Still Ahead Of Its Time

SAN FRANCISCO (03/07/2000) - Technology historians may one day look back at last week as the time when the fuse was lit on the wireless explosion.

Or they may not. America Online announced deals to offer its online service via wireless devices in partnerships with BellSouth, Motorola, Nokia and Sprint PCS. Microsoft announced deals with AirTouch, Nextel, Totally Free Paging and WebLink, while Sony said it would develop a Net-enabled phone using Microsoft Mobile Explorer software.

Other recent wireless announcements have come from Amazon.com, AT&T, Ericsson, IBM, Oracle and Xerox. Ditto from Motorola and Sprint, in addition to their deals with AOL. Driving those announcements are extravagant predictions for wireless usage in the next several years. The Yankee Group expects the current 1.8 million U.S. wireless-data subscribers to grow to nearly 4 million by the end of 2000. Lehman Brothers has raised its estimate of wireless data penetration from 25 percent of voice subscribers to 50 percent by 2007.

Yankee Group forecasts that by 2003 1 billion mobile devices will be in use worldwide, and International Data Corp. says as many as 40 million of those will be used for Internet access in the United States alone. Trumpeting the wireless "revolution" at the Wireless 2000 Conference in New Orleans last week, AT&T Wireless Services CEO John Zeglis predicted, "In the future, my PocketNet traveling companion will know where I am every minute during the day. It will compute the distance from where I am to the airport, check to see if the flight is on time, let me know when it's time to go to the airport and tell me the best route to take."

But Zeglis acknowledged that the U.S. wireless market today is at about the same place television was in 1955, with only a 30 percent penetration rate.

TVs, of course, became ubiquitous in North American households. Despite the predictions and the huge investments, it's not yet clear that personal wireless Internet devices will enjoy the same adoption rate. "If you take most projections out there, probably including our own, and add 12 to 18 months to them," you'll get a more accurate prediction for the technology, confesses David Kerr, vice president of wireless services at research firm Strategy Analytics.

Analysts look at current penetration rates and historical growth patterns to make their projections. But new technologies often saturate a small fraction of the market - the proverbial early adopters - rapidly, then slow down as they creep into the hands of general consumers.

What's more, analysts and executives agree that several things have to happen before it's common to see people whip out cell phones to buy a book or check a stock quote. Consumers must buy more Internet-ready phones; transmission speeds have to improve; subscriber costs must come down; Internet-equipped phones need to be easier to use; and more content on the Web has to be converted to low-bandwidth formats accessible by mobile devices.

The first hurdle has already begun to fall. Mobile-phone companies are quickly ramping up their Internet-capable phones. Thirty percent of mobile phones shipped in the United States this year are expected to have a browser - a number that could leap to 80 percent in two years, according to predictions from Yankee Group and Strategy Analytics, respectively. Transmission rates, however, will remain a limiting factor to widespread mobile Internet use until cellular phones are able to handle speeds of 56Kbps to 64Kbps. Currently, many phones receive data as slow as 9.6Kbps or 14.4Kbps, says Yankee Group's Mark Lowenstein.

Higher-speed phones will not be widely available until at least late 2000.

Wireless industry executives point out that the streamlined Web content designed for mobile devices will require less bandwidth than that for PCs.

Mobile users need quick information, such as e-mail or stock quotes, not elaborate, image-rich Web sites, observes Charles Levine, chief sales and marketing officer for Sprint PCS, the most aggressive carrier to roll out wireless Internet services.

Price remains a significant obstacle. Consumers who have recently purchased new cell phones and who already complain about complicated, pricey calling plans, may not be willing to shell out more money for new devices so they can check baseball scores on the fly. "What's going to really push things is going to be packet-based data networks that allow carriers to offer flat-rate pricing," says Tole Hart, senior analyst at Dataquest-GartnerGroup.

On packet-based networks, like the Internet, bandwidth is used up when data is being transferred - in contrast to traditional circuit-based phone networks, which tie up a voice channel for the duration of a call. Levine says prices will drop for wireless data access just as they have for voice service, but voice and data pricing will likely remain different. "I don't think you'll see people sitting around just surfing the Web the way they do at home on the Internet," he adds. The most popular Sprint PCS pricing plan is $50 for 500 minutes of voice per month and $9.99 for 50 minutes of data, plus 50 Internet updates on things like stocks and sports scores.

Meanwhile, more user-friendly mobile phones for Internet access are under development. One model employs a pointing device to type on a screen keyboard.

Web developers are rapidly reformatting their content for devices with small screens and limited bandwidth, eliminating graphics and shortening the text.

More than 300 Web sites already have wireless versions, according to Levine. In addition to Yahoo and other portals that are offering wireless services, smaller companies that create the software and services for the wireless Web access are cropping up.

Phone.com offers a browser used in many wireless phones. AirFlash is building a mobile portal for ExciteAtHome and will launch a location-based service for AT&T's network later this year. AvantGo offers a free service that will eventually let mobile users access about 2,000 sites optimized for wireless devices. Since the service launched in May 1999, AvantGo has attracted 500,000 subscribers, says Stuart Read, the company's VP of marketing. That's a healthy number. It's always dangerous to underestimate the public hunger for new, cool technology.

But it should be noted that it was 15 years after the 1939 World's Fair debut of the first television sets - which also suffered from small screens and big price tags - before TV became a mass-market commodity in the '50s. And even those in the thick of the wireless revolution tend to downplay the more-rosy five-year projections. In the end, says Read, it's not how many devices are sold that counts; it's how user behavior dictates progress. "I don't think the real question is how many Internet-enabled devices will be in place. The real question is how many people will use them on the Web?"

(Richard Martin contributed to this report.)

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