OXFORD, United Kingdom-Most cellular operators now recognize that to ensure their businesses continue to experience breakneck growth, they must compete more directly with fixed operators. According to industry analysts, this battle for the telephone user will take place over the provision of voice and mobile data services.
However, the U.K. cell phone operator Orange has rejected this perceived wisdom, stating that it intends to take wireline voice and data traffic away from the fixed-line operators. The firm’s chief operating officer (COO), Bob Fuller, has gone as far as commenting that Orange believes by 2008, nearly 90 percent of today’s mainstream voice and data communications will occur over “wirefree” networks-a term trademarked by Orange.
Orange, never one to be constrained by convention, said it is confident it will be successful in the voice and data market based on its ability to provide good in-building coverage, the early introduction of high-speed data services and a tariff structure that it contends will compete with existing local loop charges made by the present incumbent, British Telecom. “The promotion of fixed-line displacement hinges upon us convincing and helping our customers to challenge and break previous communication models,” stated Fuller.
Complement to fixed
The collective studies of market research firms agree that wireless data technologies will complement wired data networks by principally extending the reach of local area networks (LANs) and wired networks to locations that are inaccessible to users. Wireless data technologies using Bluetooth could also make it easier to network devices for short or impromptu meetings, all of which appear to be a somewhat meager foundation on which to build a business case for GSM local loop services.
In addition, researchers at U.K.-based Analysys maintain that companies will be reluctant to substitute wireless services for wired technologies in their data networks because of the existing investment, slower data rates of wireless systems and security concerns. Some will also be deterred by the wide variety of available wireless technologies and the fear that some of their devices may not be compatible with selected technologies.
Analyst Susan Ablett with Analysys added, “Fixed networks still have a massive advantage in terms of cost, speed and capacity when it comes to carrying data.”
Motorola’s head of WLL strategy, Dr. William Webb, admits that cellular operators will need to perform a balancing act between offering voice services and wireless local loop (WLL) data. He warned, “In our experience, most operators are a little wary of deploying cheap WLL voice or data against recruiting a mobile subscriber and getting the higher mobile tariff.”
He questioned the logic behind using expensive mobile spectrum to offer data speeds that are, at best, about the same as those that can be achieved over low-cost fixed lines. “Even with UMTS rates of 2 Mbps (Megabits per second), it would not take many data users to swamp a base station,” commented Webb.
Operator strategies
The stated intent by Orange to compete with fixed operators is seen as one of the few alternatives for it to substantially grow its revenue. As a company without a fixed license or partner, it can only focus on substituting cellular voice and data services for existing fixed services. By looking to offer a data service based on High Speed Circuit Switched Data (HSCSD), Orange is adopting a technology that is seen by many in the cellular industry as a short-term interim step before General Packet Radio Service (GPRS) becomes available sometime next year.
Orange has defended its 10 million (US$16.2 million) HSCSD investment by claiming this will put it ahead of its competitors. Fuller said that, following the launch of its data service at a speed of 28.8 kilobits per second (kbps) in October, the access speed quickly will be upgraded to 57.7 kbps or higher.
“On the strength of this WLL data capability, we intend to launch as an Internet service provider (ISP) in October of this year. We will also announce a wirefree modem card from Nokia in Q4 ’99, which will slot into a user’s PC, enabling wireless Internet access at 28.8 kbps,” Fuller said.
Fuller added that the demand within the United Kingdom for these wirefree modems is expected to exceed 14 million by 2004.
Understandably, Fuller remained coy about pricing for these WLL data services prior to the launch date. He referred inquiries on this all-important topic to existing examples of the company’s voice tariffs. However, the quoted example is based around bundles of airtime minutes a day of off-peak calls-for one pence per minute. The company claims this style of tariff remains unique, being the only daily bundle available on the market, and offering call rates “ideally positioned” for home Internet use, as well as voice.
Historically speaking
Regardless of this newfound bullishness toward wireless data, it has taken eight years for cellular access at 9.6 kbps to approach 2 percent of the present subscriber base. This longest hockey stick in history has seemed stuck on the beginning of a demand curve that many expected to mirror the growth in voice services. Will the attempt by Orange to provide GSM WLL be too radical for what has been self-evidently a disappointing take-up?
This gamble, together with the US$2 billion being invested by other European cell phone operators in high-speed data infrastructure, is based on the unproven belief that they can stimulate additional usage among existing users and persuade them to use mobile data services for the first time.
