24 March 2004, 2:00pm ET
By Justin Hyde
ATLANTA, March 24 (Reuters) – U.S. wireless companies are wary of pouring
billions of dollars into faster networks to accommodate high-speed data,
noting
that it may be years before consumers widely adopt the technology.
High-speed wireless data technology claimed much of the limelight at this
year’s Cellular Telecommunications & Internet Association industry show
here,
but executives want more time to evaluate the technology and wait for more
advanced consumer devices, such as phones that can send and receive video
clips.
High-speed wireless data “is here, it’s here to stay and it’s going to be a
big part of our business,” Tim Donahue, Nextel Communications president and
CEO said during a panel discussion on Wednesday.
But with the telecom spending boom and bust of the past few years in mind,
several cellular companies say they want a clear picture of the high-speed
business
before they resume spending.
“We’re trying not to have a short-term memory lapse and remember where we
came from and have a viable business case,” Sprint Corp.
President and Chief Operating Officer Len Lauer said in a panel at the CTIA
show on Tuesday.
After several false starts, high-speed wireless data appears poised to take
off for two reasons. One is that the wireless industry has settled on a few
network standards that can make wireless links competitive with wired
high-speed services.
The second is that while the U.S. cellular market as a whole is still
growing, competition has begun to push down prices for its bedrock voice
service.
To avoid the fate of the traditional phone business, where declining
revenues are a fact of life, cell phone companies need another tool to keep
customers’
wallets open.
LAPTOP VS. HANDHELD
Verizon Wireless, the largest U.S. cellular company, has unveiled plans to
spend about $1 billion to roll out a high-speed data service over about 30
percent
of its network by the end of the year.
That service, known as EV-DO, will be aimed mostly at business laptop users
whose companies are willing to pay about $80 a month per user for Internet
access
speeds that can average 500 megabits per second or more.
Sprint’s Lauer said in an interview that his company will spend $1 billion
in 2005 to upgrade its network for high-speed data. But it does not expect
much
consumer demand until as late as 2006, when device manufacturers catch up.
“From our view, you can’t get a return just going after the business
market,” Lauer said. “You’ve got to get the handsets and the PDAs.”
Other than Verizon, many cellular companies have not publicly committed to a
high-speed technology for strategic reasons. Sprint seems to favor a
variation
of the technology Verizon is using, called EV-DV, that allows higher data
rates for uploads from customers — essential for swapping files like video
clips.
Nextel garnered much attention at the show with its test of a different
technology from Flarion Technologies, a spin-off of Lucent Technologies.
The Flarion wireless network can provide download speeds of about 1.5
megabits per second, with bursts up to 3 megabits — comparable to home
cable Internet
connections.
In a meeting with analysts on Tuesday, Nextel’s chief technology officer,
Barry West, did not commit Nextel to using Flarion’s technology or say when
Nextel
would roll out a high-speed data service.
But he did say the testing around Raleigh, North Carolina, was “more than a
technical trial,” and that a full roll-out
of high-speed wireless would cost Nextel roughly $2 billion.
West said Nextel was still considering other technologies, and that he had
not found a network that would let Nextel serve high-speed data for prices
similar
to DSL or cable.
The $80 per user Verizon is charging “is hard to sustain,” West said in a
panel discussion. “I think the real competition is down at the level of
cable
or DSL, with a premium for mobility.”
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