NEW YORK-Although growing use of Research In Motion’s BlackBerry e-mail service has congested wireless networks in some areas, paging carriers are not well-positioned to seize this opportunity to serve as alternative providers, said Jim Balsillie, co-chief executive officer of RIM.
“Paging carriers have tried to get us to make BlackBerry for them, but we told them, `We will kill your networks.’ PageNet has 500 kilohertz (of spectrum), while VoiceStream and AT&T Wireless each have 40 megahertz,” he said recently at the New York Society of Security Analysts’ “Internet Economy Conference.”
“Glenayre and Motorola hung paging companies out to dry, gave them a broadcasting bicycle and offered upgrades that are only add-ons to the bicycle. What they needed is a car, an upgrade path to a cellularized service gain.”
Cellular and PCS carriers are responding to rising demand for RIM services by scaling up their cell-site capacity and adding more distributed links to RIM. Also needed is better filtering to avoid multiple transmissions of the same message and the overburdening of base stations that results, he said.
Even for diehard data users, Research In Motion recognizes that voice communications remains an important feature. Consequently, the company is readying a RIM device that will offer that capability.
“The voice ability is latent in them. Voice is just a software load with a $5 ear bud from RadioShack. In Europe, all kinds of people are using this in beta tests,” Balsillie said.
“This has the potential to be a disruptive technology … But it’s a lot easier to put data into a voice appliance than voice into data.”
BlackBerry devices retail for $300-$400, and the RIM service costs $40 per month for unlimited use.
“With BlackBerry devices, churn is virtually zero … When you throw in voice with that, it will be interesting to see the dynamic innovations from the carriers,” Balsillie said.
The high growth in RIM services is attracting many potential rivals into its space, a phenomenon of “competitive substitutes” that is typical of high-technology industries, the chief executive said.
“It’s good to be smart, but it’s also good to be first. We have a proud portfolio, and we will protect it. We have 36 lines into Cingular (Wireless) alone, and we are behind the firewalls of 8,000 corporations.”
Although the dominant focus of Research In Motion remains one of expanding its e-mail platform to handle growing numbers of enterprise functions, the company also recently announced a consumer-oriented arrangement with AOL Time Warner. The AOL Mobile Communicator is a two-way data communicator that incorporates RIM technology and is designed to provide instant messaging as well as e-mail.
“AOL is being very proprietary about its instant messaging. Cellular carriers are trying to develop their own IM standard,” Balsillie said.
“GPRS devices have SMS in them, and SMS will become more chat-like, more like Instant Messaging.”
RIM expects General Packet Radio Service to begin commercial service in Europe by summer. In its first European supply contract, RIM has a purchase commitment from BT Cellnet in the United Kingdom for 175,000 BlackBerry wireless handhelds during the next 12-18 months.
In North America, GPRS trials are scheduled for later this year, and broad coverage and service reliability should be achieved in 2002, he said.
“The 1xRTT people will come along a bit later because in CDMA it’s a hardware upgrade,” Balsillie said.
Besides expanding functionality, 2.5-generation wireless also will go a long way to solve network capacity constraints and do so at a modest cost compared with third-generation wireless, he said.
“I put the 3G stuff in here to be polite, but I think you have to look very closely at the facts and economics of it. There is a whole lot more run room in 2.5G than it’s given credit for,” Balsillie said.
