Changing Course

Two disparate events-the 700 MHz auction and the iPhone introduction-have the potential to alter the wireless industry’s existing course. Traditional wireless players must adapt to these new forces of change-and if they respond correctly, they will remain healthy.
It is ironic the two movements are at opposite ends of the spectrum (bad pun intended). The 700 MHz draft calls for unlocked devices capable of running any application; the iPhone is a locked device that uses proprietary software.
The last time a single event molded the industry was when AT&T introduced its Digital One Rate plan about 10 years back. The long-term upshot: long-distance resellers went out of business.
FCC Chairman Kevin Martin’s proposed 700 MHz rules promise open access. The proposal seems to gloss over several realities of the wireless world: Devices will need a 700 MHz chip to access a 700 MHz network, and too many devices accessing a network simultaneously can take down even the best network. Further, vendors will only build devices or infrastructure if there is the potential for mass adoption and Martin’s plan doesn’t call for a nationwide license.
So while I don’t think a new entrant is going to change everything as we know it today, I do think industry needs to fight the negative publicity it has been getting regarding its walled gardens. After all, T-Mobile and Cincinnati Bell already offer Wi-Fi roaming, and a number of carriers allow third-party applications.
Indeed, Sprint Nextel Corp. is aiming toward open access with its WiMAX network without a government mandate, but has conceded that it won’t start off as a free-forall, likely because it’s worried about overloading the network.
The more immediate issue traditional wireless players need to respond to is Apple’s iPhone. American consumers have shown they will pay high dollar for a cool device. They proved it with the Razr and underscored it with the iPhone. Although industry has worked to lessen the value of devices (after all, they give them away for free!) this month consumers taught industry that they are willing to pay for something of value. Industry needs to capitalize on this phenomenon and put value back into devices, especially if there is a movement toward unlocked devices. But someone needs to explain that to the customer-without a lot of backlash.