2004 will be remembered as the year when 3G and Wifi battle to be the de facto wireless communication standard.
3G, or Third-generation, is a wireless communication standard that enables devices to access information at about 2 Mbits per second (more on 3G here). Using a spectrum auctioned by the government, five telecom companies spent a total of £22.47bn (US$35.4bn in 2000) for the UK 3G licenses. The technology itself is sound, and provides a very wide range of coverage. The initial investment, however, is large (and could really do without the £22bn spent on the license fees!) Consumers seem quite indifferent towards it, possibly due to the lack of a SMS/text messaging-like killer app.
Wifi, on the other hand, uses unregulated spectrums. Initially conceived as a local-area network protocol, where users have to stay near a "hotspot" to access it, Wifi can now serve much wider areas, thanks to roaming technology, where various "hotspots" can be linked together to create a larger network. Since initial investment for a "hotspot" is quite low, Wifi providers can place their "hotspots" in some unlikely places, such as on a bicycle (also here: "I am like the ice cream man, but with no music and I deliver free wireless access and not ice cream") and on domestic flights.
When two equally appealing standards compete against each other, many economists use market failure concepts such as "network effects" and "lock-in" to explain the final outcome. The Economics of QWERTY by Stan J.Liebowitz & Steven E.Margolis discusses lengthily how such concepts actually bear no relevance in the decision making process of the consumers - the QWERTY keyboard "won" because it was overall a better alternative.
I hesitate to draw such conclusion on either Wifi or 3G, since technology enables different standards to work together seamlessly - see how Linux and Mac OS X can happily "live" on a Windows network - people can now enjoy real choices and decide what's best for them, what Lehr & McKnight call a "heterogeneous future" (see their survey, in PDF, here).
I predict that despite both camps' best efforts, 2004 will see both Wifi and 3G learn how to co-exist with each other.