At a new manufacturing plant outside San Diego, round-the-clock shifts fill pallets with wireless phones ready to ship to Sprint and other providers. The products in question are thin circuit boards destined for the next generation of handheld devices to access the Internet. Each circuit board inside this Denso International plant reveals why handhelds have become wildly popular: They blend humans and machines perhaps better than any prior invention. Analog chips, which render emotionally toned voice, share the board with digital signal-processing chips that are brilliant at manipulating data. Natural human communication and data-it’s a compact and capable combination that is ready to fuel the next stage of network development: the mobile Internet.

The circuit boards rolling off the Denso line are harbingers of an explosion that may dwarf the growth of PCs. America Online took more than 10 years to reach 20 million subscribers. NTT DoCoMo, the Japanese company with the country’s largest Internet portal, expects to reach that rarefied stratum in less than two years for subscribers of its mobile data service. Within several years a billion people-1 in 6 on the planet-are likely to access the Internet through portable wireless devices, according to analyst and company estimates. “They used to say every home will have a PC,” says Dave Oros, CEO of wireless startup Aether Systems. “I believe every pocket will have a handheld.”

This explosion is coming soon. Within two to three years, large numbers of consumers will have high-speed access to the wireless Internet. Next May, Tokyo will debut commercial operation of a so-called third-generation (3G) wireless network-one in which high-speed data capabilities are built in from the get-go. NTT DoCoMo plans to extend the multimedia network to cover all of Japan within three years. Sprint PCS says that it will introduce 3G service in the United States in late 2001; Vodafone will do the same in Britain in early 2002.

“This will smooth the rough edges of life,” predicts Richard Howard, vice president for wireless research at Lucent Technologies’ Bell Labs. If the immobile Internet of the 1990s seemed big, networked handhelds will be bigger: reaching more people and more machines in more countries of the world and offering novel capabilities.

Generation Hopping

Getting a wireless handset to tap into the Internet takes some finagling, because just about everything on a wireless device is diminutive compared to a PC-memory, processing, power supply, keypad and screen. In addition to the problems of engineering the individual devices, there’s also the vexing issue of enabling the dozens of different models to talk to each other. To attack that problem, Ericsson, Motorola, Nokia and Phone.com (formerly Unwired Planet) teamed up in 1997 to craft a new standard, called wireless applications protocol (WAP). The goal of the so-called WAP Forum was to develop a universal, open specification to bring the Web to the tiny screen. They succeeded in many ways. More than 100 companies are participating in the WAP Forum; a growing number of servers and handhelds incorporate WAP 1.1. One result, observes Yvonne Verse, a WAP Forum board member from Motorola, is that consumers can now buy any device and not worry about compatibility.

Surfing the Web through a handheld is just the latest phase in a rapid technological development that began with analog networks, which are still common in the United States outside of congested urban markets; these are what garden-variety cellular phones use. The so-called second-generation networks now common in densely populated areas traffic in digital bits rather than analog waves. Subscribers to second-generation networks benefit by more secure conversations, better battery power management and services such as caller ID and messaging. More recently, WAP has made possible access to Web sites with a level of security adequate for many consumer transactions. The screen on the handheld that Denso is manufacturing in California, for instance, shows icons for Sprint, America Online, Amazon.com, Yahoo, Fidelity Investments and Bloomberg News. That little screen is now extremely valuable real estate.

Although Web access and commercial transactions are now eminently possible on a handheld, so far the big winners from the second-generation networks have not been consumers but service providers. Indeed, the pressing reason for 2G deployment was that digital code could be transmitted more efficiently over airwaves, so carriers could serve six to eight times more talkers within a given cell. Suddenly 1,000 customers became 8,000. And Nortel Networks believes the new generation of wireless infrastructure can reduce an operator’s cost dramatically-from 37 cents per megabit in 1999 to 4 cents per megabit in 2004. Data services, though, have been something of an afterthought.

Thanks to more capable electronics for handhelds, communications companies are scrambling to deploy so-called 2.5G (for generation 2.5) networks more attuned to the world of data. In earlier networks, whether analog or digital, each call creates a circuit that reserves a channel between two parties for the entire session. The 2.5G devices are the first to use Internet-style, packet-switched networks; they send bursts of data only when needed. Because these devices don’t hog an entire circuit, they can be “always on.”

And the 3G networks coming soon will open new vistas in wireless bandwidth. Today’s digital wireless handsets typically handle around 14.4 kilobits per second-the speed of home computer connections nearly 10 years ago. The 3G systems will leave that in the dust. 3G will provide 144 kilobits per second for people in moving vehicles and 384 kilobits per second for pedestrians, along with a blazing 2.2 megabits per second for fixed office environments (the faster you move the harder it is for the handheld to sort out the signal). Such speeds will allow wireless transmission of rich multimedia material. With more capable devices and networks, a user can listen to a song while she checks e-mail or bank statements. Tourists will be able to send snapshots or videos wirelessly to loved ones direct from the scene. In essence, we can all be television correspondents filing real-time reports from the field.

First, We Shop

One thing that will make us better correspondents is the capacity of our handhelds to pinpoint our location. Indeed, the value of wireless handhelds will be greatly increased when the network can tell where they are. A number of different technologies are now being developed to locate wireless devices with greater accuracy (see companion article: ” Location, Location, Location”), including a promising new system called Bluetooth created by Ericsson and now being exploited by a plethora of companies. Many of the early uses of Bluetooth and its location-finding counterparts will center on that universal human pastime: shopping.

As an example, the screen of a wireless device could continuously change as you walk down a street, tempting you with various offers. Your spouse’s screen might differ from yours, even though you are near the same bookstore, restaurant or shopping center. When you pass a certain store, your “To Do” list stored on a network reminds you to pick up an item that has been spotted in the store’s virtual database, says Lucent’s Howard. Or maybe a local store-it could be a Jiffy Lube or a grocer-wants to drum up business one Thursday morning. It offers a discount for the next two hours to all receptive people within a 1-mile radius.

It’s also conceivable to blend personal “buddy lists” with geographic location, so any networked friends passing within five blocks will know you are at the coffee shop, amenable to old-fashioned face-to-face conversation. No friends in the vicinity? Picture this: A Bluetooth query emanates from your handheld, finds a person with similar hobbies two tables down and makes a consensual wireless introduction.

Systems that approximate these visions are already under development. At Stanford, for instance, electrical engineering grad student James Cutler has demonstrated location-based services for a bookstore to show how digital connections might improve tactile brick-and-mortar shopping. Browsers wandering to the history section, for instance, would be presented with a Top 10 list of history books on their handheld devices and then be able to call up book reviews. To save time, they might pay electronically-maybe after being offered a discount for being a repeat customer. Walk out the door of the store and an electronic receipt is zapped into the device. “Microtransactions” might pay for a traffic report for a fraction of a cent.

A Moving Experience

The power of wireless connections goes beyond greasing the wheels of consumerism. The technology also will bring Net access to all those people who don’t work at a desk with a fast, hard-wired connection. Medical professionals, teachers, business travelers and delivery workers, for instance, are starting to toss away clipboards and claim forms in favor of a wireless web of Palms, PocketPCs and WAP phones.

Dallas’ Veterans Administration Medical Center is a case in point. According to a 1999 study by the Institute of Medicine, some 7,000 Americans die each year due to improper administration of medication. In an effort to avoid such mistakes, the hospital recently installed a wireless network that links handhelds carried by medical staff. Dallas VA nurse Ruth Jara says patients in the VA nursing home may be taking as many as 15 medications, often with similar-sounding names. The potential for confusion and human error is boundless. With the new system, a robot dispenses the correct dose and barcodes each medication. Nurses scan their own ID badges, the barcodes on the medication and the patient’s wristband. A central computer correlates this data to ensure that the right dose of the right drug is administered and to create an audit trail.

Teachers at Smithtown High School on Long Island are using Palms and a wireless network to scan student ID cards for attendance at every class as well as processing tests and reports. Administrators get special handhelds equipped with master schedules of all students. According to Jay Landau, instructional coordinator for the town’s school district, the devices let teachers spend less time on paperwork and more on instruction. The ID card of a student roaming the hall can be scanned, instantly revealing where he or she is supposed to be.

Now!

Next-generation networks and devices could bestow on users an almost omniscient awareness-at least for items deemed personally important.

A desktop computer is an ally in thought, knowledge creation, new product design and exploration of the far reaches of the Web. Handhelds, by contrast, present a narrower slice of information that tends to support simpler decisions: Yes or no. Turn left or right. Alert if malfunction occurs. Vibrate if a specific stock reaches $42. It is no accident that Aether Systems and many other wireless companies got started in the financial industry, where simple, timely data triggers quick trades. According to Research In Motion, maker of two-way pagers with tiny keypads for mobile workers, nearly 80 percent of pages require a fast response. Mobile workers can respond directly with the device and get confirmation of messages received. But both timeliness and awareness seem to be getting more important in fast-paced business.

As handheld devices evolve, users will be able to choose their preferred way of getting this instantaneous information; they’ll decide, for instance, whether they want to listen to information, read it or both. They will be able to reconfigure their factory-fresh devices with Java programs from the Internet, for instance. Devices could eventually subsume most of the functions of the paraphernalia people now feel compelled to carry with them: wallet, keys, address and appointment book, notepad, tape recorder. Personal medical monitoring functions and records might be added too.

As these devices find their way into every pocket and purse, they bring with them privacy issues. The small screens are peepholes into the Internet, arguably the largest assemblage of data ever. But can that portal be reversed by government or multinational corporations to build an intimate portrait of the user? Much of the value of digital companions boils down to getting relevant information at the right place or the right time. Yet getting such information often requires divulging preferences, voluntarily or tacitly. The better this information, the more personalized the service-but also the more exposed the user is to misappropriation of personal data. Moreover, wireless services that work by determining the user’s location can open up scary possibilities. Do we really want to leave an electronic trail of our whereabouts and allow ourselves to be tracked like packages, revealing our preferences, income levels and habits all the while? Over the next several years, the challenge will be to design devices and networks to avoid pitfalls-while building a system so useful and benign that you won’t ever want to turn it off.