From Red Herring:

The principle is straightforward: all complex systems share some profound similarities. Each of them is massively parallel: they have many quasi-independent "agents" interacting at once. (An agent might be a single firm in an economy or a baggage handler at an airline.) These agents are adaptive: they are constantly responding to each other (the baggage handlers interact with their bosses). And they are decentralized: no one agent is completely in charge (baggage handlers may not always follow management's directives). Like all complex systems, then, the overall behavior...emerges spontaneously from myriad low-level interactions.

The key to these simulations, known as agent-based modeling, is to identify these low-level interactions.

For the emerging markets, WiFi's disruptiveness stems from it being a low-cost bottom-up network, which can provide wireless broadband to bandwidth-starved societies. For many users, the killer app for WiFi is likely to be voice in the form of VoIP (voice-over-IP), using regular phones but carried over the WiFi networks. A customer-owned WiFi network can be majorly disruptive to the existing telecom operators, according to Clay Shirky:

Two cheap consumer devices loom large on this front, devices that create enormous value for the owners while generating little revenue for the phone companies. The first is WiFi access points, which allow the effortless sharing of broadband connections, and the second is VoIP converters, which provide the ability to route phone calls over the internet from a regular phone.

Hardware symbiosis will further magnify the threat of WiFi and VoIP. The hardest part of setting up VoIP is simply getting a network hub in place. Once a hub is installed, adding an analog telephone adapter is literally a three-plug set-up: power, network, phone. Meanwhile, one of the side-effects of installing WiFi is getting a hub with open ethernet ports. The synergy is obvious: Installing WiFi? You've done most of the work towards adding VoIP. Want VoIP? Since you need to add a hub, why not get a WiFi-enabled hub? (There are obvious opportunities here for bundling, and later for integration -- a single box with WiFi, Ethernet ports, and phone jacks for VoIP.)

WiFi hubs and VoIP adapters allow the users to build out the edges of the network without needing to ask the phone companies for either help or permission. Thanks to the move from analog to digital networks, the telephone companies' most significant competition is now their customers, because if the customer can buy a simple device that makes wireless connectivity or IP phone calls possible.

WiFi has the support of much of the computer industry, which sees it as the force to ensure a new cycle of upgrades in the coming years, and a profitable shift from the desktop to notebooks. Telcos are now also getting into the business of setting of setting up hotspots. The economics of WiFi make it very compelling, as Business Week wrote recently: “It typically costs less than $1,000 to deploy a hot spot that can accommodate about 10 users at once. That's only about one-tenth the cost of providing equivalent capacity on a 3G network. End users save, too. Downloading a 20-megabyte PowerPoint presentation over 3G could take nearly 20 minutes and cost $16, while over Wi-Fi it would take about three minutes and cost just $2.50, figures telecom researcher Analysys.”

So, where does WiFi fit into the 5KPC (Rs 5,000 Personal Computer) ecosystem?

The 5KPCs can be equipped with WiFi cards, sourced from the developed countries (for older computers) or built onto the motherboard (for the newer ones). This eliminates the need for cabling in the enterprise and for the last mile, and solves the connectivity problem. The wireless access point could be in the enterprise or in the neighbourhood. WiFi can thus become the foundation for a bottom-up wireless broadband network, of which India has already seen two in the past – the community telecom access points (via the STD PCOs) and cable.

Using WiFi and a shared broadband connection will also bring down the cost of connectivity for users. Today, it costs Rs 500 per month for more for individual users via dial-up or cable. WiFi can not only increase the connection speeds (from 56/64 Kbps to a 1-2 Mbps) but also reduce the cost to Rs 100-250 per month. At the same time, the barrier of connectivity for getting additional computers is eliminated, thus enabling wider and easier deployment of the 5KPCs.

Tomorrow: The Alternatives