Jul 28 1999 7:28PM ET More on Stock Lab...
Will 'Wireless Only' Take Over?
By John W. Schoen,
Senior Producer
MSNBC
An increasing number of mobile phone users are "cutting the cord" and giving up their land line connections altogether, according to new research from the Yankee Group.
But while that number is expected to grow, don't look for wireless phones to replace their hard-wired cousins any time soon.
The growth of wireless telephony continues to accelerate, according to Yankee Group analyst Mark Lowenstein, driven by falling prices and improved service. In many parts of the country, wireless and land line services now cost roughly the same --- following a 60 percent drop in wireless rates in the past four years.
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Phone users are also going "wireless only" due to improved wireless coverage, clearer signals, and services like voicemail, fax, and caller ID that until recently were available only via land line.
Lowenstein estimates that the number of wireless subscribers -- who now total roughly 70 million -- will double over the next four years. Traffic on wireless networks is expected to quadruple during the period. While only 2 percent of telephone customers have gone "wireless only," those who use both have shifted some 12 percent of their calls to wireless accounts.
Source: Yankee Group
Still, Lowenstein says that, for the time being, wireless only users will remain a limited segment of the phone market. For one thing, Internet access is still limited -- and slow -- on wireless networks.
"And for a typical family of four in the suburbs, they're not going to throw away their land line," he said. "If someone in the family in takes that phone, now no one else can use it."
For a glimpse of the future of wireless, consider Chris Bock, a New York city food wholesaler doing business as The Chicken Man, who carries what amounts to a portable office with him on sales calls.
Over the past few years, he's stitched together a wireless network that includes a Nokia phone, handheld Hewlett Packard scanner, Newton PDA, portable 4-inch printer and IBM laptop computer -- all interconnected by infrared links.
Every day at 12:30 p.m., Bock has the latest chicken prices faxed to him. When he makes a sale, he books the order on a server in his office, where an invoice is printed and the order processed in about five minutes. For him, that kind speed is an enormous competitive advantage.
"You're talking about chickens that were walking around yesterday that are in my frig at 3 today and served for dinner at 6 p.m.," he said in an interview via cell phone from Brooklyn.
Bock is the first to admit that the kind of communications saturation he craves may not be for everyone.
For one thing, wireless data transfer, at 9600 kilobits per second, is considerably slower than the 56 Kbs speed most home PC users expect. And can't come close to the high speed networks found in most offices. Making the multiple devices work together is an ongoing project. And the arrangement requires that he wear multiple portable wireless devices on his belt.
"I walk into the customer and he says, ‘Here comes James Bond,' " said Bock.
But if Bock seems a bit ahead of the technology curve to U.S. phone users, he may seem less so in some overseas markets where cheaper services has fueled even faster growth.
The U.S. ranks ninth in a list of most affordable countries for wireless service, according to Yankee Group.
The leader is Canada, where 100 minutes of monthly wireless service costs less than one percent of an average Canadian's monthly salary. Next on the affordability list are Finland, Italy, Israel and Hong Kong. At the bottom are Mexico, Columbia, South Africa and India, where wireless service costs consume up to 23 percent of a month's wages.
Globe-trotting wireless customers can also now enjoy the convenience of worldwide roaming and wireless data transfer, thanks to a recent agreement among so-called Global System for Mobile Telecommunications, or GSM, carriers.
Last month, U.S. wireless carrier Omnipoint {OMPT} announced a service that lets customers roam in 53 countries, using a single phone that works with different GSM frequencies.
OMPT 52-week price chart
Other carriers are expected to follow suit. Though only 4 million U.S. customers now use GSM, with 170 million customers worldwide, the technology is widely established abroad, especially in Europe.
Hard-wired customers may also find it easier to "cut the cord" if a new generation of broadband wireless technology becomes widely available.
One broadband provider, Com21, recently announced plans to offer a wireless technology that could provide high-speed, voice and data service to homes and businesses.
"Cable and twisted pair are there already and are difficult to beat," Com21's CEO Peter Fenner told CNBC's Power Lunch recently. "However, for example, ADSL or XDSL, the twisted pair solution, only reaches about 60 to 70 percent of homes. So, wireless is a great way to fill in that niche and also an interesting bypass opportunity for the MCIs and Sprints of this world."
Click here to watch Fenner's interview on Power Lunch Box July 26, 1999
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The growth of wireless is benefiting a variety of hardware makers that supply gear to build the increased demand for wireless infrastructure.
And while more people are giving up hard-line service, it's not considered an immediate threat to the traditional regional Bell operating telephone companies, which are seeing huge traffic increases of their own.
"We don't hear the RBOCs crying that they're losing out," said Lowenstein. "They're racing to keep up with the demand for capacity from people logged on to AOL for hours at a time." |
