24 March 2004, 2:00pm ET
By Justin Hyde
ATLANTA, March 24 (Reuters) – U.S. wireless companies are wary of pouring
billions of dollars into faster networks to accommodate high-speed data,
that it may be years before consumers widely adopt the technology.
High-speed wireless data technology claimed much of the limelight at this
year’s Cellular Telecommunications & Internet Association industry show
but executives want more time to evaluate the technology and wait for more
advanced consumer devices, such as phones that can send and receive video
High-speed wireless data “is here, it’s here to stay and it’s going to be a
big part of our business,” Tim Donahue, Nextel Communications president and
CEO said during a panel discussion on Wednesday.
But with the telecom spending boom and bust of the past few years in mind,
several cellular companies say they want a clear picture of the high-speed
before they resume spending.
“We’re trying not to have a short-term memory lapse and remember where we
came from and have a viable business case,” Sprint Corp.
President and Chief Operating Officer Len Lauer said in a panel at the CTIA
show on Tuesday.
After several false starts, high-speed wireless data appears poised to take
off for two reasons. One is that the wireless industry has settled on a few
network standards that can make wireless links competitive with wired
The second is that while the U.S. cellular market as a whole is still
growing, competition has begun to push down prices for its bedrock voice
To avoid the fate of the traditional phone business, where declining
revenues are a fact of life, cell phone companies need another tool to keep
LAPTOP VS. HANDHELD
Verizon Wireless, the largest U.S. cellular company, has unveiled plans to
spend about $1 billion to roll out a high-speed data service over about 30
of its network by the end of the year.
That service, known as EV-DO, will be aimed mostly at business laptop users
whose companies are willing to pay about $80 a month per user for Internet
speeds that can average 500 megabits per second or more.
Sprint’s Lauer said in an interview that his company will spend $1 billion
in 2005 to upgrade its network for high-speed data. But it does not expect
consumer demand until as late as 2006, when device manufacturers catch up.
“From our view, you can’t get a return just going after the business
market,” Lauer said. “You’ve got to get the handsets and the PDAs.”
Other than Verizon, many cellular companies have not publicly committed to a
high-speed technology for strategic reasons. Sprint seems to favor a
of the technology Verizon is using, called EV-DV, that allows higher data
rates for uploads from customers — essential for swapping files like video
Nextel garnered much attention at the show with its test of a different
technology from Flarion Technologies, a spin-off of Lucent Technologies.
The Flarion wireless network can provide download speeds of about 1.5
megabits per second, with bursts up to 3 megabits — comparable to home
In a meeting with analysts on Tuesday, Nextel’s chief technology officer,
Barry West, did not commit Nextel to using Flarion’s technology or say when
would roll out a high-speed data service.
But he did say the testing around Raleigh, North Carolina, was “more than a
technical trial,” and that a full roll-out
of high-speed wireless would cost Nextel roughly $2 billion.
West said Nextel was still considering other technologies, and that he had
not found a network that would let Nextel serve high-speed data for prices
to DSL or cable.
The $80 per user Verizon is charging “is hard to sustain,” West said in a
panel discussion. “I think the real competition is down at the level of
or DSL, with a premium for mobility.”
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