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The Fiber-RF Dilemma

Two big pieces of telecommunications news this morning capture the central dilemma facing many IT managers today.

First, Sprint Corp. (NYSE: S) announced that it will invest billions of dollars to build a next-generation WiMax broadband wireless network over the coming years. Then, Australian carrier Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) said it is scrapping plans to build a $3.06 billion fiber-optic network, which had already been contracted to French vendor Alcatel.

These developments are not directly related, and a complex array of forces led to both companies' decisions. (In Telstra's case, it was a disagreement with the national regulator over access fees to rival service providers.) In sum, though, they highlight the choice that every IT manager is grappling with today, in some form: fiber or radio frequency?

In other words, given limited IT budgets and staff, is it wiser to invest resources in upgrading legacy wired networks, or in purchasing and installing next-generation wireless systems?

The forms this choice takes are many: WLAN vs. Ethernet-over-fiber, voice-over-WLAN vs. PBX upgrades, smartphone rollouts vs. improved in-building networks, and so on. The pros and cons of each choice are not always clear. In fact, it's often not obvious that you're actually choosing between two options. If you install more fully featured deskphones, you're reducing the potential for more flexible smartphone deployments, for instance, but those are seldom either/or choices on a spreadsheet.

IT today is a zero-sum game, and any investment of money, time, and resources in one technology takes away from investment in another.

In the case of Sprint Nextel, the company took a commendable flyer on a technology that many people don't understand and which few on Wall Street find value (Sprint Nextel's share price was getting pummeled as of 3 p.m. Eastern time today, though a rebound seems inevitable). The first big U.S. carrier to deploy the mobile version of WiMax, "Sprint is making a huge bet that consumer demand for wireless Internet access and services such as cellphone downloads of music and video will continue to grow in the coming years," wrote Amol Sharma and Don Clark in this morning's Wall Street Journal.

Should enterprises make the same bet on next-generation wireless technology? The answer to that question varies from industry to industry and company to company. (And don't ask me; I'm obviously a biased observer. Go Wireless!)

What's clear, though, is that the fiber vs. RF decision is a strategic one for companies large and small, one that calls for conscious decision-making at the upper-management level. And making the right choice -- or, more accurately, the right combination of incremental choices -- will be a critical factor in separating industry leaders from also-rans in the next few years.

— Richard Martin, Senior Editor, Unstrung

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