Cellular systems may be outdated in five years:

Originally a home-and-office product designed to link up personal computers without wires, Wi-Fi is an inexpensive way to send data over the airwaves at blazing speeds. Asia's fixed-line carriers are capitalizing on that bang-for-the-buck to offer broadband access to the Internet in more and more public places, like airports and coffee shops. In the last year, they've speckled the maps of major cities with close to 10,000 of these so-called hot spots, mainly catering to business people with specially equipped laptops.

....Because it's based on technology that's in the public domain — allowing thousands of companies to freely tinker with it — Wi-Fi technology is also advancing much faster than mainstream cellular systems. "Over time, it blows by proprietary technologies," says Robert Berger, a researcher at the Centre for Global Communications, an independent think-tank in Tokyo.

He predicts that within five to seven years, engineers will be able to adapt Wi-Fi's Internet-based capabilities to provide cellular-like services at much greater cost efficiency. At that point, fixed-line operators will be in the driver's seat. And because they already own the Internet's essential fibre-optic networks, they'll be in position to overrun the cellphone business.

Here's why it looks to play out that way: Wi-Fi's core technology isn't controlled by any company. Rather, it's an open specification put forward by the U.S.-based Institute of Electrical and Electronics Engineers, a neutral not-for-profit organization made up of engineers from around the world. IEEE working groups are continually developing and publishing blueprints for better Wi-Fi products. They then encourage businesses to use them for free.

....A cellular carrier usually makes most of its money from the most heavily used part of its network, the bustling town centre, Robinson adds — the exact place where Wi-Fi providers are focusing on building hot spots.

Wi-Fi's ultimate disadvantage is that it's not designed for mobility. People generally can't use broadband Internet while walking or driving — they have to be sitting down — though trains can be wired with it because they maintain contact with a fixed network along the track. That leaves 3G with a monopoly over only a limited market: Customers who need broadband while sitting in cars or buses and are willing to pay a premium for it.

Because it's based on computing, Wi-Fi technology is adaptable. With clever enough software running on constantly improving semiconductors, it can be programmed for new uses. [Dow Jones]