cross virtually all demographic boundaries. However, truly fast mobile Internet is another matter.
The proliferation of wireless and its establishment as a primary communications medium for the bulk of the human population has heretofore been a matter of logistics. Existing infrastructure technology has been generally up to the task. However, as we begin thinking about our expectations of 4G, it is clear that we have some very formidable engineering challenges ahead of us.
The entrance of new carriers and new spectrum will, in the short term, bring expanded broadband capabilities and lower prices to consumers in many markets. We feel that this will create a dynamic similar to the PCS revolution of the 1990s, where new entrants set expectations for price and utility that helped usher in the present period of near-universal wireless usage.
Yet, in the long term, cheap next-generation mobile broadband is not a market issue but a technology issue. The timetable to truly fast, reliable, and inexpensive mobile Internet access will be set by those who are currently solving the industries most complex technological problems. We like to think that it will be set by many of those we are investing in.
Jarvinian Wireless Venture Fund was established to seek out opportunity in the Information Technology revolution. Spanning the core infrastructure, advanced components, and enabled media sectors, Jarvinian’s IT Mobility Initiative represents one of the private equity industry’s most focused and ambitious efforts to finance disruptive innovation in young technology-driven companies.
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