SERVICE QUALITY REGULATION SEEN THREAT TO WIRELESS INDUSTRY

Although 2000 was blockbuster year for wireless industry, Wireless Area Protocol (WAP) failed to impress, Cingular Wireless CEO Stephen Carter said. “This was due to overzealous marketing that led the average consumer to believe we would deliver a desktop-like experience to a cellphone,” he said. To take full advantage of mobility, applications must be reinvented for wireless world, he said. “I don’t see the road to 3G as a racetrack,” Carter said. Europe and Japan appear to be ahead of U.S. but “technology will become a commodity,” he said. “We already have networks that carry an incredible amount of data, but we need to build public interest in future activities. Technology is a given, in the long run the winner is who is there with the applications.”

Both CEOs see wireless voice more of commodity by middecade, but Strigl believes “voice is still king. We've overlooked this in our fixation on wireless data.” Incremental min. continue to increase and wireless could become 40% of voice usage, he said. “Voice benefits are often overlooked in transition to 3G. It’s not just about data, 3G will provide 2 times our current CMDA capacity. The capacity is critical as voice minutes increase,” he said. Incremental voice will continue to provide large percentage of Verizon revenue. He estimated “2 to 3 years” would pass before wireless data were “meaningful piece of our revenue.”

Clearly anticipating regulatory restriction on cellphone use while driving, Carter described Cingular “Drive Sensibly” public awareness program scheduled for height of July driving season. “It is wrong for a carrier to take a position [that] ‘we only provide a service,'” he said. He cited study of 28,000 auto accidents that said it found only 2% were caused by cellphone distractions. “There are 180,000 calls to 911 and other emergency services each day, and we'd hate to see anything to discourage that use of mobile phones,” Carter said. He said he favored restrictions on teens’ use of cellphones in “graduated licensing period.” To focus on inconsiderate cellphone use in public places, carrier partnered with Nokia to develop “Be Sensible” window cling-ons that Carter said soon would be familiar sight on doorways to museums, restaurants, theaters.

Sounding theme of optimism, Strigl said: “The sky is not falling. Hearing this talk of economic uncertainty, I have to ask the question: ‘When was the last time the economy was certain?'” He said wireless industry still was strong, citing: (1) Continued growth in first quarter 2001 after tremendous increase in 2000. Industry still has plenty of headroom to grow, especially compared with penetration of consumers in Europe or Japan. (2) Strong embedded base -- 150 million people in U.S. now use wireless phones. (3) Mature product with strong network. Verizon will spend $4 billion on coast-to-coast network this year, with “quite a bit” of investment toward improved service quality. (4) Increasingly high value to customers with mobility as “killer application.” (5) Increase in usage. “Other metrics are improving. Revenue is up. Profitability is up,” he said.

In question session later, both CEOs said spectrum availability was major problem for successful rollout of new wireless data services. In U.S., spectrum allocated to carriers is half that of European carriers and about half of Japan’s, Carter said: “The equation says we have to have more spectrum available.” Strigl said he hoped FCC Chmn. Powell would “work with carriers” but was concerned about time “government has taken to rectify the situation. We have had an auction and my company has spent a ton of money but can’t get access to the spectrum,” he said. -- John Spofford

Supercomm Notebook…

CEOs of major carriers worldwide expressed optimism in face of hard economic times at Supercomm Global Communication Directions plenary panel that opened show Sun. Current downturn in industry is “imbalance of supply and demand caused by exuberance but will get back into balance,” Aligent Technologies CEO Ned Barholt said. Service providers face dilemma of traffic growing at “explosive rate” but costs growing faster than revenue, he said: “Carriers need to be less dependent on voice services” and develop network services such as messaging, ticketing and banking. Siemens Optical Networks Pres. Jost Spielvogel said “fantastic voyage of the year 2000 ended with shocking abruptness” replaced with “need to join the real world. Money was spent on just expectations while overstating business opportunities,” he said. Adding to problem was stock market and analysts, he said. Each company felt need to announce growth beyond market growth: “Companies put out capacity they won’t need for years but were afraid to not deploy it because of the stock market,” he said. Spielvogel sees slow recovery from overstated demand, beginning “at the end of next year. Until then, the focus will be cost- cutting and revenue-generating technology.” Next step of telecom industry is evolution of network models and concepts, he said. “Disruptive technologies” such as IP, Internet and wireless telephony will lead changes, Spielvogel said. “However, the nature of a revolution is no one knows the ultimate outcome,” he said. -- JS -

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Targeting tier-one wireless service providers, Netonomy announced updated software product to allow wireless customers to manage own account. Company’s CMR (customer-managed relationship) product enables wireless carriers to use Internet customer interface to “reduce service costs, seize cross sales opportunities, improve customer service and reduce churn,” said spokeswoman. Customers have control over administrating own accounts, allowing users to sign up for new services, such as call waiting or global roaming, pay phone bills and get answers to service questions via Web, WAP phones or SMS messaging. “We enable customers to get a 360 degree view into the service provider to access different systems. It adds a ’self service’ function to view a bill, change services or enter a trouble ticket,” she said. Product integrates the backend system and presents to customer as Web interface on browser, or via PDA, telephone, SMS message, WAP, iMode or ITV, she said. Also available is channel activator software for dealers used in phone store environment. Netonomy said it has about 9 carrier customers in Europe and begins U.S. launch at Supercomm.