Upwards of 40,000 mobile gadget aficionados, business executives and people in between will travel to Las Vegas next week to check out cutting-edge content and communications products.
The event, the Cellular Telecommunications & Internet Association (CTIA) Wireless 2006 show, is the most lauded in the wireless industry for consistently showcasing technologies and handheld devices that let people communicate better.
Little Bit of Everything in The ‘Sausage’
Wireless subscribers will flock to learn about the advantages of mobile virtual network operators versus traditional carriers such as Sprint.
Vendors will come to debate the merits of WiMAX versus 3G cellular technology. Consumers will attend to applaud or jeer how mobile content, such as music and video, looks on mobile phones and handheld computers.
“When all of this gets smashed together and out into the grinder and spit out the other end, then it will have a definition,” Rob Mesirow, CTIA show director, said when asked to sum up the wireless industry.
“Right now, we’re making sausage. We’re sort of in this weird space where wireless is defining itself.”
WiMAX Takes on 3G
For every competent technology, there is an equally competent one to match. So goes one theory anyway. Depending on whom you talk to, that idea holds true in the battle of WiMAX WiMAX, or IEEE 802.16, is wireless broadband. It’s basically the science of bringing a fatter data pipe into the home or business to power computers without the typical broadband cable. WiMAX is expected to be a popular topic at CTIA for some vendors, whose fates hinge on the ability to sell investors on the technology at a time when cellular technologies are entrenched. Soma Networks President Greg Caltabiano, whose company makes data stations and terminals to outfit entire networks in wireless broadband, refutes the notion that one technology is better than another. He said that WiMAX is for green field operators, most of whom are not mobile carriers but ISPs, or carriers that don’t have local access. “WiMAX providers are IP-centric and don’t go for ubiquitous coverage like cellular does,” Caltabiano said in an interview. “Why are you going to try to compete against something that’s been out there forever and has billions and billions of dollars in the ground to get that coverage?” The executive pointed out that WiMAX can handle different frequencies, offering service on frequencies not traditionally allocated for mobile carriers. “The issue is no longer whether or not WiMAX will happen,” Caltabiano said. “The issue is how successful it will be, not whether it will have some degree of success.” Research companies like In-Stat seem to agree, arguing that WiMAX equipment could become a $3 billion market by 2010, provided that the cost of subscriber units -– modems -– falls from the current $500 to $100. The debate rages on. Skeptics like Gartner analyst Tole Hart said his research firm is not that positive on WiMAX. “Fixed WiMAX, we think, will be like a fill-in solution,” Hart said. “For mobile WiMAX, Sprint is deciding on a 4G technology to go with and WiMAX is one of them, but it does not seem like a leading option. It will probably take awhile.” But Lars Johnsson, vice president of business development for WiMAX chipmaker BeCeem, said his company is hustling, along with Intel, Fujitsu and other startups, to get WiMAX-based chips into more equipment. He is aware of criticisms people have levied at WiMAX. But Johnsson said he feels confident that carriers like Nokia, Lucent, Ericcson and Samsung are business-centric, not technology-centric, making them more open to evaluating technology based on market potential instead of religion and IP licensing. He noted that the Korean government has already allocated a bunch of spectrum for WiMAX, with Samsung taking the lead. Rise of the MVNOs WiMax has major implications for businesses and consumers. But so do mobile virtual network operators (MVNO), which figure to be a major staple at CTIA. MVNOs are a new breed of wireless service providers that lease high-speed voice and data networks from major carriers. These companies leverage carriers’ networks to offer custom phones and services tailored to highly specific market segments. Mobile ESPN is a high-profile example of an MVNO. Launched last February, this complement to the sports network leases the network from Sprint and is currently in a deal with Best Buy to sell its custom Sanyo MVP phone to consumers who crave sports. Lots of sports. ESPN spokesperson Rebecca Gertsmark said Mobile ESPN service is offered separately from Sprint, noting that the MVNO handles the contracts, billing, customer care — all of the business parts. Make no mistake: MVNOS compete with carriers for the same piece of what is now a 205 million wireless subscriber pie. But Gertsmark said Mobile ESPN is built from the ground up for sports fans. The Sanyo MVP phone is set up with a one-touch “E” button, so that sports nuts don’t have to hit 10 buttons to see their favorite content, score or stat. The voice and data plan is bundled, not separate, and costs from $34.99 to $224.99, with a 35 megabyte cap. Such differentiation is where Mobile ESPN thinks it’s going to score well with subscribers. “Bigger carriers are not designed to serve the needs of one segment,” Gertsmark said. “They have to be all things to all people.” Gartner analyst Hart said that while Sprint and Mobile ESPN have some overlap, ESPN is “niche enough to where a real sports fan would want this product and they wouldn’t take much away from Sprint subscribers.” That’s a nice endorsement for MVNOs like Mobile ESPN, Virgin Mobile, Amp’d, Boost and Helio, whose subscribers Hart said comprise about 5 percent of the current wireless subscriber base. He expects that figure to balloon to 10 to 20 percent in the next few years. Mobile Advertising Looms Large So carriers and MVNOs are providing services to customers, adding new revenue streams to their bottom line. But their services are the gateway to other revenue streams. Mobile advertising and mobile search are two extremely popular vectors some technology vendors are looking to use to make money. But they’re beset by challenges. Michael Kelley, a partner in the Entertainment, Media, Communications and Technology Sector of PricewaterhouseCoopers, has researched how consumers view mobile advertising, and the view isn’t too sweet. The consumer wants the content, but they don’t necessarily want to be bugged by an ad popping up while they’re watching a clip of their favorite team playing in the Sweet 16. “New forms of advertising have to be created around a 30-second, snack-sized, double-overtime loss or win,” Kelley said. “Consumers are just happy to take phone calls and do text messaging. They’re not quite enamored with the idea of advertising over their mobile phone.” In fact, he said consumers say there is “nothing more annoying then an ad popping up in the middle of a phone call.” Instead, Kelley said consumers need to be reoriented from the traditional forms of advertising. The answer may not be the so-called “front-end advertising” we see on TV every day. Kelley suggested that perhaps a sponsor could provide a promotional code, prompting a subscriber to agree to view an ad to get, say, 20 percent off of their next purchase at Revlon. Or, it could be a sort of raffle or lotto — a chance to win Final Four tickets — provided the consumer takes action. “Advertisers have got to experiment and start being more creative by the way they deliver the info,” Kelley said. Members of PwC will present a white paper on this issue at CTIA next week, one of many issues show organizers expect to be thrown into the so-called “sausage grinder.”
