Editor’s Note: Looking to bring a younger perspective to the mobile space, RCR Wireless News has tapped Jeff Hawn to provide insight into what’s on the minds of the tech-savvy youth of today.
The giants of American wireless, AT&T Mobility, Verizon Wireless, T-Mobile US and Sprint have one thing in common: They have established their market niche as the providers of the infrastructure that is necessary for all cellphones, smart watches, tablets and other assorted gizmos to function. Since collectively they control about 90% of the market, they can afford to charge a premium for their services. That premium covers the very costly endeavor of building and maintaining cellphone towers, junction boxes, server rooms and all the other pieces of modern digital wireless connectivity. AT&T announced last year it had spent $23 billion, or 17% of its revenue on infrastructure improvements with plans to spend $14 billion more over the next three years. All carriers are looking for ways to build the best and fastest networks, switching from 3G to LTE and building as many towers as they can.
I don’t claim to be an expert on telecommunications, but from my observations I’ve come to believe that the American telecom giants are throwing good money after bad. They have remained focused on the traditional infrastructure of cell towers that may one day soon be as obsolete as telegraph lines. Cell towers are a wireless company’s ideal infrastructure because they are cheap – coming in at about $150,000 each – and easy to build and maintain. Of course the issue with cell towers is that they are eyesores that no one wants in their neighborhood, or have to be built on private land where they are leased. There also needs to be a lot of them with the average cellphone tower only being effective up to about 22 miles.
Nevertheless, wireless companies are continuing to pour money into conventional cell towers because no alternatives exist, right? Wrong! Currently there are three alternative forms of infrastructure that have been in the news, and the American wireless giants are investing in none of them.
The first alternative is the Google balloon program somewhat aptly named Project Loon. This is a seemingly outlandish plan to place a global network of balloons in the stratosphere allowing connectivity with 3G-like speeds. While the initial idea seems like science fiction, the science behind it is sound and the advantages are obvious. Balloons, though more expensive, will be able to cover a much wider area with fewer units bringing overall costs down. Moreover, at the altitude at which they would be flying the balloons make transmitting over the horizon easier, thus allowing true global connectivity.
Another flying infrastructure project being developed by a different Internet giant is Facebook’s solar-powered drone program. The notion is similar to the balloon only instead of a high-altitude device relatively outside your area of control, a drone would have a link in an infrastructure chain that can be controlled and flown to an airfield for maintenance if required. Both Google and Facebook are investing heavily in the done program that has begun to make great strides, but like Project Loon it is also years away from practical application.
The final alternative to the traditional cell tower is the satellite. Satellites have been competing against traditional wireless for decades, and although they’ve established a niche market, they are not yet threatening to supplant traditional carriers. Satellite technology is evolving at a faster pace than it has since the end of the Cold War. Two factors contributing to this are the falling costs of launching a satellite due to easier commercial access to space, and the miniaturization of satellite technology. It is making space more associable and more lucrative. So-called Cubesat’s, small satellites roughly the size of a toaster, can be constructed with off-the-shelf components and equipped with transmitters powerful enough to relay a signal from person to person on earth.
Despite these three and other viable alternatives of infrastructure, wireless companies remain fairly tied to their established infrastructure. It may be wise for wireless companies to begin to evolve now instead of assuring themselves that any alternative is decades away. After all, telegraph lines are a thing of the past and cell towers may not be far behind.
Jeff Hawn was born in 1991 and represents the “millennial generation,” the people who have spent their entire lives wired and wireless. His adult life has revolved around cellphones, the Internet, video chat and Google. Hawn has a degree in international relations from American University, and has lived and traveled extensively throughout Europe and Russia. He represents the most valuable, but most discerning, market for wireless companies: the people who have never lived without their products, but are fickle and flighty in their loyalty to one company or product. He’ll be sharing his views – and to a certain extent the views of his generation – with RCR Wireless News readers, hoping to bridge the generational divide and let the decision makers know what’s on the mind of this demographic.
