The high-speed wireless data field is filling up with contestants as most of the country’s larger operators have announced plans to deploy services that in some cases will open up the door to additional competition from companies that either have resale agreements for wireless services or are expected to announce such arrangements soon.
While the playing field is still relatively level in that high-speed services are only available in a limited number of markets, analysts expect carriers that are quick to market and have high-profile resale partners like Verizon Wireless and Sprint PCS could tip the field to their advantage.
Verizon Wireless and Sprint PCS both reported plans to spend $1 billion each deploying CDMA2000 1x EV-DO services across their networks by early 2006, which should beat out UMTS network deployments by their GSM-based rivals Cingular Wireless L.L.C. and AT&T Wireless Services Inc., which are set to begin commercial deployments by the time the EV-DO networks are fully deployed.
The two remaining nationwide carriers, T-Mobile USA Inc. and Nextel Communications Inc., have yet to make any official high-speed wireless data plans; T-Mobile USA has only committed to EDGE-based services that are expected to launch sometime this year and Nextel is testing Flarion Technologies Inc.’s Flash-OFDM solution in North Carolina.
While the major carriers are likely to be their own stiffest competition for wireless data subscribers, analysts predict the increasing number of mobile virtual network operator and resale partners entering the wireless space could add to those challenges.
“It makes sense for these companies to want to expand their service offerings beyond voice, especially for those that have content that can take advantage of higher-speed services,” said Patrick Zerbib, vice president of Adventis Corp.’s wireless practice.
Sprint PCS is seen by many as the carrier most likely to provide the on ramp for its resale partners, which today includes a number of both telecom and non-telecom companies like Virgin Mobile USA L.L.C., Qwest Communications International Inc. and its recently signed deal with AT&T Corp. While those agreements include access to the carrier’s voice and 1x-based data network, a company spokesman said Sprint would allow its MVNO and resell partners access to its EV-DO network once the carrier completes its rollout.
The potential influx of MVNOs and resellers using their carrier partner’s high-speed data networks could place additional competitive pressure on carriers that are still developing their high-speed strategies or lag in deploying services, said Iain Gillott, founder of IGillottResearch.
“These carriers will not just have to deal with one or two competitors beating them to the market, they will have to deal with all of the companies sharing those networks as well,” Gillott warned.
Others note this access should help Sprint PCS spread out the nearly $1 billion the carrier said it plans to spend on deploying EV-DO as well as help fund additional investments in future iterations of the technology.
“[Sprint] said it plans to spend at least $1 billion to deploy the technology and they need to drive as much adoption as possible to get their return on investment.” Zerbib added.
A number of MVNO and resellers already are offering low-bandwidth data services to their customers, including text messaging and access to exclusive content, and are expected to increase the data options to take advantage of higher speeds.
Virgin Mobile has aggressively targeted the youth market with its prepaid service, which might prove a more compelling platform for Virgin Mobile to take advantage of its exclusive content agreements with companies like MTV and VH1. Of course, higher prices could make offering EV-DO based services a tougher sell to that audience. Virgin’s U.K.-based parent, Virgin Mobile Group, is planning a $2 billion initial public offering later this year to fund service expansion plans.
Qwest and AT&T, which are both using wireless to fill in their bundled service offerings targeting business customers, are likely to take a more traditional approach to EV-DO services, offering their customers higher-speed access to corporate apps.
With its recently signed deal to offer digital service to telematics provider OnStar, analysts also noted that Verizon is in position to leverage its EV-DO plans to benefit its resale partners, noting the technology’s ability to stream content or other applications to increasingly complex in-car entertainment packages.
Cingular is expected to establish the biggest challenge to its CDMA-based competitors as analysts note the carrier will have a strong spectrum position following its pending acquisition of AWS to launch high-speed data services and has recently said it would like to begin rolling out UMTS services as soon as late next year. The carrier recently inked an MVNO deal with 7-Eleven that today only covers voice services on its TDMA network.
