Wireless Data Woes No Big Deal

Carl Weinschenk

A piece in the Toronto Globe and Mail quotes IDC and Merrill Lynch numbers to make the case that wireless data results in North America are, well, less than overwhelming. That's hardly a great New Year's surprise if you're an executive who signed onto the expensive transition to 3G.


These executives need not worry, in our opinion. For one thing, the numbers quoted in the story don't seem all that bad for what essentially is a new sector. In any case, cellular carriers simply had no choice but to make the transition.


Even if they knew that revenues would be low once they upgraded from 2G and 2.5G, the idea of not taking the plunge clearly wasn't viable. There are all sorts of wired and wireless competitors that are either operational or gearing up for launch. Remaining passive and static in such a dynamic landscape is a short-sighted road that will end in marginalization.


In any case, the story says the situation is far from hopeless. To date, by far the most popular data application is short message service (SMS), which also is the cheapest. It's hot, and proves that a market exists. The obstacles to expansion are prices that are too high, devices that are overly complex and marketers who don't yet have their data acts together. That's a heck of a lot better than the idea that nobody at all is interested.


It's going to be an interesting year. The apparent sluggishness in the mobile data market raises two interesting questions. The first is whether carriers will slow down planning of even more ambitious 4G networks. The other is whether -- and, if so, how much -- the slow uptake of data services will impact cellular carriers' relationships with Wi-Fi and WiMax service providers.


Increasingly, smartphones can access either network. Since cellular spectrum is more expensive than Wi-Fi and WiMax spectrum, negotiations between the parties over how traffic is divvied up will be very important. It seems logical that the actual demand will be an important factor in those negotiations.

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