WASHINGTON-It would be nice to say this policy or that technology will shape the direction of the wireless industry in 2003. But neither industry nor official Washington has that luxury. Geopolitics could come to color the wireless world to a far greater extent than any single piece of legislation, regulatory action, court decision, business transaction or technological innovation next year.
The prospect of war with Iraq early next year has huge implications for the wireless industry, which having hit rock bottom desperately needs stability in the only market that counts anymore-the global one. Oil still trumps spectrum in the big scheme of things. Just the same, there are plenty of folks around here ready to go war in a heartbeat over radio frequencies.
War is a wild card unpredictable in its possible manifestations. For the wireless industry, it is not a pretty picture-one complicated by the lingering overhang of accounting scandals, corporate fraud, heavy debt, lackluster earnings, waning consumer demand and bankruptcies. Such uncertainty is bound to give rise to risk-averse behavior in a high-tech sector that normally thrives on living dangerously.
This scenario cannot warm the hearts of wireless executives as the curtain rises on the New Year. The only real silver lining for industry is the bucket of federal money-billions upon billions-for defense and homeland security. Cashing in is another matter, though. Industry and government officials will pound doors in 2003 for the $73 million denied President Bush in 2002 for wireless priority access service.
Perhaps survival will be victory enough for wireless firms in 2003. Perhaps not. For sure, carriers and vendors will be forced to make the best of what likely will continue to be a skittish economy and an unsettled policy landscape.
Wireless carriers, short on cash and time, will have to move forward. But it will have to be in a manner more measured and thoughtful than in those crazy dot-com days, when everything seemed possible. Welcome to the morning after.
Strong, inspired managers with an eye for the bottom line will carry the day in 2003 and beyond. The difference between success and failure can be as thin as the razor’s edge. There can be bundling strategy or a strategy that is bungled. Can you hear me know?
What wireless firms can do-aside from keeping their heads above water-is lay the foundation in 2003 for subsequent years when the industry shakeout and economic tremors have subsided. That day will come. But it will not be in 2003.
The wireless industry stands at the crossroads in 2003.
It is a maturing industry, 140 million subscribers strong. But with success comes baggage-good and bad.
Mobile-phone carriers, cash poor and debt rich, want regulators to be sensitive to business pressures in their competitive business. The industry campaign against federal mandates will continue in 2003.
Consumers, increasingly perturbed about shoddy service, billing problems and pricey termination fees, want carriers who are more responsive to them. Subscribers and non-subscribers alike do not have the nine lives of cats. Drivers distracted by handheld cell-phone conversations while driving are becoming public enemy No. 1.
It is a combustible mix.
Look for states-public utility commissions, attorneys general and legislatures-to flex their collective muscle in 2003. California and New York are taking the lead. Plaintiff lawyers are close behind. The wireless consumer backlash gained momentum in 2002. It could gain a full head of steam in 2003.
“There’s got to be a change,” said Carl Hilliard, leading the charge for the Wireless Consumers Alliance. “It makes no sense to battle your consumer base.”
But consumer problems-not to mention a mobile-phone health question that’s still hanging around and the largely ignored tower-safety issue-represent the dark side of industry.
There is a bright side.
Fierce wireless competition shames other telecom and high-tech sectors. Consolidation-owing to the repeal of the spectrum cap in 2003-will change industry’s look in coming years. The question is how much consolidation will the Justice Department and federal regulators allow.
How then should a wireless industry-which will be 20 years old in October 2003-be regulated (or deregulated) going forward.
Wireless is becoming a substitute for landline telephone service, a trend more pronounced in emerging markets. China is the mother of them all. Whether U.S. wireless firms make further inroads in the nation of 1.3 billion people depends on whether Beijing lives up to market-opening commitments as a World Trade Organization member.
If China erects barriers to wireless trade and investment-explicit or subtle-U.S. Trade Representative Robert Zoellick could find himself inundated with courtesy calls from industry lobbyists in 2003.
Change is in the air. Unlicensed wireless technologies are emerging that could cut into the mobile-phone business, or perhaps complement it. The picture should become clearer in 2003. That’s the marketplace.
How will unlicensed wireless and licensed wireless services coexist in the regulatory world?
The answer is likely to be found in spectrum reforms that the FCC, Congress and the National Telecommunications and Information Administration will continue to pursue.
Or the answer could come from higher up, say, the Oval Office. The Bush administration could find political gold in unlicensed wireless technology. It could help the White House leverage a broadband policy-otherwise held hostage by warring Bell telephone companies, long-distance carriers, cable TV operators and others-jumpstart the down-and-out high-tech sector and, by extension, give the economy the boost it needs in time for the 2004 presidential election.
The dark-horse technology of 2003 could be a broadband combo of Wi-Fi and power-grid technologies.
The only thing standing in the way of a 2003 breakout-year for Wi-Fi is the Pentagon, which opposes making the world safe for 5 GHz wireless Internet access because of fears that widespread deployment of wireless computing could interfere with military radar.
All this raises another question: Is Wi-Fi sci-fi? Is it for real? It would not be the first time a much ballyhooed technology failed to meet immediate expectations. Can you say 3G? MSS? E-commerce?
But despite its problems, third-generation wireless technology is slowly becoming a reality. Whether there is enough spectrum to provide Internet and multimedia services depends in part on whether industry can score more frequencies from the military, broadcasters and fixed-wireless licensees. Congress’ consideration of relocation fund legislation in 2003 will be critical to the industry securing Pentagon spectrum.
Rudy Baca, a wireless analyst at The Precursor Group and a former FCC official, predicts ultra-wideband technology will outshine Wi-Fi in 2003. He said to expect important UWB product announcements early in 2003. Baca noted that Wi-Fi has security problems and the technology likely will be limited to a niche market.
“We don’t see it [Wi-Fi] being an enterprise play. That’s a UWB story,” said Baca.
But that’s not the end of the story. Mobile-phone firms-particularly those that depend on satellite-based Global Positioning System technology for E911, federal agencies (including the Federal Aviation Administration and NASA) and the GPS industry itself are expected to continue pressing policy-makers in 2003 to keep UWB reined in in order to prevent interference to their spectrum-based assets.
Mobile-phone carriers, for their part, will have to figure out what the business case is (or isn’t) for digital content as they roll out 3G systems. Policy-makers will get more involved in 2003 in crafting a legal regime for d
igital content. Perhaps wireless data will finally get serious traction in the New Year. There are a slew of possibilities: short
messaging service, ring tones, games, color pictures, streaming video, location-based services and the rest. Is there a winner out there? Java or BREW, anyone?
There will be a changing of the guard in wireless leadership next year, as the mobile-phone industry’s top lobbyist the past decade-Thomas Wheeler-departs as president of the Cellular Telecommunications & Internet Association. Another Tom, whose last name is Sugrue and who heads the FCC’s Wireless Telecommunications Bureau, may leave his post in 2003 as well.
Even though the Iraqi issue is outside the reach and influence of the $100 billion mobile-phone industry, carriers and vendors are not completely helpless in shaping their destiny. They have their work cut out for them in 2003.
In fact, it will be war.
Throughout official Washington next year expect more of the same: mobile-phone carriers fighting mobile satellite services over the 2 GHz band; Microsoft Corp and Silicon Valley fighting the Department of Defense over the 5 GHz band; everyone fighting with everyone else over the 800 MHz band; fixed-wireless licensees fighting the FCC and others over the 2.5 GHz band; cdma2000 technology fighting W-CDMA technology (Europe will be the region to watch); rural telcos fighting the mobile-phone industry over leftover spectrum; and privacy advocates fighting the Justice Department over eavesdropping in the ether and elsewhere.
The tower industry, like Senate Majority Leader Trent Lott (R-Miss.), will simply be for fighting for its life.
The FCC will be the scene for a number of high-pitched battles over spectrum and policy next year. Arguably the biggest is local number portability. After delays that pushed the implementation deadline out to November 2003, the FCC will be forced to act. Mobile-phone firms decry LNP as expensive and unnecessary, given today’s high subscriber churn rate. Which way will FCC Chairman Michael Powell and fellow commissioners jump? Some industry observers predict Powell, not wanting to perpetuate churn and force carriers to absorb additional costs, may give industry a pass.
Maybe the FCC chairman can count on new Commissioner Jonathan Adelstein, perhaps figuring the Bush-appointed Democrat may not want to make waves if he wants to be re-nominated before his term ends on June 30, 2003.
The commission may not be so forgiving on enforcement of enhanced (location-based) 911. Powell & Co. sent signals in 2002 that its patience is wearing thin. Are daily fines on the horizon in 2003? The FCC is under growing pressure to take a tough stand.
“I think it’s going to be a wild ride for the FCC and the wireless industry in 2003,” said Jonathan Cohen, a wireless attorney who had stints at the White House and the FCC in the Clinton administration.
How will compassionate conservatism play out when the FCC decides in 2003 whether or not to mandate hearing-aid compatibility for digital mobile phones?
What will the FCC do when the first major mobile-phone merger comes its way as it might in 2003? The agency will not issue official merger guidelines, but has worked up a roadmap to guide it. However, smart money says there will not be any mega-mergers in the mobile-phone industry until stock prices recover.
Forecasting is a funny business. Little or none of the predictions above may come to pass in 2003. But here’s one you can take to the bank: There will be more from the NextWave Telecom Inc. controversy. RCR
