WASHINGTON-2001: A Space Odyssey? Perhaps if you’re working on the international space station or developing a Star Wars defense. But for wireless, it will be a year the industry comes back to earth and gets back to basics as carriers, manufacturers, dot-coms, government policy-makers and others rethink this Next Big Thing called the mobile Internet.
The Next Big Thing is indeed very big and the stakes are huge, as huge as the risks. Governments and wireless sectors here and around the world have made that determination in policy pronouncements and at spectrum license auctions. For sure, there’s plenty of evidence that putting the power of the Internet in the hands of mobile consumers should be a natural. It is.
Yet, there is a mighty paradox to all this. For all the seemingly unlimited promise and opportunity of the mobile Internet, there are an equal number of challenges wrought by the convergence of wireless and Internet technologies. Indeed, the wireless industry may never be the same. Looking back and ahead, here are a handful of trends we see in 2001.
Wapathy
This year was but a preview of the year to come. Technology wars escalated, pitting European-driven wideband CDMA vs. American-made cdma2000 around the world. The WAP standard lost ground as fast as export-minded Japan made believers of its wildly successful i-mode Internet phone service. Still, some suspect a marriage of WAP and i-mode might be in the offing.
“I think unless WAP can work with the Internet … then WAP is dead,” said Andrew Seybold, a leading wireless industry analyst.
Meanwhile, Bluetooth and short messaging service technologies laid the foundation this year for a big splash in 2001.
Concerns about spectrum availability for third-generation mobile-phone systems grew so serious that the Clinton administration ordered federal agencies to swiftly study whether the 1710 MHz to 1885 MHz and 2500 MHz to 2690 MHz bands could be shared with-or even freed of-military, educational, religious and fixed broadband Internet licenses.
But wait, there’s more: the powerful TV broadcasters who are exerting squatter’s rights to the other global 3G band: 698 MHz to 960 MHz. If only frequencies could be as plentiful as chads.
Somehow, someway, the Federal Communications Commission will write 3G service rules and auction guidelines by the end of 2001. Before that happens, watch next year for a nasty lobbying brawl on 3G. It will provide a well-needed fix to political junkies who’ll be lost now that Recount 2000 is resolved.
Dancing in the dark
On the business side, wireless executives will continue to struggle with business models that take account of voice, data, video and multimedia applications of future wireless devices.
Another question: What will be the killer application? Does one exist? Is wireless data the pot of gold that will eclipse voice? While data holds great promise for the wireless industry, voice is still king. In fact, with the development of voice-enabled applications, voice ironically could be the application that keeps wireless data viable.
“Voice will still be the largest growth engine next year,” said David Freedman, a wireless analyst at Bear, Stearns & Co.
To date, engineers and software gurus have ruled. But do they know what consumers want and what they’re willing to pay for it? What device will prove most popular: personal digital assistants with built-in cell phones or mobile phones with built-in PDAs? Will mobile Internet be supported by advertising or by transaction fees or by something else yet concocted? And, by the way, just who will own the customer?
There is fundamental disagreement on where 3G-driven mobile commerce is headed?
Herschel Shosteck, a cellular industry analyst, predicts a 3G meltdown. “This is engineering fantasy. The business case is not wideband, but IP (Internet Protocol).” He said the United States, owing to various problems, will fall behind the rest of the world in the development of future mobile-phone systems.
Others are more optimistic.
“We know wireless devices will surpass PCs as the edge of the Internet and its exit point,” said Fred Fosnacht, managing partner of the North American mobile practice at Andersen Consulting.
Taking it to the street
Like many, the wireless industry has become a true believer in the Internet. Truth is, though, we’re all still novices at this. The Internet has an insidious nature, having the potential for good and mischief that seems to unexpectedly pop up like all those aggravating Net ads. We’ve barely scratched the surface of the Internet’s integration into business, government and society.
Just the same, you can’t blame the wireless industry for getting jazzed about mobile Internet this year. But the calculus for mobile Internet is far more complex than anyone imagined. It made for a wild roller coaster ride this year, which ended with a bunch of nauseous wireless executives clutching barf bags. They’re still recovering.
Indeed, the bubble has burst. The drunken optimism on Wall Street, which produced super inflated high-tech stocks and overnight twentysomething millionaires, has gone south. The spigot of free-flowing venture capital has tightened. Initial public offerings are on hold, no longer being mass produced.
The mobile satellite business fell from the financial heavens in 2000, and other wireless sectors with steep debt hint at uncertain futures in 2001.
Hype is out and fundamentals are in. Wireless realism will reign in 2001.
Private eyes
Wireless consolidation continued this year, producing a handful of truly nationwide mega carriers. The only obstacle preventing total, unfettered consolidation is the spectrum that some large mobile-phone carries want removed. They’ll lobby the issue hard in 2001.
Congress signalled disenchantment with merger review at the FCC and laid the foundation for agency reform.
The Federal Trade Commission let it be known that it could be a force to be reckoned with next year and in the future. Consumer and health lawsuits gained steam. The hearing impaired community resurfaced to demand non-discriminatory access to wireless technologies.
The privacy issue cannot be underestimated. How will the wireless industry best exploit the Internet in ways that give consumers, businesses, shareholders and others maximum value? And how will federal regulators oversee the blending of the two fastest growing high-tech sectors in a way that fosters growth, competition and innovation without violating the consumer?
With location predicted to be a key application of m-commence, some might wonder if industry now simply will pick up where Big Brother leaves off.
Look for Congress and the FTC to weigh in on privacy in 2001.
The focus on privacy in 2001 will be matched by concerns about network security. Hacking is no longer considered a pastime of hobbyists, but rather a major threat to the New Economy and national security. Big time, as GOP vice- president elect Dick Cheney might say.
If mobile Internet firms of the future are to be successful, wireless consumer confidence is a must.
Legal tsunami
In 2001, wireless consumerism will pick up more momentum. With the FCC determination this year that wireless carriers can be subject to monetary damages in state court for misleading advertising, consumer fraud and other illegal business practices, disenchanted wireless consumers will seek their day in court. Consumers are angry as attested to by complaints filed with state attorneys general who have spoken up to date.
On Capitol Hill, Rep. Anthony Weiner (D-N.Y.) is expected next year to press again for legislation that would mandate cellular service standards and require the FCC to collect and monitor consumer complaints.
Rep. Rush Holt (D-N.J.), who survived a close re-election contest, can be counted on to continue his crusade against mobile-phone spam.
Interestingly, even as it de
liberated Recount 2000 legal challenges, the U.S. Supreme Court found time earlier this month to uphold the kind of consumer arbitration clauses common in mobile-phone service contracts.
The high court still has before it requests to overturn the FCC radio-frequency radiation exposure guidelines.
Consumers will be emboldened to pursue antenna-siting litigation now that the Supreme Court has refused to overturn a lower court ruling favoring local regulators.
States and counties in 2001 will turn up the heat for laws to bar talking on mobile phones while driving.
Perhaps the biggest concern in 2001 will be the onslaught of mobile-phone-cancer lawsuits. The mobile-phone industry has escaped unscathed in such litigation to date. But the industry has never faced the kind of legal challenge it will see next year.
Charging the Hill
The combination of a new administration coming in under a cloud, a slim GOP House majority and a possible 50-50 split in the Senate spells gridlock and endless partisan bickering next year. Normally, this would be cause for concern. But for the wireless industry and other high-tech sectors, this is welcome news. They want government out of their business, except when they need something.
In addition to privacy, Congress next year is expected to grapple with e-commerce taxation-a huge issue for cities and states that fear enormous revenue loss from Internet sales. Lawmakers also will be confronted with intellectual property protection, patent reform and other novel issues raised by the Net.
If the Clinton administration’s 3G spectrum initiative crashes, the wireless industry likely will seek legislative relief. Republican lawmakers will push for FCC reform. The GOP-led Congress likely will vote to repeal the 3-percent telephone tax if the measure fails to make it out of the lame duck session. The wireless industry will push hard for a bill-and-keep arrangement in Congress and at the FCC.
With the 1996 telecom act having failed to produce local residential competition or to have taken account of the massive restructuring created by the Internet, some lawmakers next year may seek amendments to the telecom law.
“I think it’s simply naive to think there will be competition in non-dense areas,” said Robert Crandall, senior fellow of economics studies at the Brookings Institution. Crandall says the answer is not resale, but incentives to spur more facilities-based competition. He said mobile-phone companies have made a small dent in local competition, but not enough to scare local Bell and GTE wireline monopolies.
Meanwhile, policy-makers are working to bridge the digital divide in order to ensure that low-income, minority and rural citizens have the same access to new technology as others.
Trade and freedom
Wireless firms in 2001 will look to make further inroads in emerging markets, especially China. China is expected to become a member of the World Trade Organization next year. The challenge for the U.S. Trade Representative next year and in years to come will be enforcing free-trade agreements with countries that have telecom infrastructure needs. Such countries represent lucrative business opportunities for American wireless firms.
Whether the Internet-either wireless or wireline-will be governed by uniform global rules or will be subject to a patchwork of national laws (i.e. France’s treatment of Yahoo! content) has yet to be determined.
Likewise, whether the information revolution can flourish in nations, like Communist China, which are slow to enact meaningful political reforms, also is unclear.
Albert Einstein, one of America’s greatest scientists, understood the connection between innovation and democracy.
“Without such freedom there would have been no Shakespeare, no Goethe, no Newton, no Faraday, no Pasteur and no Lister,” Einstein stated in 1933. “There would be not comfortable houses for the mass of people, no railway, no wireless, no protection against epidemics, no cheap books, no culture and no enjoyment of art for all. … It is only men who are free, who create the inventions and intellectual works which to us moderns make life worthwhile.”
Brand new day
Despite all the challenges next year for the wobbly wireless industry, the 2001 space odyssey of Arthur C. Clarke, the prolific science writer, still has relevance. In fact, his outlook turns out to dead on. At least in sense of Einsteinian relativity.
Like other geniuses, Clarke, stumbled onto something even bigger than he probably realized in his space prophecy.
It is this: That in 2001 and for the foreseeable future, America and the world would move closer to conquering space, distance and time. Wireless and Internet technologies, separately and combined, would make it so.
That is the great frontier the wireless industry must continue to conquer in 2001 and beyond.
