CES : Panel looks at challenges to wireless data

The mobile phone industry is looking for ways to make wireless data services more attractive to businesses and consumers, but a lack of useful applications and other obstacles are making their goal harder to achieve, a panel of industry executives said here last week.

Offering businesses applications that make workers more productive is critical for driving wireless data use, said an executive with Nextel Communications Inc., which serves mostly enterprise customers. That means approaching them with partners such as IBM Corp. and offering products that solve specific problems, according to Tim Donahue, Nextel’s president and chief executive officer.

“You’re going to make money from applications that make corporations more productive,” he said.

An example is phones that have global positioning systems. Those phones can help companies keep track of delivery teams and be used to send them work orders using both voice and data, he said.

On the consumer side, phones that can send photographs and text messages or be used to download and play games are a step in the right direction, the panelists said, though it’s unclear yet how popular those applications will be, especially in the U.S. where such services are relatively novel.

So-called “push to talk” services, which allow users to talk to colleagues by pressing a button on the phone as if it were a “walkie-talkie,” will be another big driver, a few panelists said. Nextel offers the capability to business customers with its DirectConnect service, but the feature will also be popular among young people, according to Philip Christopher, president and CEO of Audiovox Communications Corp.

The executives spoke Friday on a panel at the Consumer Electronics Show which looked at the state of the wireless services industry.

Len Lauer, president of Sprint Corp.’s PCS Division, said customers want the ability to roam freely between cellular networks and wireless LANs depending on which is available and best suited to their needs at the time. Along with other carriers, Sprint is looking for a way to provide customers with a single bill that will cover their monthly usage of both types of networks, he said.

On the handset side, Kyocera Wireless Corp. has shifted 500 engineers into its consumer group from other parts of the company. Customers want a wider range of handsets and combination phone-PDAs to choose from, said Skip Speaks, Kyocera’s president and CEO.

The executives seemed to agree on one key issue: They can’t afford to compete on price alone for much longer. Profit margins are thin for both handset makers and services providers, they said, and the industry needs to come up with a business model that allows them to compete on features and value instead of pricing.

“I saw a sign the other day offering for five phones for free. I promise you, they were not free,” Kyocera’s Speaks said.

Panel moderator Andrew Seybold, president of Andrew Seybold’s Outlook 4Mobility, wasn’t sure they would find a different model quickly enough to avoid dramatic consolidation. Among his predictions for the year: BellSouth Corp. will buy Sprint PCS, and the U.K.’s Vodafone Group PLC will pull out of a U.S. venture with Verizon Communications Inc. and partner instead with AT&T Wireless.

Sprint’s Lauer said his company is doing fine and isn’t for sale. Verizon wasn’t on the panel to defend itself.

Perhaps the biggest obstacle to the growth of wireless data services is the lack of interoperability among the various carrier networks, according to Mike Lazaridis, president and co-chief executive officer of Research In Motion Ltd. He said RIM still has trouble sending SMS (Short Messaging Service) messages from one carrier’s network to the next.

Philip Christopher, president and CEO of Audiovox, agreed. His company has to make a slightly different phone for the networks operated by Sprint, Verizon and AT&T Corp. because they all use different software for their networks, he said. This increases development costs.

Some requirements imposed on the wireless industry by the U.S. government are unjustified and waste money that could be invested elsewhere, Nextel’s Donahue said. For example, a requirement that operators support “e911” calls by 2005 will cost the industry thousands of millions of dollars, he said. He called e911 a worthwhile initiative but argued that emergency services don’t have the capabilities yet to receive such calls.