Handset hardball and other sports : Wireless teams are forming, but not all can play with the big battalions.

By: LAUGHLIN, KIRK
Publication: America's Network
Date: Monday, April 15 2002

The most notable split among US wireless carriers is their divergent air-interface pathways -- GSM/GRPS vs. CDMA.

Of course, carriers will crease and wrinkle their networks to conform to their uniquely drawn missions, but in sum, their migration strategies are virtually locked in place.

(Nextel is the only operator yet to define its course.).

STANDARD ISSUE

Carriers like to beat their chests about chosen network standards. Is it a waste of time? Probably. Do consumers care if text message is sent via GPRS or CDMA-1x? Of course not.

Subscribers care about service quality in the same way a business cares about making money. Service and revenue are inextricably linked.

Both emerging data standards are starting to demonstrate reliability. That's not by accident. Carriers have been intensely focused on data -- the sooner those networks are up the faster new revenue sources can be tapped.

The current preoccupation with network performance is understandable, but it also presents dangers. Carriers not only need wider-band airlinks, pressure is on executives to cultivate a wideband understanding of their market positioning. The first major test will be whether carriers can demonstrate how to make a profit off data services. Having the slickest, most technically efficient network will not assure an A-rating.

The common belief is operators need time to optimize their networks, market new services and form rationale billing schemes.

There is more to the story.

A LITTLE MAGIC?

The current rite of passage for carriers has more to do with the skills they employ to strike alliances with parties of emerging influence. They include software makers, content providers, developers and handset manufacturers who bring a brave, new attitude about standing up to ferocious market competition.

Carriers have before them a rare opportunity to expel the ailments that continue to plague their businesses, specifically churn and flattening revenue.

Carriers are falling over themselves searching for the magic applications that will enamor customers for longer terms. Part of the solution may be to call off the search and, instead, call on software developers to do the scouting.

Dealing with developers is an uncertain exercise. That's part of the new, open-ended equation. Sprint PCS, for example, doesn't know what it will get from developers who are now able to play around with a free Java application-building toolkit. But, the carrier is taking a stab anyway, believing a few sticky services will keep a lid on churn.

Software will also underpin enterprise relationships. As part of its parent DeutscheTelekom's new partnership with Microsoft, VoiceStream Wireless will charge subscribers a flat monthly fee to use Microsoft Exchange. If successful, software makers will imprint wireless pipes with greater intelligence.

IN HAND

Handset alliances are even more interesting. Intense rivalries will produce more choices and formulas for operators. They will tinker with ways to unlock growth in key population segments. By the end of the year, the mobile industry will see as many as 20 handset models with color displays.

These smarter devices will tighten the connection between a successfully deployed service and incremental gains in subscriber spending. Improved browsing, mobile Web portals and the benefits derived from wider adoption of BREW and Java's J2ME will change the game entirely. Therefore, the maneuvering of handset vendors becomes integral.

Sony Ericsson is one to keep an eye on. The device maker says it will become the top seller by playing the game a bit differently. Success leveraging troves of unique content will likely become the decisive factor. Sony CEO Howard Stringer says the venture features "complementary strengths" not found elsewhere. Sony Pictures will deliver multimedia, Sony Music will open up its audio archives and Sony Imaging will make available graphics, personal images and ringtones.

One might naturally anticipate that the air-interface division separating carriers will cascade into the handset, content development and software arenas where new lines of separation could be drawn. That is unlikely given the call for open standards championed by the likes of Nokia.

Yet, there is still no safe haven for migrating operators. As formidable as some alliances may appear, there are bound to be a few gaps. That's why a functioning wireless network with decent reliability has an even chance against any competitor. What matters most will be the partner at your side.

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