Expectations Are High for a Future That’s Wireless

Telecommunications has always been about wires. But now it seems the industry’s future may well ride on airwaves instead.

The shift so far has been a slow one, limited largely by the cost and capability of U.S. wireless systems. In the coming years, however, cutting the cord will likely become easier and cheaper, and the service offerings will approach the reliability and functionality of wired phones and computers.

Obviously, expectations are high. In the last year--a time of record consolidation among phone firms--some of the largest deals revolved around wireless businesses. Phone giant MCI WorldCom, lacking its own mobile phone business, struck a deal to buy rival Sprint primarily to get its hands on the innovative and booming Sprint PCS unit. Britain’s wireless giant, Vodafone, bought San Francisco-based AirTouch and is now vying to buy Mannesmann, Germany’s largest mobile carrier.

Companies from the computer world also are getting into the act, with equipment makers such as Sun Microsystems, software developers such as Microsoft and Internet players ranging from Amazon.com to Yahoo all jockeying to make sure they’ll have a piece of the wireless pie.

The future they are eyeing looks good.

To start, wireless networks rely heavily on wired systems to carry their traffic between antennas and through the regular phone network to wired gadgets of all kinds. But the wireless world also provides a fertile market for a broad range of suppliers, ranging from content and software companies to back-office firms (billing, credit checks) and the makers of advanced chips, phones, batteries and accessories.

“The wireless ecosystem is really much richer than even the wireline ecosystem,” said Roger Wery, a telecommunications analyst and vice president at Renaissance Worldwide Inc. “It’s a very exciting field.”

“Smart phones”--wireless phones packed with advanced features such as messaging and information retrieval--will handle large chunks of the communications that today travel over wires, with many people junking their tethered phones entirely once mobile devices can deliver video, Internet information and electronic mail.

In addition, evolving technologies will allow devices to communicate with one another without wires, ultimately eliminating the need for cables between computers and printers and the like. One such project, “Bluetooth,” involves technology that will allow devices to talk to each other using short-range radio signals.

“Fixed wireless” systems, which send phone calls and data over the airwaves using stationary receivers in a home or office building, also are expected to take off as users opt to do away with the limitations of wires.

“We’re really just at the beginning of interactive services, so they’re really kind of plain right now,” said Daniel Hankins, business development director of Yahoo Everywhere, the unit charged with expanding the Santa Clara, Calif.-based company’s reach beyond desktop computers. “But we’re betting on the come that it’s going to be big.”

Big indeed. In the coming year, more than half of all wireless phones shipped by Nokia, Ericsson, Motorola and Qualcomm will include a mini-browser capable of retrieving and displaying stripped-down Web pages.

Much of the demand thus far for Web-enabled wireless phones has been overseas, where carriers adopted advanced wireless features early on. Still, demand is growing worldwide, and a new study by Datacomm Research Co. predicts that smart phones will account for 90% of all mobile phone sales within five years.

But not all of the action will be in wireless in the coming years. New, faster data technologies are spurring big advances in wired networks throughout the country.

“Wireline is not dead,” said Wery, at Renaissance. “Data is the common thread between wireless and wireline, and the key words in 2000 will be choice and bandwidth at an affordable price.”

For consumers, much of that bandwidth will come in the form of huge roll-outs of cable modems and Digital Subscriber Line (DSL), a technology that allows telephone companies to provide high-speed Internet access over standard copper phone lines.

SBC Communications, the San Antonio-based parent company of Pacific Bell and other local phone units, has said it will spend $6 billion over three years to bring DSL service to 80% of its U.S. customers.

“We know that there is great demand for bandwidth out there . . . for Internet connections, for data transmission,” SBC Chairman Ed Whitacre said in announcing the project. “Everybody wants to go faster and faster.”

SBC and other Baby Bell companies are also gearing up to sell long-distance service in their home territories in the coming years. Last week, Bell Atlantic was given approval to offer long-distance service in New York, marking the first time a Baby Bell has been allowed to compete in long-distance since AT&T; Corp.’s breakup in 1984.