Las Vegas – Medicines prescribed here by wireless-industry executives to improve the industry’s health include robust data services, reduced handset subsidies, a consumer-market mindset, improved network interoperability, fewer government mandates, and a consolidation of the nation’s six national carriers.
The executives spoke at Friday’s Wireless Supersession, where the presidents of Sprint PCS and Nextel also sparred over the potential profitability of data services aimed at consumer users.
The industry’s biggest challenge, said Sprint PCS president Len Lauer, is ‘getting beyond voice.’ With 50 percent market penetration, the industry must focus on enhanced messaging, gaming and other non-voice services such as wireless e-mailing of digital pictures to expand the revenue and user bases, he said. These are ‘non-capital-intensive-type services,’ he noted.
Another way to get past the 50-percent mark is to displace landline service, added Mike Lazaridis, president of Blackberry maker Research In Motion. Ways to wean users off landline phones include improved interoperability of services, including messaging, among carriers and the integration of carrier networks with corporate PBX networks, he said. ‘One of the most profitable services, SMS [short message service], is still plagued with [network-interoperability] trouble,’ he contended.
‘If carriers try too hard to compete by blocking interoperable services,’ Lazaridis said, ‘it will hold back the total base.’
Lauer pointed out that a step-up messaging service, MMS (multimedia messaging service), will be launched industrywide in the second half, but ‘it needs to be interoperable to drive adoption.’
Another way to boost penetration and usage in a mature market is to develop niche products and services, said Audiovox Communications president Phil Christopher. The services include push-to-talk service, which will attract youth to wireless, he said. Individual carriers, he predicted, will evolve services to ‘excel in a particular market.’
For his part, Skip Speaks, president of handset maker Kyocera, contended the industry must move from a technology-focused mindset to a consumer-market-focused mindset. Another key challenge is moving away from a subsidized-handset business model to redirect capital to ‘support continued innovation.’ Carriers, he noted, are carrying $97 billion in debt.
Some participants contended that carrier consolidation is also needed to improve industry profitability. ‘The industry can’t survive with six [national] providers,’ contended Nextel president Tim Donahue. ‘I’m hoping for consolidation, but I don’t see it on the horizon’ because of several factors, including carrier balance sheets, differing network technologies, and ‘egos,’ he said.
Sprint’s Lauer agreed that ‘it’s hard to rationalize six players’ and forecast GSM-carrier consolidation in 2003 or 2004. For his part, Speaks claimed that ‘we need more differentiation based on value,’ and he contended ‘if consolidation should happen, that’s why it should happen.’
Government-imposed mandates are also harming the industry, Donahue contended. ‘Numbers portability will cost us over $100 million’ and will be an ‘administrative nightmare,’ he said. That money should instead be invested in the networks and services, he contended.
Another capital-draining mandate is the FCC’s emergency 911 mandate. ‘We should have it, but the public service answering points aren’t ready, yet all of us must have it by 2005’ at a cost of hundreds of millions of dollars, he charged.
While they discussed the industry’s greatest challenges, some executives also disagreed on the value of data services in the consumer market and whether high-speed data is necessary in the business market.
‘You won’t make a lot of money in data with consumers,’ claimed Donohue, whose data services are targeted to enterprise and business users. ‘Corporate America will pay for it’ to improve productivity, but it takes carrier partnerships with other companies to develop specific applications for a specific business or class of business, he contended. These applications, he noted, require only 15kbps-20kbps throughput.
Sprint’s Lauer wasn’t so sure. He contended 15kbps to 20kbps isn’t adequate for people who want to download Microsoft Word or Powerpoint attachments or send digital pictures. Sprints’s average throughput is 50kbps-70kbps, and a wireless PC Card gets 200kbps-3,-000kbps with compression, he said.
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