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Filming the Wireless Data Sequel

by brad smith
January 7, 2002

With apologies to actor Kevin Costner and the cornfields of Iowa, if a movie about wireless data were made today, it might have the title "Field of Dreams." The industry is writing the sequel now – but naming it later.

In 2001, wireless carriers and the wireless Internet industry seemed to have adopted a "build it and they will come" business philosophy, says analyst Adam Guy of the Strategis Group. They were intent on building out their packet-based 2.5- and third-generation networks with the promise of always-on capability and higher data rates.

As the industry enters 2002, it is realizing that compelling application are necessary to drive usage and revenue to pay for these next-generation networks. That need may be the greatest in the United States, where Web junkies compare wireless to wireline, Guy says. "The Internet is fueling interest in wireless data," he says, "but in the short term it may also serve as an inhibitor."

Plenty of long-range forecasts indicate that wireless data will be a large market in 2005 and beyond. One recent survey by the Gartner Group found that 90 percent of professionals and telecommuters plan to use high-speed wireless data services in 2005. But what's in store for 2002? Will there be any reality in that dream field?

Warren Wilson, an analyst with Summit Strategies, titled a recent wireless data forecast for 2002 "The Wireless Wait," which is about dreams meeting realities. Instead of a utopian "Wireless Age," the shift is toward the cautious deployment of applications as carriers move more slowly with network upgrades.

In an interview, Wilson said wireless data fundamentals remain strong. Devices, networks and applications have become more sophisticated and powerful, and lower pricing is attracting a wider audience. But recent events, including the Sept. 11 terrorist attacks and the economic downturn, have changed Wilson's expectations for 2002.

Last year, the industry shifted its attention from the consumer to the enterprise market, a shift that Wilson says has given U.S. operators an advantage over their European brethren. But at the same time, European carriers are ahead in upgrading their networks.

"The business focus will remain for the coming year," Wilson says. "That trend will be accelerated by the economic challenges. You have to go where the profits are and where your best chances of survival are."

Martin Dunsby, a wireless analyst with Deloitte Consulting, makes some of the same predictions about 2002. He sees increased business adoption of wireless data, an emphasis on applications and services to take advantage of next-generation networks, and devices that can use multiple network standards.

Aaron Dobrinsky, CEO of GoAmerica Inc., says economic conditions may keep smaller enterprises on the fence about wireless data adoption. But larger and even mid-sized companies will sign on in greater numbers in 2002 because they can see the return on investment, he says.

Creating A Long-Term Blockbuster

With larger and mid-sized companies taking the wireless data plunge, 2002 could bring a competitive struggle between the traditional cellular data networks using Mobitex and ARDIS technology and the 2.5G and 3G networks that CDMA and GSM carriers are launching. This is especially true if CDMA and GSM carriers incorporate wireless local area networks into their offerings.

Wilson says 2002 "shapes up as a challenging year. The smartest companies, both vendors and customers, will look past the doom-and- gloom rhetoric and master the delicate balance between achieving near-term results and developing long-term capabilities."

He recommends the industry focus on the network infrastructure necessary to offer new applications and services.

"While all types of wireless vendors are pursuing these objectives, the challenge is particularly pressing for wireless carriers," Wilson says. They must develop the ability to build and deploy new applications and services quickly; monitor and manage them closely but cost-effectively without relying on armies of expensive customer service representatives; and bill and collect payment in a variety of models, including subscription services for basic service and information such as news, weather and stock quotes, one-time fees for content such as music and movies and per-byte download fees for transferring data to and from corporate intranets, he says.

Carriers will need to provide these services in packages tailored for different types of customers and different geographic areas and they must adapt quickly – deploying new services as they are developed, mimicking the "hits" of their competitors and quickly terminating offerings that prove unpopular.

He says wireless vendors and carriers will need to focus on boosting near-term results by identifying and addressing concrete business problems with applications that can show a rapid return on investment. These solutions need to take into account the next generation networks based on GPRS, CDMA2000 1X and 802.11b, as well as those on the horizon.

Today's business climate means that wireless solutions must emphasize cost savings instead of new revenue.

Technology's Star Power

Among the technologies Wilson sees becoming more important in 2002 are those that use compression and acceleration technology to improve the perceived performance of networks. That's because the next-generation networks likely won't live up to users' high-speed expectations.

Another important technology for carriers to implement will be self-provisioning by users, the analyst says. With the multitude of new services and applications that should become available, carriers could see their customer service departments overwhelmed if subscribers can't select their own services online.

Dunsby also thinks that location-based services finally will become a reality in 2002, especially in the United States. Sometime during the year, he says, wireless subscribers will have the ability to find the closest gas stations and restaurants without typing in their location. There also will be a trend toward owning multiple wireless devices to take advantage of the new networks.

On the business side, GoAmerica's Dobrinsky believes 2002 will see a further weeding out of wireless data solutions providers, with continued mergers, acquisi-tions, alliances and fire sales.

Bluetooth may become a consumer reality in 2002, but Dobrinsky doubts the technology will ever be more than a personal LAN. It may have greater impact when it is tied into a high-speed 3G network, though.

"Personally, I don't believe that it will have the same utility as 802.11b," he says. "I have one (Wi- Fi) router that covers my whole house with 802.11. Bluetooth won't have that range."

Will the advances in wireless data use and capabilities in 2002 be enough to signal the start of Wilson's "Wireless Age"? Wilson himself thinks we won't know until that Nirvana is in full flower.

"It's one of those things that creeps up and suddenly we realize it is here," he says. "I think the incremental emergence will continue. And overall it is happening more slowly than optimists predicted a few years ago.

"Ultimately, the value proposition does get stronger and stronger. You can do so much more with wireless devices now than a year ago. It's inevitable that that will continue. The question for companies is how to survive the rough times that have befallen us."

And, if a sequel is made to the wireless "Field of Dreams," what will it be called: "Dream On" or "Reality Bites"? [WIM]