Good Reading>
When will data change the wireless world?
By Corey Grice
Staff Writer, CNET News.com
February 10, 1999, 4:00 a.m. PT
The wireless communications industry is hell-bent on a simple goal: the Internet
unplugged.
Wireless companies such as AirTouch Communications and AT&T as well as equipment
makers like Nokia and Ericsson are devising strategies to capitalize on the booming
demand for accessing information from anywhere.
Having already cut into traditional voice markets with special one-rate pricing and roaming
plans, the wireless world now wants a piece of the Net action. Meanwhile, even PC
industry giant Microsoft and browser pioneer Netscape Communications are intent on
getting into the game, making sure their software plays a role.
But while these companies may have starry-eyed plans for blazing Internet speeds, remote
connections to the office, and all-in-one messaging systems that can convert email into
voice calls--all through a cell phone or handheld device--industry analysts say they have
heard the rhetoric before.
Do you want to know more?
Read related news
View story in The Big Picture
Go to Message Boards
Search News.com
Wireless carriers are expected to make progress in delivering certain types of data this
year. But the day when consumers will use their mobile phone or handheld computer to
access the Net as they do at their desk remains an elusive proposition.
"Wireless data has been coming so many times it's not even funny--It's kind of the industry
joke," said Iain Gillott, a wireless analyst at International Data Corporation. "It's great on
paper, it's great in the lab...but we don't have anything yet."
Many wireless communication providers are announcing ambitious plans this week at an
industry conference in New Orleans.
For example, Nextel and Netscape will join forces for a wireless data and Net access
offering called Nextel Online. Separately, networking equipment provider Cisco Systems
and Motorola, a long-time wireless player, said yesterday they will invest $1 billion to
develop wireless Internet technologies.
Qualcomm and US West also announced plans to offer a wireless Internet trial this spring.
And software giant Microsoft and British Telecommunications got into the act by rolling out
plans for a version of the Windows CE operating system that includes a "microbrowser" for
wireless Net surfing.
The move marks Redmond's second dip into the wireless world, building on last year's
formation of WirelessKnowledge, a wireless communications joint venture between
Microsoft and Qualcomm.
Taken in its totality, one might think the wireless carrier industry is on the cusp of a
Net-based nirvana, but to some the promises ring all too familiar. "You've got to separate
hype from reality," Gillott said.
Other analysts believe high-level business executives will be willing to pay for advanced
mobile data services, but the average consumer may not.
"The only thing people are really looking for is to check their email. It's unlikely that the
regular consumer will place that high of a value on surfing the Internet that
instantaneously," said Kneko Burney, new market opportunities analyst for Cahners
In-Stat Group.
"I don't see the market developing until after 2000, 2001," she said.
There are 66 million mobile phone users in the U.S., according to IDC. But most of them
use their phones primarily for voice communications. Carriers are practically drooling over
the possible billing options and packages they could offer with data services, and handset
makers see a whole new market of devices with added functionality.
Analysts agree the future is bright for wireless data capabilities, but the reality may be
further out than company executives hope.
"You're not going to get much demand from consumers unless somebody comes out with
a low-price product that appeals to the first-time users, and I don't see that happening
now," observed Burney.
Analysts also say many vendors will soon offer data-capable phones and other devices,
but wireless carriers won't necessarily support them initially. And smaller carriers are
expected to lag behind their larger national competitors.
Standard anyone?
Most wireless data applications today--there are few--use the cellular digital packet data
(CDPD) standard, a technology that allows carriers to deliver data over existing cellular
switched networks. AT&T Wireless Services is one company that employs the technology.
But analysts say CDPD is available in only certain coverage areas and has limited uses,
namely for stock quotes, sports scores, weather information and email--typically with a
160-character cap.
The CDPD standard allows transfers of 19.2 kilobits per second (kbps), while the
Global System for Mobile Communications (GSM) standard--which is used widely in
Europe, Asia, and to a lesser extent in the United States--allows data transfers of
up to 9.6 kbps.
"Those are the maximum rates today," said Weston Henderek, a wireless analyst
at GIGA Information Group.
But slower rates haven't deterred some industry players from forging ahead with
data plans.
Analysts say alternative standards, such as code division multiple access (CDMA)
and time division multiple access (TDMA), will reap data services for wireless
providers by the second quarter of this year.
Upgraded flavors of CDMA and TDMA--the transmission standards used by many
U.S. wireless voice networks--will soon be available and will offer higher data rates.
As a result, industry experts expect data delivery rates of about 64 kbps by the
year 2000 and up to 144 kbps (faster than an ISDN line) by 2001.
Also, new third-generation wireless communications standards are expected to
increase the data rates carriers are capable of delivering--up to 2 megabits per
second (mbps) in some instances. The higher speeds will allow carriers to expand
their data services to include Internet access, email, remote network access, and
perhaps even video-conferencing.
"Many of these things become possible when you move into third-generation
standards, but you won't really start seeing true third-generation data services until
2003," Giga's Henderek said.
Those higher data rates open many possibilities for carriers and handset makers
alike.
The sky opens up
"We really see a confluence of these industries," said F. Craig Farrill, vice president
of strategic technology for AirTouch. "The computer industry wants wireless
connectivity...and the Internet industry wants to reach people on the go, and we
want to do all that."
Farrill said he expects AirTouch, which was recently acquired by Vodafone Group,
to partner with Internet backbone providers.
"We will be an ISP," he said. "The ISP is the natural way for us to go."
By most accounts, data now accounts for roughly half the traffic on many terrestrial
networks, but it represents only a small portion of most wireless network traffic.
Currently, 97 percent of AirTouch's business is voice service, according to Farrill.
"It wouldn't surprise me if 30 percent of our business was non-voice in five years,"
he predicted.
Giga's Henderek said he expects data to account for about 10 percent of traffic on
most wireless networks in five years.
Despite the huge market potential, even industry executives admit there are
challenges to be faced.
Carriers will become systems integrators more than ever before with data
applications, according to Farrill. Typically there are four or five companies involved
in delivering a wireless data application as opposed to just two--the service provider
and handset maker--with simple voice applications.
Wireless networks also do not have the same reliability rates as their wireline
brethren.
Data changes the handset game
The conversion to digital services, including an increasing demand for wireless data
applications, is driving the demand for advanced wireless handsets, according to
industry executives.
Some 160 million wireless handsets were sold in the world in 1998, with projections
calling for about 210 million or 220 million to be sold in 1999, according to Mark
McKechnie, wireless equipment analyst for NationsBanc Montgomery Securities.
But while data applications are expected to help increase phone sales, they must
not become too complicated to use, executives said at a recent conference in San
Francisco.
"A challenge will be adding wireless data and more functionality and still
maintaining ease of use," said Ericsson chief executive Bo Dimert.
Many industry executives say the wireless handset market will offer many choices
for consumers about which phone style to buy. Phones will be personalized
depending on their desired function, they said.
As data demand grows, Internet applications will merge with cellular capabilities,
creating a variety of handsets designed for different uses. Some will just be voice
phones while others will have larger screens with keyboards for data input, blending
handheld PCs and personal digital assistants with the mobile phone.
"We will start to see different devices for different purposes throughout the day,"
said Kari-Pekka Wilska, president of Nokia's mobile phone unit. "When you are
jogging you don't want a bulky device with you."
A billing bonanza?
In addition to changing the actual look and feel of the handset, industry executives
are salivating at the new billing opportunities wireless data will bring.
"There'll be a lot of new billing paradigms," AirTouch's Farrill said. "We will be in the
information delivery business. Urgency carries a premium."
Executives anticipate sending voice and time-of-day-sensitive information to users
first, with delayed data transfers delivered at a discount. A file could be scheduled
for delivery at midnight, or another off-peak time, for a fraction of the price, Farrill
said.
The packaging and prepaid models that have done so well in the wireless voice
market are likely to carry over to data, he said.
Executives foresee more transparent data applications for the wireless industry.
"Data, per se, is not always the data that involves a keyboard," said Fred Kuznik,
president of Motorola's personal communications sector.
Information such as bank account balance transfers or lottery information exemplify
data that doesn't take the form of email, Web browsing, or traditional file transfers,
Kuznik said.
Data is expected to increase customers' time on the wireless networks, adding
valuable minutes of usage to the average monthly bill. Ericsson's Dimert said
studies show a data call is three to six times longer than an average voice call.
As another way to increase customers' minutes of usage, the industry is exploring
a broadcast data model, a sort of "push" technology for the wireless world. "There is
excitement in this area of broadcast," Kuznik said. "Broadcast will drive more
minutes than just people with phones originating calls."
Related news stories
• US West looks for wireless safety net February 9, 1999
• Bell Atlantic reviews wireless options February 8, 1999
• Short Take: Qualcomm, US West test fast wireless Net February 8, 1999
• Microsoft, BT ink wireless data deal February 8, 1999
• Nextel, Netscape to combine voice, data, Net February 8, 1999
• Motorola, Cisco in wireless Net alliance February 8, 1999
• Wireless giants ink $56 billion deal January 15, 1999 |
