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Home / Washington Business - September/October 2004 / Wireless Revolution in Flux |
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Wireless Revolution in Flux |
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Written On: September/October 2004 |
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Written By: by Daniel Brunell |
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It might be hard to believe, but there was a time when all phone messages were written long hand, phones that weren’t wired into a wall didn’t work and phones didn’t have numbered buttons but had a strange circle device that you had to rotate in a certain way for a given number. As a matter of fact, there was a time when you actually talked with a human operator instead of being on hold for a customer service representative or shuffled to a computer with a disturbing voice.
So much has changed in the way we communicate in the last 25 years it is hard to imagine the wired world we lived in. Who would have thought then when Motorola introduced the first mass-marketed cellular phone that the popularity would reach these heights? Who would think that the “bricks and suitcase telephones” would turn into the palm phones of today? The change has been drastic. In 1984, there were 92,000 cell phone subscribers in the United States. By the beginning of this year, there were more then 259 million subscribers. In 1984, the wireless communication industry was a half-billion dollar business employing about 1,000 people. In 2003, the industry had grown into an $87 billion business and over 200,000 employee juggernaut. The constant flux of improvements and competition has dropped the average monthly bill from $96.83 in 1987 to $49.91 in 2003. Instead of one or two phone companies dominating a market, now there are more than a dozen wireless companies in Washington state alone fighting for subscribers.
For the meteoric rise of the wireless industry, there have been some bumps along the way. In some ways it has been a victim of its own progress. What we are experiencing is a transitory period when most people have wireless phones as their primary phone instead of their wireline phone. However, many government regulations still reflect a time when wireline communications and local monopolies ruled. “Continued application of regulations designed for a monopoly era has left our wireline business extremely vulnerable to competitive pressures from the wireless industry,” said Kirk Nelson, president of Qwest. “For example, many of the older rules such as giving the customer 60 days to terminate service without a penalty drives up the cost of doing business and runs totally counter to market-driven competition.” Also, the explosion of phone numbers has led to a proliferation of new area codes and mass confusion in the realm of phone number portability.
However, with the problems have come a lot of progress. The wireless industry’s rapid growth can also be attributed to not being regulated. Innovations such as text messaging, mobile e-mail, personalized ring tones and integrated PDA features would probably not have occurred if the wireless industry had been burdened with lengthy regulatory periods. The improved service has allowed for crystal clear conversations from areas once thought inaccessible to wireless phones. One of the few areas that government has been very proactive is in the public safety realm. “Governments have done a lot to further the development in wireless development, in part to public safety,” said Dave Mellin, communication manager with Sprint. “They coordinate disaster relief efforts and also have been instrumental in helping ensure that services such as e-911 (location-based 911 services for the wireless industry) are implemented today and in the future.”
The increasing competition for consumers has made the industry hotly contested. Most major markets have at least ten companies competing for subscribership, which has lead to the lower rates, high quality and the constant improvement we see today. Advertising spending for wireless companies has exploded in the attempt to bring a larger number of customers. Each company touts their plans — offering things such as free weekends, free limited text messaging, free and discounted phones, discounted evening rates and even a free number of downloads to one’s phone. This has led to a very vibrant and colorful sector of the new economy.
With the sector still growing rapidly, many in the industry are afraid of obtrusive government regulations that would hinder the progress the industry is making. The response that industry has received from Washington state has been receptive, so far. “In general, Washington state seems to be supportive,” said Michael Bagley, executive director of public policy for Verizon Wireless. “However, we do not want Washington to go down the road of California where regressive taxes on communications has really hindered innovation and services.” This fear is amplified throughout the industry. Many states are seeing the wireless industry as a new source of revenue. For example, Rhode Island and California have added surcharges and taxes to consumers which have severely added to the cost of doing business in those areas. With the current budget situation in Olympia, many fear that the wireless industry may see obtrusive taxes on their service.
On top of this fear of taxation, local, city and state governments have set up road blocks on improving infrastructure. The prime example of this is cell tower placement. Cell towers are antennas 50-100 feet high that act as relay stations between one’s wireless phone and the phone network. These towers are essential for the network to work. “Governments have historically erred on the conservative side in permitting cell tower siting in attempts to balance environmental and aesthetic concerns with the need for reliable, high-quality wireless services,” said Lauren Garner, spokesperson with Cingular Wireless. “The science of wireless dictates that cell towers and antennas be placed at optimal geographic intervals to effectively carry wireless radio signals. When local ordinances or state/federal regulations prevent or delay our ability to place antennas in optimal locations, it invariably impacts the ability to deliver high-quality service in those areas.”
The future of the wireless industry is a real contrast. On one hand, advancing technology will rapidly enhance our way of life. Much of this is increasing the versatility of the phone. Current wireless phones are already starting their metamorphosis from simple voice communications to one device with which you can surf the Internet at broadband speeds; take one megapixel-plus photos; record and play videos; access all the functions we now have in PDAs; send instant messages and e-mail; and play your favorite music. All this along with the ability to call people with crystal clarity. On the other hand, the rapid growth will at some time become unsustainable, causing a rash of consolidations and mergers in the industry. Frankly, there are just too many carriers to sustain current levels. The current proposed takeover of AT&T Wireless by Cingular might be a sign of things to come. Despite these storm clouds on the horizon, the industry has never looked better.
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