Wired In to Wireless : Big Firms Want to Avoid the Late Jump They Got on PCs
Wireless communication, a la Dick Tracy’s two-way wrist radio and Maxwell Smart’s telephone-in-a-shoe, is no longer just the stuff of comic book fantasy and goofy TV shows.
Some of the nation’s largest companies are betting billions that demand for this new style of mobile communication for both voice and computer chatter will become the next high-tech mother lode, perhaps comparable to the personal computer bonanza of 15 years ago.
But unlike the personal computer market, created mostly by tiny start-ups under the noses of the era’s sleepy computer giants, early combatants for the wireless communications market could be part of a Who’s Who of American technology, communications and entertainment companies. Among them: American Telephone & Telegraph, International Business Machines, Motorola Corp., the regional telephone companies, Cox Media and cable television giant Tele-Communications Inc.
Unlike previous technology breakthroughs, the wireless market is the first to emerge in the era of deregulated telecommunications, which has brought about a blending and overlapping of the once separate telephone, computer and entertainment media industries.
Several players are joining forces to bolster their already formidable strengths.
IBM and Motorola jointly operate a wireless data network. Apple Computer has formed alliances with several larger and smaller companies to build hand-held wireless computers. AT&T; is a primary backer of a small Silicon Valley company, Eo, that recently unveiled a portable, cellular computer.
And last week, AT&T; announced plans to invest $3.8 billion to obtain a one-third stake in McCaw Cellular, the country’s largest cellular operator, to speed development of a national wireless phone network. On Monday, MCI, the nation’s second-largest long-distance company, said it wants to form a consortium to create another wireless network.
“This is not the Home Brew Computer Club all over again,” said Richard Shaffer, editor of a technology research newsletter in New York, referring to the small group of young computer aficionados who built the first PCs. “The early wireless market entrants are all big, powerful companies with deep resources who have spotted an opportunity just as fast as the little guys. They learned their lessons from the personal computer. They’re not about to allow the creation of another Bill Gates (the billionaire founder of software powerhouse Microsoft) right under their noses.”
Because of the early involvement of big, established companies, the wireless market is expected to grow more quickly than that for other new technologies. Further, large manufacturers can better afford to more quickly lower the price of new technology products, which could benefit consumers.
“The momentum is building to build these systems now--not later,” said Craig McCaw, chairman of McCaw Cellular, whose dramatic alliance with AT&T; could make the company the front-runner in the race for leadership in the new wireless markets. “It’s within our ability as a nation to get this done within the next several years.”
Although early market estimates are often inflated, analysts agree that sales of wireless voice and data equipment and services could soar into the billions of dollars.
But building networks and developing cutting-edge technology will be expensive, and it is likely that the biggest companies will reap most of the rewards.
Possible exceptions are start-up companies, such as Eo, whose technical know-how will attract the attention of much-larger companies.
Many details of how the new market will emerge will depend on decisions expected over the next 18 months from the Federal Communications Commission.
For the last several years, the agency has fostered development of wireless personal communication systems and has encouraged wide participation from such non-traditional telecommunications players as cable TV companies. Already more than 150 companies are testing pocket phone systems under experimental licenses granted by the FCC.
The commission is expected to vote next year on final rules for allocating new space on radio air waves set aside for personal wireless communications. The issuing of licenses to some of the more than 150 potential applicants is not expected until late 1993 or early 1994.
“It is still far too early to pick the winners and identify the likely losers,” said Sharon Armbrust, an analyst with Paul Kagan Associates, a Carmel communications and media research firm. “There are many issues to be resolved. Technology alone isn’t driving this market; politics and regulatory affairs are playing a large part.”
Because the wireless market is still a wide-open competition, dozens of rival proposals are being offered for portable voice and data communication. Many do not require the new FCC licenses.
For example, IBM and Motorola have teamed to form Ardis, a private network for computer-to-computer data transmission. RAM Mobile Data, a venture of Ram Broadcasting, Ericsson and BellSouth Corp., is operating a rival network. And McCaw Cellular expects to roll out its data network sometime next year.
Paging service operators are also getting into the act. SkyTel Corp., for example, offers a nationwide service that delivers messages of up to 80 characters over ordinary pagers.
Existing cellular network operators can use new digital technologies to expand the capacity of their existing operations. The result can be cellular-style wireless communications, only less expensive and mobile.
Even satellite operators are entering the field. Five U.S. companies are competing for new FCC licenses for low-orbiting satellites, which would relay signals sent by battery-powered wireless telephones, paging devices and computers.
One applicant is Motorola, whose $3.4-billion Iridium project envisions the launching of 66 satellites. A rival plan from TRW Inc. calls for 12 satellites with a price tag of $1.3 billion.
The U.S. Wireless Market
The market for wireless communication equipment and services is expected to explode over the next decade. As a result, the still-embryonic market has attracted some of the biggest names among the nation’s technology, telecommunications and entertainment media companies.
Estimated revenue from service and equipment sales; in millions of dollars: Cellular Phones: 1992: $10,700 1993: $12,900 1997: $21,000 2002: $24,000
Personal Communications Networks (includes wireless public-branch exchanges): 1992: 114 1993: 230 1997: 1,550 2002: 7,800
Wireless data and other wireless (includes pagers, cordless phones, local-area networks, wide-area networks, specialized mobile radios): 1992: 3,515 1993: 4,170 1997: 11,385 2002: 17,850
Total Revenue: 1992: 14,329 1993: 17,300 1997: 32,945 2002: 49,650
Source: Ryan-Hankin-Kent Inc.
