New Wireless Technology Gets Boost From FCC
Sitting in his office with his laptop connected to his wireless phone, Lucent Technologies’ Technical Manager Frank Cosenza called up a Web site and, within seconds, was viewing a local dining spot. He lingered over one attractive table with a window view.
Users already can virtually walk through a restaurant using desktop PCs with fast Internet connections. But doing it via cell phone is a major technological leap.
Lucent, and other telecommunications giants, are poised to bring these new wireless capabilities to market by using a technology called third-generation wireless, or 3G.
3G technology will allow consumer electronics and wireless firms to offer go-anywhere, pocket-size wireless devices that connect to the Internet at high speeds. So consumers with next-generation cell phones, outfitted with small cameras, could send live video postcards of themselves over the Internet.
Federal regulators are moving to give this new technology a huge boost.
The push begins in earnest Tuesday when the Federal Communications Commission will auction wireless airwaves worth as much as $15 billion. Though the frequencies will be used primarily for conventional cell phones, winning bidders are expected to offer some 3G wireless Internet services as well.
Tuesday’s FCC auction of 422 licenses in 195 markets is the first major opportunity for the industry to test demand for 3G services.
Opening bids for the Los Angeles licenses will start at $21.2 million; San Francisco will be $12.9 million and San Diego starts at $2 million. Participants will bid online, and the airwave sale is expected to last several weeks.
It could be years before 3G devices become widely used--in part because of higher costs--but there is plenty of interest in this airwave auction.
About 110 companies, including AT&T;, Sprint, Verizon Wireless and dozens of small businesses, have applied to bid for these FCC licenses. Verizon paid a $131-million deposit for rights to bid.
Wireless access to the Internet is not a new idea--it is now offered by SBC Communications’ Pacific Bell Wireless unit, Verizon Wireless and many others. But most existing wireless phones retrieve e-mail and provide access to Web pages at only 14.4 kilobits per second--or one-fourth as fast as most home computers with slow analog modems.
By contrast, this new generation of 3G-based wireless phones is expected to transfer data at speeds 10 to 25 times faster.
In New Jersey, Lucent is testing technology that can transfer Internet data at 144 Kbps, fast enough to let users view streaming movie trailers, listen to Internet radio or call up travel directions while driving.
Those capabilities, experts say, will be greatly enhanced by another FCC initiative that next year will require wireless carriers to install technology to identify the location of cell phone users. The combination of 3G and location technology could potentially create a wireless Internet vastly more valuable than the wired one.
“Mobile commerce is clearly going to be a dynamic market,” said Brett Haan, a former FCC advisor who is now a senior manager at KPMG Consulting. “It’s going to be very compelling, when you can tell your phone, ‘I’m in D.C. Tell me where the nearest Starbucks coffee is,’ ” Haan said.
Merchants, for instance, would be able to pitch consumers by phone as they walk past their shops. Likewise, consumers in unfamiliar surroundings could call up directions to the closest gas station or restaurant.
This 3G movement is also underway in Japan and Europe. This year in Britain an auction of 3G licenses netted the government $35 billion.
A second wireless auction by the FCC is scheduled for March 6. Meanwhile, the Clinton administration is pressuring the military and others to free up even more of the spectrum, predicting 3G will transform the U.S. economy--creating millions of new jobs and boosting productivity and innovation.
Some analysts believe that 3G wireless services will generate $50 billion in the next few years, and carriers want a piece of the action, said Ken Hyers, a senior analyst with the Cahners In-Stat Group in Boston.
Still, the ultimate success of third-generation wireless in the marketplace is far from certain. Investors worry about the high cost of building infrastructure for new wireless devices at a time when consumers can get free Internet access and the price of wireless phone service is plummeting.
Lucent said an inexpensive envelope-size circuit board and some new software is all that is needed for carriers to modernize networks for faster Internet access. But that upgrade would cost millions of dollars: It would also force users to trade in their cell phones, and wireless phone companies would have to install these new circuit boards in thousands of cell phone towers, many of which are in remote areas.
Still, many wireless carriers--facing plummeting rates for their bread-and-butter voice business as well as high customer turnover--hope that fancy 3G service will boost their bottom lines, experts say.
“From the carriers’ standpoint, 3G can reduce customer churn because wireless devices become a lot more personal to the user who establishes his own e-mail account and phone number through a wireless carrier,” said Hyers of Cahners In-Stat. “People will be a lot less likely to switch, and when they start buying things over the Internet [using their phone], wireless carriers are going to get a cut of each transaction” from Web merchants, Hyers said.
“The market for voice phone services has become a commodity,” added Bob Yurkovic, Lucent’s senior manager for advanced mobile media. “The new model is to . . . offer value-added services.”
A spokeswoman for Verizon Wireless said the company is in the final stages of testing 3G services with Lucent and other equipment suppliers. Verizon said it plans to offer the technology by late next year.
“The technology offers a couple of advantages,” said Verizon spokeswoman Andrea Linskey. It can at least “double the voice capacity of our network, as well as provide higher data speeds for our customers.”
